After a year marked by escalating costs and uncertainties surrounding forthcoming legislation, what lies ahead for buy-to-let landlords in 2024? Here are our predictions for five key aspects of the rental market:
Advancements in Rental Reforms
In the aftermath of the Renters’ Reform Bill’s introduction in May 2023, addressing Section 21 evictions, pet ownership requests, and fixed-term tenancies, 2024 may witness these proposed reforms inching closer to becoming law. The legislative process, including a report stage and third reading in the House of Commons and approval by the House of Lords, suggests potential implementation in late 2024 or early 2025, barring delays linked to the upcoming general election.
Landlords Decision-Making Amid Challenging Conditions
With rising costs, reduced tax relief, and evolving legislation, landlords continue to contemplate property sales. Despite a potential capital gains tax reduction in April 2024, landlords may persist in evaluating their options, influenced by challenging conditions.
General Election’s Influence on the Rental Market
The impending general election, expected by January 2025, is poised to impact the rental market significantly. Political parties may address issues like confusing legislation and escalating costs, reflected in their manifestos. The Conservative Party aims for a ‘better deal for renters,’ while the Labour Party emphasizes ending Section 21 evictions and hints at measures like compulsory licensing and rent controls.
Projected Rental Price Increases
After 2023’s rapid rent increases, 2024 is forecasted to see continued growth, albeit slower. Savills predicts a six percent rental growth, down from 9.5 percent in 2023, reaching an ‘affordability ceiling’ in 2025. Despite this, tenants may face challenges in affording higher rents, as indicated by recent data from Hamptons and Propertymark.
Sustained Focus on Energy Efficiency
While plans to increase minimum energy efficiency standards were scrapped in September 2023, the spotlight on energy efficiency in rental properties will persist in 2024. The cost of energy bills and climate change concerns may drive discussions, potentially prompting the Conservative government to reevaluate its stance on boosting Energy Performance Certificate ratings.
Landlords should also monitor other developments in 2024, such as regulations on short-term lets, expanding landlord licensing schemes, potential increases in mortgage costs, and additional details required in property listings under new Trading Standards rules. Despite a National Insurance tax break, landlords can anticipate rising tax costs due to frozen income tax thresholds and the ongoing impact of Section 24 changes. As we enter 2024, what do you foresee for the rental market?
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