A significant warning has been issued by Nathan Emerson, Chief Executive of Propertymark, who predicts that changes in 2025 may render buy-to-let investments unviable for some landlords.
As government data reveals substantial rent increases, Emerson highlights the challenges facing the private rental sector. He notes, “The lettings market continues to prove challenging to those who rent,” and emphasizes that the sector is poised for its biggest transformation in over three decades due to new legislative measures. These changes could fundamentally impact the profitability of buy-to-let properties for many landlords.
The Importance of Long-Term Support
Emerson stresses the need for a balanced approach to housing policy. He calls on the UK Government to encourage a diverse housing market, anticipating that demand for rental properties will rise significantly over the next decade. “It is crucial there is sensible support… encouraging long-term investment in rental properties, ensuring fairness for both tenants and landlords,” he states, as the sector faces mounting pressure to meet increasing demand.
Record-High Rent Inflation
The warning comes amidst soaring rental costs. Recent government statistics show that private rents increased by 9.1% year-on-year as of November 2024, reaching an average of £1,319 across Britain. This is close to the record 9.2% rise recorded earlier in March.
- England: Rents rose by 9.3%, averaging £1,362.
- Wales: Rents increased by 8.0%, averaging £772.
- Scotland: Rents rose by 6.5%, averaging £980.
- Northern Ireland: The most recent data (to September 2024) shows a 9.0% increase.
London saw the highest rent inflation in England, with an 11.6% annual increase—a new record driven by consecutive months of large rent hikes. The average rent in London now stands at £2,206, the highest in the UK, while the North East recorded the lowest average rent at £700.
Regional Variations
The Yorkshire and Humber region experienced the lowest annual rent inflation in England at 5.7% in November 2024, slightly down from 5.9% in October.
Conclusion
With rents continuing to rise sharply and significant legislative changes on the horizon, the buy-to-let sector is at a critical juncture. Propertymark’s call for a balanced and supportive approach underscores the need for careful policymaking to ensure the sector remains viable for landlords while addressing the growing demands of tenants.
This transformative period will be pivotal for both investors and tenants as the UK rental market evolves.
