Significant changes are on the horizon for landlords and property investors in 2025, making it essential to stay informed. What new rules should landlords expect in 2025?
In 2024, many anticipated the Renters Reform Bill would receive Royal Assent, but it was unexpectedly dropped ahead of the General Election in July. Instead, it evolved into Labour’s Renters’ Rights Bill, effectively a Renters Reform Bill 2.0.
The Renters’ Rights Bill will bring a major overhaul to the tenancy system, with a “big bang” implementation expected in the second half of 2025. The Labour government is focused on strengthening tenants’ rights, which means landlords will face new obligations and lose some existing rights.
However, 2025 isn’t just about the Renters’ Rights Bill. Other key legislative changes include the implementation of aspects of the Leasehold and Freehold Reform Act 2024, consultations on additional reforms, potential changes to stamp duty, and discussions around regulating property agents.
This guide highlights five key changes in 2025 that will impact landlords.
How will the Renters’ Rights Act impact landlords and tenants?
The key change is the replacement of the long-standing Assured Shorthold Tenancies (ASTs)—the default tenancy type since the late 1990s—with new Assured Tenancies.
While the names may seem similar, these new rules will significantly impact landlords. Here are the key changes:
- Fixed-term tenancies will be abolished. All existing fixed-term agreements will automatically become periodic.
- What does “periodic” mean? Tenants will have the right to end their tenancy with at least two months’ notice to coincide with a rent payment date. This means that even if a landlord signs a 12-month agreement in 2025, tenants may still leave before the term ends.
- No need for tenancy renewals. Since all tenancies will be periodic by default, renewing fixed-term agreements will no longer be necessary unless specifically requested by the tenant.
- Section 21 will be abolished. Landlords will only be able to regain possession of their property using Section 8, which requires a valid legal reason.
- Rent must be paid monthly. Payments cannot be made quarterly or termly, and landlords cannot request rent in advance under newly tightened regulations.
- Rent increases must follow Section 13 procedures. Any alternative method will be invalid.
Leasehold and Freehold Reform Act 2024
The Leasehold and Freehold Reform Act 2024 became law in 2024, but its key provisions are set to take effect in stages throughout 2025. Below is a summary of what leasehold landlords should expect, based on Matthew Pennycook’s Written Statement to the House of Commons on 21 November 2024.
1. Abolition of the “Two-Year Rule” (Effective 31 January 2025)
- This was the first major provision to come into force.
- Previously, leaseholders had to wait two years after purchasing a property before they could extend their lease or buy the freehold.
- This rule has now been abolished, meaning leaseholders can act immediately.
- Implemented under the Leasehold and Freehold Reform Act 2024 (Commencement No. 2 and Transitional Provision) Regulations 2025.
2. Right to Manage (RTM) Reforms (Spring 2025)
- Set to take effect in spring 2025, these reforms will expand leaseholders’ rights, including:
- Easier access to Right to Manage (RTM)
- Reforms to costs and voting rules
- Leaseholders in mixed-use buildings will find it easier to take over management from landlords.
- Leaseholders in some houses will no longer have to pay their freeholder’s costs.
3. Consultation on Service Charges and Admin Fees (Early 2025)
- The government plans to consult on service charges and admin fees “very shortly”.
- Unfair service charges have been a longstanding concern for leaseholders.
- Proposed reforms include:
- A simplified fee structure
- Improved transparency for leaseholders
- A shift away from the current system of arbitrary admin fees
4. Strengthening Leaseholder Protection Against Unfair Charges (2025 Onwards)
- The government has committed to tackling unfair residential leasehold fees.
- Key measures include:
- Cracking down on excessive “fair charges”
- Providing better legal protections for leaseholders
- Enhancing transparency in service charges
- Leaseholders will also have the right to challenge unreasonable fees at the First-tier Tribunal (England).
5. Consultation on Enfranchisement Premiums (Summer 2025)
- A government consultation is planned for summer 2025 regarding valuation rates used to calculate enfranchisement premiums.
- This will impact costs for leaseholders buying their freehold or extending leases.
- The consultation will also address “serious flaws” in the current system.
Draft Leasehold and Commonhold Reform Bill
The UK government is set to introduce significant leasehold reforms in 2025, including the ban on new leasehold properties and measures to promote the “commonhold” system by 2030. The proposed bill will also address forfeiture and the “tackling” of ground rent, impacting future property buyers and owners.
Understanding Commonhold
Commonhold was introduced through the Leasehold and Freehold Reform Act 2002 under Tony Blair’s government. However, it failed to gain widespread adoption due to its complexity.
Commonhold is comparable to strata or condominium ownership models in countries such as the USA, Canada, Australia, and New Zealand. Unlike leasehold, commonhold provides outright ownership without time restrictions and eliminates the need for lease agreements. Instead of landlords, unit owners collectively manage the building through an association, which can appoint property management services.
Expected Timeline for Commonhold Implementation
Housing Minister Matthew Pennycook has announced plans to introduce a “comprehensive new legal framework” for commonhold in the second half of 2025. A White Paper, expected in early 2025, will invite discussion on how to transition from leasehold to commonhold.
The government aims to make commonhold the default tenure by 2030. However, converting existing leasehold properties into commonhold will be a gradual process, with full implementation not expected before 2030.
Other Key Measures in the Reform Bill
The draft Leasehold and Commonhold Reform Bill will also include two major provisions:
1. End of Forfeiture
- The 2024 King’s Speech promised to abolish forfeiture, a process where landlords can reclaim a lease for breaches.
- The government has yet to clarify how forfeiture will be replaced or handled in cases of breach of covenant.
- Matthew Pennycook previously proposed an amendment to the Leasehold and Freehold Act, restricting forfeiture in cases where the leaseholder is in breach of covenant.
2. Ground Rent Reforms
- The bill is expected to address issues surrounding ground rent, though specific details remain unclear.
- While the Conservative Party committed in 2019 to restricting ground rent, previous legislative attempts have been watered down.
The Leasehold and Commonhold Reform Bill represents a major shift in UK property law. While the transition to commonhold is a long-term goal, immediate reforms such as the ban on new leaseholds and potential changes to forfeiture and ground rent are expected to reshape the housing market. More details will emerge with the publication of the White Paper in early 2025.
Stamp Duty (SDLT) Increases in 2025
Stamp Duty Land Tax (SDLT) will rise in 2025, increasing tax by £2,500 for properties over £250,000 and for first-time buyers purchasing properties over £300,000. These changes take effect from 1 April 2025.
A surge in transactions is expected in Q1 2025 as buyers rush to avoid the tax hike.
The “mini budget” of 23 September 2022 introduced a permanent cut, exempting the first £250,000 of a property’s value from SDLT (excluding additional property owners, who still pay a 3% surcharge). First-time buyers were also exempt from paying SDLT on the first £425,000 of a property’s value.
However, the Autumn Statement of November 2022 introduced a “sunset clause,” ending these thresholds on 31 March 2025. With no extension announced, SDLT exemptions will be reduced from 1 April 2025, lowering the first-time buyer threshold to £125,000.
From April 2025, landlords will pay £15,000 in SDLT for a £250,000 purchase, up from £12,500. For a £500,000 purchase, SDLT rises from £37,500 to £40,000.
| Property Value | SDLT (1 Jan 2025) | SDLT (1 Apr 2025) |
| £250K – Investor | £12,500 | £15,000 |
| £250K – Main residence | £0 | £2,500 |
| £250K – FTB main residence | £0 | £0 |
| £500K – Investor | £37,500 | £40,000 |
| £500K – Main residence | £12,500 | £15,000 |
| £500K – FTB main residence | £0 | £2,500 |
First-time buyers will lose the SDLT exemption over £300,000 and will pay tax on property values between £300,000 and £500,000. However, purchases exceeding £500,000 will not qualify for first-time buyer relief, subjecting them to full SDLT rates.
If a property’s value exceeds £500,000, first-time buyers will only be able to claim the standard SDLT relief on the first £125,000.
Regulation of Property Agents in 2025
Matthew Pennycook has stated that the government is reviewing Lord Best’s 2019 report on property agent sector regulation. The review will focus on setting mandatory professional qualifications to improve service standards.
The statement did not include mention of letting agent regulation, although Lord Best’s report had covered this area. The absence of letting agents from the announcement leaves uncertainty about whether they will be subject to future regulation.
For more information, call HW Residential Lettings on 01484 680308, or use our contact form to get in touch.