The UK rental property market in 2025 is being shaped by multiple economic factors, report the team at Holland Asset Management.
As inflation rises due to transport and food costs, together with new government policies such as VAT charges on private school fees, the likelihood of interest cuts increase.
Overall, the private rental property market increased by 9% in the 12 months to December 2024, and rents have increased by 3.9%. Forecasts predict that an approximate advertised rent increase of 3% inside and outside of London has been influenced by a shift in supply and demand which has resulted in this slower than expected growth
The rental property is imbalanced, despite the increase in rental property supply. And with house prices seeing only moderate growth, together with rising mortgage rates, demand for rental properties continues to grow.
Affordability concerns remain, and tenants less willing to move. Rents have increased by an average of 40% in the last five years, although wages have only risen by 28%, with London worst affected.
Rental markets in the North East and North West have demonstrated most notable growth, adding to a perceived narrowing gap between rental prices in the North and South.
Landlords in areas where rental prices are increasing may enjoy higher rental yields and stronger returns, but affordabilty constraints do pose risks, so rental expectations may need adjustment to allow for this.
In conclusion, the UK rental property market is expected to experience moderate growth in 2025, and as such, both landlords and tenants will need to adjust to these shifting dynamics.
For the full report and analysis from the team at Holland Asset Management, visit their website here.
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