Housing Market Update: Rental Special

If you rent a property, let out a property or manage a buy-to-let property, 2025 is a seismic year for you. One of the biggest reforms of the private rental sector is now winding up to its conclusion.

Even the mere suggestion of the Renters’ Rights Bill has affected attitudes towards property investment and in May, we took a step closer to permanent changes. The Committee stage in the House of Lords finished and the report stage began. Here’s what we know:

• A new ground for possession will be introduced: this will be known as 6B and can be used when a landlord’s superior lease expires or is terminated. In practical terms, 6B applies when the freeholder of a block of flats terminates the building’s lease, leaving all leaseholders – including landlords – with no legal ownership rights.
• The abolition of Section 21 stands – ending so-called ‘no fault evictions’ remains the backbone of the Bill, with a commitment to digitalise the county court possession system.
• Fixed-term AST tenancies will end – it has been confirmed that periodic tenancies will become the default tenure. No exemptions for students lets were included in the second reading.
• Rent increases will be capped – landlords will only be permitted to increase rents once a year and tenants will be able to challenge this.
• Pets in lets needs further detail – while an emboldened right to keep pets in private rentals remains, there will be further consideration regarding what may constitute a landlord’s ‘reasonable refusal’.
• Rent in advance will be banned – peers did discuss how this could lead to a heavier reliance on guarantors and the Government has agreed to provide further guidance.
• Landlord database to go ahead – the responsibility to register will fall to landlords. One proposal suggested unregistered landlords should be restricted to when they can initiate possession proceedings.

The report stage and the subsequent third reading in the House of Lords may see further amendments to the Bill. All proposals put forward by peers will be debated and considered in the House of Commons, with the aim for the Bill to gain Royal Assent in late summer.

Speculation fuels sales

A byproduct of the protracted rental reforms has been a crisis of confidence among some landlords. Only in May did Pegasus Insight reveal the extent. Its latest Landlord Trends report found 22% of landlords sold property in 2024, versus only 6% who bought.

Single storey living disappearing

One of the property types hardest hit has been the bungalow. Propertymark recently found privately rented bungalows have declined in numbers by almost 5% year on year. There were 19,161 bungalows available to rent between April 2024 and April 2025 – down from 20,138 in the previous year.

The decrease in bungalow availability is a blow to the older population who are increasingly turning to private rentals later in life. The National Housing Federation has found the number of private rented households aged 55+ has grown by 70% since 2010/11.

Yields provide a boost

That doesn’t mean to say there aren’t pockets of positivity – but it all depends on where your buy-to-lets are and how they are held. New data from specialist lender Landbay found 23% of landlords in the south are feeling positive about the future, compared to 17% in the Midlands and just 13% in the north.

Positivity is also more prominent among landlords using limited company structures. Only 35% of limited company landlords felt negative about the future, compared to 56% operating personally.

If incoming reforms are a point of concern, there is encouraging news elsewhere. The latest figures from Paragon Bank show buy-to-let yields are at their highest for 13 years. Landlords were achieving an average yield of 7.11% in April 2025.

The best yields are being noted in Wales – an average of 8.43%. Although Greater London has the lowest rental yields, at 5.78%, this represents a remarkable 12 month recovery. When it comes to property types, the house in multiple occupation (HMO) reigns supreme, with average yields of 8.50%.

Increasing yields are driven by rents that continue to rise, a shortage of available lets and moderate house price inflation – trends that forecasters predict will continue. For context, Zoopla expects UK rents to increase by 3-4% over 2025, while house prices may end the year up to 4% higher than the start.

Holiday let turnover trending upwards

Returns are also looking rosy for some holiday let landlords. According to a new report from Sykes Holiday Cottages, three locations generated owners at least an average of £40,000 in turnover during 2024 – Grasmere, Bourton-on-the-Water and Stow-on-the-Wold. The figures must be encouraging as of those holiday let owners questioned, 23% are buying another property to rent out to holidaymakers.

Short-term lets left on the shelf

Even with a Renters’ Rights Bill that’s designed to empower tenants, some renters appear at odds with part of the proposed legislation. New analysis by FCC Paragon found tenants prefer tenure security, with 25.2% of long-term rental listings on the market securing a renter, compared to just 10.4% of short-term rental listings. Despite this, the ban of fixed-term tenancies that offer tenants the ability to lock in for 6 or 12 months looks set to go ahead.

WFH link to wear and tear

Finally, May was the month another rental disparity was uncovered. A study by Inventory Base found furnishings and fixtures in rental properties are now wearing out 30% faster than they did before the pandemic.

The erosion is being blamed on the fact that 41% of the UK workforce now reports they work from home. Before the pandemic, this figure was just 26.7%. What hasn’t been adjusted are the rules around fair wear and tear. Exacerbating the matter is a decline in product quality, with Inventory Base estimating the average lifespan of household items in rental properties has dropped by 30%.

Viewber partners with letting agents, landlords, holiday let owners and property managers across the UK, providing invaluable viewing and property visit support. Our nationwide network is available seven days a week, including evenings and Bank Holidays. Talk to us about outsource support for whatever rental conditions are coming your way.