We can’t remember a quiet year in the private rented sector but 2024 was exceptionally busy in terms of announcements and market analysis. The news came thick and fast, so here’s a recap of major changes and trends in the rental market (in case you dared to switch off for 30 seconds).
Renters’ Rights Bill
It didn’t take long for Labour’s Renters’ Rights Bill to have its first reading in Parliament. Although it takes the Conservative’s Renters Reform Bill as its blueprint, this new Bill contains some changes. Still on the cards is a ban on Section 21 eviction notices and reforms to make it easier for tenants to keep pets in rental properties. Also carried over is an extension of Awaab’s Law and the Decent Homes Standard to privately rented properties.
Labour’s new Bill amendments and additions include:
- a ban on tenants outbidding each other to secure a rental property, with landlords and letting agents prohibited from accepting any offers that are higher than the advertised rent
- a Section 13 rent rise reform - mid tenancy rent rises will be dropped in favour of one annual rise in line with market values
- new landlord mandatory 1 & 1 A grounds regarding a landlord’s repossession for personal reasons, effectively banning landlords from reletting or selling their buy-to-let during the first 12 months after a notice is served
- a change to mandatory rent arrears, so notices are only effective when there are three months’ arrears, with a four week associated notice period
The Renters’ Rights Bill is at committee stage and if passed, there are indications some reforms will be immediate, rather than phased.
Capital gains tax
While we didn’t know it at the time, March 2024 was the last time we’d see a Conservative Chancellor parade the red briefcase for some time. Jeremy Hunt used the Spring Budget to reduce the higher rate of Capital Gains Tax charged on the profit earned when selling an additional residential property. A lower rate of 24% took effect on 6th April 2024, making the disposal of buy-to-let assets cheaper for those whose investment had made them money.
The Labour-delivered Autumn Budget was feared by landlords, as there were rumours of a substantial Capital Gains Tax increase. The new Chancellor, Rachel Reeves, surprised everyone by freezing the CGT rates applied additional property sales. These remains at 18% for basic rate taxpayers, and 24% for those in the higher and additional rate tax brackets.
Holiday lets
There was bad news for Airbnb and holiday let landlords in March 2024, when the incumbent Chancellor announced the end of the furnished holiday lettings (FHL) tax regime. This will cease from 6th April 2025. From this date, furnished holiday let owners will be unable to claim full mortgage interest relief, and they’ll say goodbye to capital allowances for furniture and a reduced capital gains tax bill.
Bank of England base rate
When the Bank of England’s Monetary Policy Committee met for the last time on 18th December 2024, it decided to hold the base rate at 4.75%. This capped a year of modest movement. August saw the first base rate reduction for 12 months, with the rate dropping from 5.25% to 5%. The rate was reduced again in November, to 4.25%, where it remains.
Inflation
It was a case of ‘what goes down must come up’ regarding inflation. It started 2024 at 4% - 2% above the Government’s target – before dropping to 2.3% in April and 1.7% in September. The lows didn’t last long. Inflation crept up to 2.3% in October and the last reporting period saw the figure reach 2.6% in November 2024.
Stamp duty
Landlords were hit twice in 2024. The first change came in the Autumn Budget, when the stamp duty surcharge applied to the purchase of additional properties increased from 3% to 5%. The change was almost instant (taking effect from 31st October 2024), with the cost of some buy-to-let purchases becoming £4,000 more expensive overnight.
It was also announced that the nil rate stamp duty threshold, which is currently £250,000, will return to the previous level of £125,000 from 1st April 2025, also affecting additional property purchases.
EPCs in privately let properties
Energy and Net Zero Secretary Ed Miliband used the Labour Conference to declare he was getting tougher with energy efficiency in private rentals. Buy-to-lets will require a minimum EPC rating of C from 2030 – up from the current E rating.
Multiple Dwellings Relief
Portfolio landlords buying more than one leasehold or freehold property at the same time saw an advantageous tax perk end. Multiple Dwellings Relief (MDR) ceased to exist from 1st June 2024.
Rental values
The last Zoopla Rental Index of 2024 revealed that UK rents ended the year 3.9% higher than 12 months ago – that’s £3,240 per annum more expensive. Rents accelerated quickest in Northern Ireland (10.5%) and the North East (8.7%). The portal says the average monthly rent for new lets in the UK is £1,270. Looking ahead, Zoopla forecasts a 4% increase to the average UK rent in 2025.
HomeLet reported a more modest appraisal of the 2024 rental market. It says the UK’s average rent is now 2.2% more expensive than 12 months ago, with the average monthly UK rent at £1,307.
House prices
The Office for National Statistics’ final house price index of 2024 revealed the average UK house price increased 3.4% in the 12 months to October 2024, leaving the average house price at £292,000, The Nationwide was a little more bullish in its analysis, finding house prices had increased 3.7%.