Founder of LandlordZONE and experienced landlord, Tom Entwistle, sums up the highs and lows of 2024 in the private rented sector.
What a year it’s been. A General Election, a new government - the first Labour government for 14 years, a major overhaul of the residential tenancy laws, much stricter regulations in the private rented sector due in the Renters’ Rights Bill due in 2025, and a promised abolition of the long-leasehold system in the UK.
The October Budget did little to improve the residential landlords’ lot, with a two per cent increase in the stamp duty premium for buyers of second properties, increased capital gains tax rates and nothing to improve the rest of the buy to let landlords’ taxation regime. For more analysis read Total Landlord’s article, ‘Autumn Budget 2024: Key changes for landlords’.
The private rental sector continues to experience tenant demand far outstripping the supply of rented property in most of the UK. This has exacerbated the situation for tenants as shortages, coupled with rising costs, have led most landlords to increase their rents, especially on renewals.
Higher mortgage interest rates, the continuing cost of living crisis and worries about the impending loss of Section 21 have persuaded some landlords to exit the market, adding further to the shortage of rental accommodation.
The courts system in the UK is in crisis, adding to fears that eviction delays could be even longer than they are now when landlords are forced to use Section 8 court trials instead of Section 21.
“2024 was the year of uncertainty - it went from the Renters (Reform) Bill not making the cut to clear plans by the new government to make sure the Renters' Rights Bill, with further amendments added, will be implemented in the middle part of 2025. We know that’s going to happen and will be a big change for landlords. If ever there was a time for landlords to invest in property education, especially being a self-managing landlord, this is it. It's time to become more professional and show that being a landlord is a profession, and of course that landlords are working people. Having 18 months' wait for a bailiff eviction date is totally unacceptable, my worry is how is this going to get better in 2025, as clearly there's a massive struggle in recruiting bailiffs."
- Paul Shamplina, founder of Landlord Action
Many older landlords have simply reached the end of their investment journeys having started in the late 1990s or early 2000s, so they are selling up because that’s always been part of their plan.
From a tenancy perspective in 2024, a lot of tenants aren’t moving unless they have to because they’re worried about the rent being increased if they take a new tenancy, and that means few re-lets coming to market.
At the same time, a huge number of people are feeling the financial squeeze and worried about rising interest rates, fewer are managing to buy, and this is forcing more tenant demand.
With an increasing shortage of available rented homes and sometimes multiple tenants competing for the same property, rents have been hitting record highs month on month.
With all this in mind, let’s take a closer look at what’s happened in 2024, month by month.
The year kicked off with an expectation that the Conservatives’ Renters (Reform) Bill, the Tories’ own major overhaul of the rental laws, including the abolition of Section 21, would be made law before the coming General Election, expected in the autumn.
As is often the case, life didn’t turn out as expected. Prime Minister Rishi Sunak called a snap general election for 4 July. He promptly lost to Labour in a landslide victory, and Labour introduced its own rental reforms. These came in the form of a revised and beefed-up version of the Tory Bill, the Renters’ Rights Bill.
Many landlords, anticipating the self-assessment deadline on 31 January, were frantically getting their account details together for the annual ritual, while others were finding higher interest rates and operating costs limiting their access to mortgage credit.
Affordability constraints and cost of living pressures brought about by a flatlining economy – there were rumours of a recession - were also pushing more landlords into mortgage arrears. But as it turned out these were historically low numbers compared to previous financial crises and a full-blown recession did not materialise.
Nationwide warned that there was no prospect of a rapid recovery for the housing market in 2024, despite some green shoots appearing and mortgage rates edging down. Nationwide chief economist Robert Gardner said at the time:
“If the economy remains sluggish and mortgage rates moderate only gradually, as we expect, house prices are likely to record another small decline or remain broadly flat (perhaps zero to two per cent) over the course of 2024.”
One industry survey concluded that a substantial majority of landlords lacked any optimism about their sector as they entered 2024. Of 1,042 landlords questioned by Zero Deposit, the firm that commissioned the research, some 89% of respondents with between one and three properties, only 21%, said they were optimistic. 24 per cent were pessimistic, while 55% remained neutral.
The National Residential Landlords Association (NRLA) submission to government for the 6 March 2024 Budget called for an increase in the supply of homes for private rent which the landlord body said would boost government finances by £10 billion.
The assessment followed the submission of the NRLA’s proposals to the Government ahead of the Budget on March 6.
The NRLA said research findings suggest that an average of 11 prospective tenants now make enquiries about every available property to rent. Independent analysis by Capital Economics showed how scrapping the three per cent stamp duty levy on the purchase of additional homes would see almost 900,000 new private rented homes made available across the UK.
As a result of increased income and corporation tax receipts, Capital Economics’ modelling indicated that the change would lead to a £10 billion boost to Treasury revenue over the same period. This, it said, would be the equivalent of almost the entire £11.5 Affordable Homes Programme budget for 2021-26.
A London Assembly Labour housing spokesperson Sem Moema wrote to the then Housing Secretary, Michael Gove, demanding urgent action to reduce homelessness, that was following the release of new figures showing a 23% rise in rough sleeping in London.
Labour claimed there’s a direct link between the Section 21 powers given landlords under the 1988 Housing Act and what it claims is 4,400 people homeless and sleeping rough in London.
Moema called for an immediate pause to Home Office evictions during the activation of the Severe Weather Emergency Protocol and an increase in the notice to quit period to 56 days, in line with the Homelessness Reduction Act, to stem the rising number of asylum seekers who are made homeless once granted status.
Amid reports that Prime Minister Rishi Sunak was to drop plans to fine heating boiler makers who failed to meet production targets, the new system scheduled to come into effect in April 24 would have forced boiler companies to make sure heat pumps accounted for four per cent of their total boiler unit sales, or be penalised £3,000 for every item by which they fall short.
Companies complained that they had to increase boiler costs to store up income to pay the fines, as they knew heat pump sales would not hit the target. Yet the Government appeared to be dropping this net zero measure, and it issued a press release saying: “More people are taking advantage of increased heat pump grants with applications having risen by almost 50% compared to last year.”
The surge in applications followed a 50% increase in grants for air source heat pumps announced by Sunak in 2023. Grants for heat pumps were boosted to £7,500. Energy Security Secretary Claire Coutinho said at the time:
“We recently made our Boiler Upgrade Scheme one of the most generous schemes in Europe. Applications are now up by nearly 50% compared to last year. Helping people, rather than forcing them, to make the right choices for their homes will always be my priority.”
Landlord Action founder Paul Shamplina reported that court hold-ups were ongoing one year on from a government reform pledge. He said:
“Landlords are still being hit by unacceptable delays in regaining possession of their properties.”
Shamplina gave an example: the case of Dr Reneé Hoenderkamp, who served an eviction notice in January 2023 because her tenant was not paying rent and had also caused damage to her property.
Thirteen months later Dr Hoenderkamp was still waiting for a bailiff to come and remove her tenant. The timeline went: October 2022 served Section 21 notice; January 2023 filed the eviction notice with the court; March 2023 got a hearing date for June; June 2023, tenant failed to show up and the court required the EPC certificate and tenant handbook which the tenant had, so the hearing was adjourned; September 2023, second hearing, possession granted and tenant given 14 days to vacate; tenant did not leave; 31 October 2023, order finally received from the court and landlord paid for bailiff order; February 2024, landlord had still had not received a bailiff appointment and the tenant remained in the property.
Shamplina commented:
“…many landlords are experiencing frustratingly long waits just to secure a court date, let alone obtain possession orders.”
Furthermore, “…once possession is granted, further delays occur in receiving the crucial sealed court order necessary to proceed with bailiff evictions. Bailiffs will not schedule an eviction appointment until landlords possess the sealed order, adding yet another layer of delay and frustration to an already protracted process.”
A backlog of bailiff appointments adds even longer waits for landlords who have already gone through long waits in the court system.
The Renters Reform Coalition – a group of tenant organisations that includes Shelter and Generation Rent, wrote to the then Housing Secretary Michael Gove urging him to beef up the Renters (Reform) Bill.
The coalition told Gove he could “miss the opportunity to fix the crisis in private renting” and urged him “to face down vested interests”.
The coalition wanted tenants to be given four-month notice periods when being evicted (something they have now achieved under Labour’s new Bill), not the plan of two months; tenants to be protected from eviction for two years at the start of a tenancy, rather than six months at present; and the threshold for landlords when they are trying to evict tenants to be raised.
Budget changes to the new tax treatment for furnished holiday lets (FHL) announced by Chancellor Jeremy Hunt would force the closure of hundreds of businesses around the UK said Chief Executive of the Short-Term Accommodation Association, Andy Fenner:
“Plans to change the tax treatment for furnished holiday lets have sent shockwaves through the industry and are likely to force the closure of hundreds of small businesses.
“Now the dust has settled on the announcement, it’s no exaggeration to say that there is real fear out there.
“We urge the Government to reconsider before irreversible changes are inflicted on a sector that has been hit by so much already. From planning reform to licensing and registration schemes, the disruption and extra cost pressure the industry has already been asked to endure has felt endless.
“Against this backdrop of near-constant uncertainty, the latest proposals are a step too far.
“Some of these businesses will be single properties, other portfolios that support dozens of jobs. Many of them will be small businesses that have been built up over decades, sometimes involving multiple generations of family owners.
“What has been proposed will tear up a playing field that has been largely responsible for turning the holiday let industry into one of UK tourism’s crown jewels. If we move the goalposts, many of these businesses could be rendered unviable overnight.”
Total Landlord’s Spring Budget article highlights seven key takeaways for landlords.
Renting was set to boom as average house prices in England hit £290,000, some 8.3 times average annual earnings. This figure was down slightly from 8.5 times the previous year, according to the Office for National Statistics (ONS), an ONS spokesperson said:
“These ratios are similar to 2022 and represent a return to the pre-pandemic trend after a large increase between 2020 and 2021.
“The sharp price increases in 2021 coincided with increases in the volume of sales and changes in stamp duty land tax and land transaction tax. Therefore, the ratios in 2022 and 2023 are a return to the long-term trend, following the sharp increase in 2021.”
The figure remained well above the threshold the ONS uses of five years of income “as a broad indicator of affordability” for an average home.
The least affordable part of England and Wales was in the capital, Kensington and Chelsea, where property costs 34.2 times average earnings.
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, commented:
“Houses are frankly unaffordable at the moment. The pandemic property boom ratcheted up the cost of property, and while wages are growing faster at the moment, they fell so far behind house prices in recent years that there’s acres of ground yet to be made up. It means buyers in England are having to find an astonishing 8.3 times their income to buy a home.”
‘There is little difference in housing policy between the major political parties ahead of the General Election’. That’s the conclusion of Aneisha Beveridge, head of research at Hamptons.
“Both are fighting for the centre ground with a focus on helping more people become homeowners. To meet that goal, both parties have set out plans to build more homes, offer a mortgage guarantee scheme to help people with low deposits into homeownership and clamp down further on landlords. And it’s the rental market, in particular, that could see the biggest change, particularly if the polls are right and Labour win a majority.
“We saw in the local elections that much of the shift from the Conservatives to Labour came from mortgaged households, and that’s likely to play out in the main vote, too. But with little substantial housing policy on the table, it’s people’s finances and the path of mortgage rates, the latter primarily controlled by the Bank of England rather than the government, that will dictate how people feel.
“While there are no signs that demand for housing has dipped in the run-up to the election so far, as always, confidence and clarity are key for the market in the long term. Most new governments tend to come with a honeymoon period when simply being different from the previous one is enough to generate a feel-good factor. This, alongside greater clarity about future plans, should improve confidence, which means we expect the second half of the year to come with a boost that should extend into the housing market.
There were early signs suggesting that housing might be higher up on the Labour Party’s agenda than it had been in the run-up to most previous elections. The Labour manifesto an ambition to build 1.5 million new homes over the next Parliament.
The National Residential Landlords Association in June set out what it called its “three key pre-election asks” of the new government prior to the election in July.
The landlord body was calling for private rented sector “rental reform that works for all”. They wanted a ‘long-term stable housing strategy and the provision of homes that people need, where they need them’.
With the population predicted to grow by 10% over the next decade, the association argued that demand for rental homes was only going to go up.
Following Labour’s landslide victory on 4 July the biggest rental sector commitment from its manifesto was its “immediate” abolition of Section 21 eviction powers, but the party had far more extensive plans for housing. Its manifesto said:
“Security … means having a secure roof over your head. That is not the case for too many renting their homes privately. Labour will legislate where the Conservatives have failed, overhauling the regulation of the private rented sector.”
The introduction of a National Policy Planning Framework, building a new generation of new towns, the ability to challenge unreasonable rent increases, extending ‘Awaab’s Law’ to the private sector and “Labour will further reform compulsory purchase compensation rules to improve land assembly, speed up site delivery, and deliver housing, infrastructure, amenity, and transport benefits in the public interest.”
There would also be new solar-standards for new-build properties starting next year, with a so-called “rooftop revolution” part of a wider review of GB energy supply.
Prime Minister Sir Kier Starmer announced the biggest change in rental laws in a generation in the form of a new Bill – The Renters’ Rights Bill.
He pledged to clamp down on what Labour called “unscrupulous landlords strangling growth.” He would make private renters £250 a year better off under a Labour government by forcing landlords to improve the energy efficiency of rental homes and private landlords would no longer be able to auction rented homes to the highest bidder. Requests for upfront rent would be capped.
The King’s Speech confirmed that Labour’s Renters’ Rights Bill, would be introduced in the Parliamentary session.
UK Finance, the lender’s trade body, published a report examining why buy to let was so much less profitable and why more landlords were falling into mortgage arrears.
It found that the volume of lending for buy to let property purchases had more than halved over the course of 2023, with the number of new mortgage loans being granted falling from 25,280 in Q4 2022 to 12,422 in Q1 2024. The buy to let mortgage market had shrunk for the first time, from 2.039m outstanding mortgages in Q1 2023 to 1.98m in Q1 2024.
Landlords with just one property, most not using a limited company, represented one third of the buy to let market, with 10% of buy to let mortgages held by landlords operating through a limited company.
Despite rents rising, costs were also rising fast, making buy to let less profitable than it once was. In Q1 2018, the average interest cover ratio - how much of a landlord’s mortgage costs are covered by their rental income - was 342%. In Q1 2024 it was 191%. For a comprehensive overview of what to look for in a buy to let mortgage, read Total Landlord’s ultimate guide to buy to let mortgages.
Tax changes and other factors were leading to more and more new and existing landlords choosing to set up a limited company, and UK Finance recognised that this trend was likely to continue.
John Lewis asked the new government for tax breaks for build-to-rent developers such as itself, ready to start building immediately.
Katherine Russell, John Lewis Partnerships’ director of build-to-rent wrote in the Telegraph suggesting that Chancellor Rachel Reeves “should look at tax incentives… where a developer commits to building right away.”
She suggested that such a tax break for corporate investors would help the industry meet the government’s own targets of 1.5m new build homes over five years.
John Lewis Partnership claimed “most people accept the drastic need for new housing” but “many good schemes… still continue to be refused.”
One third of private sector landlords said they would sell if rent controls were introduced by the new government. That was according to research completed by consultancy Pegasus Insight. It found that amidst calls by some for the development of rent controls, 33% of landlords said implementation would lead them to sell some, or all, of their rental properties. Even the International Monetary Fund had admitted that rent controls are associated with lower housing supply. NRLA CEO, Ben Beadle, said:
“Ultimately rent controls would be a disaster for tenants. All they would do is choke off supply further, undermining what little choice tenants currently have when looking for somewhere to live.
“Housing is expensive because we don’t have enough of every type of property, be it for owner occupation, social rent or private rent. The only way to solve this crisis is to boost supply right across the board.”
Draft legislation was published on tax changes affecting the owners of furnished holiday let accommodation.
Furnished holiday lets (FHL) accommodation historically offered taxpayers significant tax breaks, so the announcement of the withdrawal of those tax advantages in the Spring Budget came as a complete surprise to many landlords who were operating FHL businesses.
From 5 April 2025 the following were to be withdrawn:
11 September, The Renters’ Rights Bill is published. The Government confirmed its plans to ban no-fault evictions and in-contract rent increases, and prepared to present the Renters’ Rights Bill to Parliament.
The Bill would abolish the Section 21 ‘no-fault’ evictions for new and existing tenancies and end blanket bans for those on benefits or with children. It would extend Awaab’s Law to the private rented sector, allow tenants to challenge dangerous conditions and apply the Decent Homes Standard for private sector rentals.
The Bill would preclude landlords from including mid-tenancy rent increases in agreements, limiting them to annually at the market rate.
Rumours of a ban on rent bidding wars were confirmed, forcing landlords and agents to publish an asking rent for their property in advance. They would also be banned from asking for, encouraging, or accepting any bids above this amount.
A Private Rented Sector Database was to be created “to help landlords understand their obligations for compliance and provide tenants with the information they need to make informed choices for new tenancies.” The Bill would also give councils more enforcement powers and increase fines for non-compliance.
The new Housing Minister, Matthew Pennycook, committed to engaging with landlord and tenant groups as the Bill progressed, to make sure the sector was ready for the changes.
Housing Secretary Angela Rayner said:
“Renters have been let down for too long and too many are stuck in disgraceful conditions, powerless to act because of the threat of a retaliatory eviction hanging over them.
“Most landlords act in a responsible way but a small number of unscrupulous ones are tarnishing the reputation of the whole sector by making the most of the housing crisis and forcing tenants into bidding wars.
“There can be no more dither and delay. We must overhaul renting and rebalance the relationship between tenant and landlord. This Bill will do just that and tenants can be reassured that this Government will protect them.”
The new Energy Secretary, Ed Miliband, committed to consult on raising the minimum energy efficiency standard for private and social rented homes by 2030, which would require landlords to hold a minimum EPC rating of a C, up from the E currently required.
Research found that circa 55% of all privately rented homes currently held an EPC rating of D or below and around 12% held an E, the legal minimum, while some fell into the F or G rating category.
Yorkshire and Humber had the highest number of privately rented homes with an EPC rating of D or less, with 74% of homes potentially requiring an upgrade by 2030.
The average cost of bringing a rental property up to a grade C EPC rating was estimated at £8,000, so, with 2,681,905 homes requiring improvement across England, that is an estimated total cost of £21.455 billion.
A deadline had been set for the Renters Rights Bill to return to the Commons.
The Bill was debated at second reading on 9 October and was then sent to a committee, to scrutinise the proposed measures line by line. No date was set for this to start, but a statement on the Parliament website suggested this would conclude with the Bill returning to the Commons by Thursday 28 November, although this did not happen.
The committee stage involves an all-party committee of MPs, representative of the make-up of the Commons as a whole.
A deadline was set for the Renters’ Rights Bill to return to the House of Commons for the committee stage. In this stage every clause in the Bill must be agreed, changed or removed from the Bill, but debate is not always necessary for every clause.
After the committee stage, the Bill returns to the floor of the House of Commons for its report stage, where the amended Bill is debated and further amendments proposed.
The report stage would then usually be followed by a debate on the Bill’s third reading, but further amendments cannot be made to a Bill at this stage, before the Bill then goes on to the House of Lords and another reading and a re-run of the different stages.
The Government has set a target for the Bill to become law in the first half of 2025. The key measures included in the Bill, which you can read about on Total Landlord’s Renters’ Rights Bill hub are:
The Autumn Budget was considered a “Halloween Horror Story” by many businesses and landlords. After a prolonged wait, gloomy predictions of pain from government, and a huge amount of speculation in the press, all was revealed on the day.
The biggest shock for buy to let landlords was the additional two percent added to the three percent Stamp Duty Land Tax (SDLT) bringing it to five per cent for all purchases of second homes, applying to transactions after 31 October 2024.
It was announced that the special tax regime enjoyed by furnished holiday let (FHL) landlords, that classes them as businesses and provides lots of benefits to owners of furnished holiday lets, would be abolished from 6 April 2025 (1 April for companies).
However, while some were predicting Capital Gains Tax (CGT) rates would be brought in line with the income tax bands, in the event no changes were made to the rates for residential property: currently 24% if you’re a higher-rate taxpayer and 18% if you are a basic-rate taxpayer.
The rates that apply to most other assets, like shares and commercial property, were increased from 10% to 18% (for basic-rate taxpayers) and from 20% to 24% for higher rate taxpayers. These changes took effect for disposals made on or after 30 October 2024.
Business Asset Disposal Relief allows the sale of a business at a 10% CGT charge up to £ 1 million of capital gains. The tax rate will increase from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026.
The other major change which was of interest to most landlords was to Inheritance Tax. Pension savings, which become subject to inheritance tax for the first time from 6 April 2027. This change will affect those expecting to pass on their pension pots to their children. However, pensions are still an attractive retirement saving vehicle as no changes were made to income tax relief on contributions.
The nil rate band (NRB) remains frozen at £325,000 and the £175,000 residence nil rate band also, both extended until 5 April 2030. By that time the £325,000 nil rate band will have been frozen for 21 years. It would be over £600,000 today if it had been increased with inflation.
The 100% relief under business property relief (BPR) and agricultural property relief (APR) will be limited to a combined cap of £1 million per person from 6 April 2026. The rate of relief will be 50% thereafter (producing an effective IHT rate of 20%). For example, a qualifying business valued at £2 million will result in IHT of £200,000.
Read Total Landlord’s article, ‘Autumn Budget 2024: Key changes for landlords’ for more analysis, and ‘Advice on UK landlord tax: the complete guide for 2024/25’.
The prominent Labour Mayor Andy Burnham said at the NRLA Conference at the NEC Birmingham that he would work with the National Residential Landlords Association to create an effective regulatory framework in his Greater Manchester area.
Speaking at the NRLA Conference, Burnham confirmed that he wants to work with private landlords in what he calls a “mixed market” with respect to the range of available housing.
Explaining how his Greater Manchester Combined Authority has adopted a “housing first” approach to this issue, Burnham thanked the NRLA for its assistance in helping shape the Good Landlord Charter.
As the year draws to a close, the Government set out tough new targets to fix unsafe buildings in England as part of its new Remediation Action Plan, which will introduce new measures to fix buildings quicker and propose tougher penalties for rogue freeholders who refuse to act. The Government is proposing that by the end of 2029 all high-rise buildings over 18 metres tall with unsafe cladding in a government-funded scheme will have been remediated, and that by the end of 2029, every building over eleven metres tall with unsafe cladding will either have been remediated or have a date for completion. Failure to comply will result in severe penalties. Deputy Prime Minister, Angela Rayner, said:
“The pace of remediation has been far too slow for far too long … We are taking decisive action to right this wrong and make homes safe.”
For more information on this topic, read Total Landlord’s article, ‘Cladding and the Building Safety Act 2022: What do landlords need to know?’
