2024- 2025 - Key changes and risks for landlords
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Stamp Duty Land Tax (SDLT) higher costs for additional properties: For buy-to-let/additional dwellings, the surcharge remains high and from 1 April 2025 the nil‐rate band drops back to £125,000, increasing the tax burden on acquisitions.
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Energy efficiency / EPC requirements: Properties will need to achieve a minimum energy performance rating (e.g., EPC rating “C”) by 2030 for private lets in many cases. Landlords with older housing stock will face increased costs upgrading.
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Potential introduction of National Insurance (NI) on rental income: The treasury is reportedly considering extending NI to rental income. If introduced, this would increase landlords’ tax burdens (effectively treating rents more like employment income rather than passive income).
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Changing regulatory environment for renting: The forthcoming Renters' Reform Bill (and broader reforms) will affect landlords’ rights to evict (e.g., no‐fault evictions) and how rents can be increased, which may affect profitability and risk.
Yield pressure: With rising costs (tax, regulation, EPC upgrades) and limited rental income growth (due to benefit freezes, tenant affordability issues) margins for landlords are under pressure. For example: housing benefit payments are frozen, making it harder to raise rents for benefit-receiving tenants.
What you should do / monitor
- Review your acquisition plans: If you are buying additional properties, make sure you factor in the higher SDLT and possibly lower future yields.
- Audit your stock’s energy performance: For older properties, start budgeting for EPC-C upgrades (insulation, boiler replacement, etc.).
- Assess your legal structure: Are you holding properties personally or via a limited company? Tax/regulation changes may impact one structure more than the other.
- Model scenarios for tax increases: For example, if NI on rental income is introduced, how will that change your net rental yield?
- Review your tenant mix and rent strategy: If housing benefit is frozen and reforms limit rent increases or make evictions harder, you may want to avoid high-risk tenants or properties.
- Keep an eye on the Budget announcements: Some key changes (e.g., NI on rents, property tax reforms) are not yet finalised and could change.
