If you’re thinking of expanding your portfolio and making further investment in buy-to-let in the coming year, you need to be clear on both your current financial position and how your commitments and profits might change in the future.

So, what is 2025 likely to bring that could affect the viability of your property portfolio and your position as a landlord?

• The Renters’ Rights Bill (England only)

Labour’s RRB, which is currently at the Committee Report stage in the House of Commons and could pass into law as early as the spring, will bring the biggest change to letting in the last 25 years.

Section 21 is set to be abolished and with it, the assured shorthold tenancy agreement. Tenancies will become periodic (rolling from one month to the next), with tenants able to give two months’ notice at any time and landlords unable to evict them without a legally valid ground.

Here are some of the key upcoming changes:

• Mandatory Registration – Landlords must join an ombudsman and register both themselves and their properties on a new online portal.

• Higher Fines – Penalties for non-compliance will increase.

• No Rent Bidding Wars – Landlords cannot encourage offers above the advertised rental price.

• Pet Restrictions – Landlords cannot refuse tenants with pets without a valid reason.

• No Blanket Bans – It will be illegal to exclude tenants based on having children or receiving benefits.

Navigating these changes to ensure you remain fully legally compliant will be challenging, so it’s well worth working with a qualified agent that can handle most of the necessary administration on your behalf and take much of the legal responsibility off your shoulders.

However, there will be a rise in the ongoing cost of being a landlord and it’s essential to understand in particular how regaining possession of your property will change.

• Changes to landlord insurance

Insurance rates have increased across the board, and with the expected passage of the RRB, your policy terms may change when it's time for renewal.

If you have rent guarantee insurance, these changes are even more likely, given the removal of Section 21 and the extended eviction notice period for rent arrears. The bill proposes raising the arrears threshold from two to three months and doubling the notice period from two to four weeks.

While the cost may not rise significantly, it’s crucial to understand how these changes could impact future claims.

• Mortgage rates and loan to value

If expanding your portfolio brings you to four or more properties, it’s important to understand how this affects mortgage lending. Your total borrowing cannot exceed 75% of your overall portfolio value.

If you’ve purchased property in the past few years with a loan-to-value (LTV) of 80% or higher, it’s wise to get an up-to-date valuation on all your buy-to-let properties to ensure you have at least 25% equity.

While the base rate is expected to gradually decline in the coming years, long-term mortgage rates may see short-term increases. Following the Labour budget, rates are projected to decrease at a slower pace. If you have a five-year fixed-rate mortgage expiring in 2025, assess potential changes to your monthly payments and stress-test your finances to see the impact of a 2% or greater rate increase.

• Future income and growth

Regularly evaluate your portfolio’s profitability by factoring in:

• Maintenance expenses (e.g., boilers, roofing).

• Rental income.

• Inflation, with forecasts suggesting property and rental growth will outpace it.

Rental prices are projected to rise by approximately 17% over the next five years, exceeding both inflation and wage growth. Consult local market experts to understand trends in your area -many locations offer excellent investment opportunities.

• Limited supply and high demand

The imbalance between housing supply and demand in the UK continues to push rental prices higher. As new developments struggle to keep up with population growth, landlords in areas with limited housing availability often have the flexibility to set competitive rental rates.

• Potential for capital growth

While property values may experience short-term fluctuations, they have shown steady long-term growth, especially in urban centres and economically vibrant regions. Cities such as Manchester, Birmingham, and parts of London are seeing rising demand due to regeneration projects and infrastructure improvements, making them strong prospects for long-term property appreciation.

• Review your tax planning

The biggest tax change recently for landlords in England was the increase in the higher Stamp Duty rate for additional properties, from 3% to 5%, as of 31st October, which will add to the up-front cost for your next property purchase. It’s also worth noting that from 1st April, the zero-rate threshold for the standard rate will drop back to £125,000, with a 2% rate applied to the portion from £125,001 to £250,000.

From 11th December, Wales has also changed its Land Transaction Rates “the higher residential rates of Land Transaction Tax applying to purchases of additional residential properties will increase by 1%, raising an estimated additional £7 million in 2025-2026. This change is broadly in line with changes made to Stamp Duty Land Tax in England and Northern Ireland.” This is an additional 5% tax on top of the existing rates.

Although capital gains tax and inheritance tax wasn’t increased for property in the recent Autumn Budget, it’s important to recognise that both these are likely to apply to your property investments in the future. So do make sure you have discussed your plans for selling or passing on your portfolio with a financial adviser or wealth manager, and have taken proper estate planning advice to make sure you and your beneficiaries mitigate tax liabilities down the line.

And if you are reporting property income of more than £30,000 on your self-assessment tax return, a reminder that you must use HMRC’s Making Tax Digital (MTD) to submit quarterly returns online:

• From 6th April 2026 for income above £50,000

• From 6th April 2027 for income of between £30,000 and £50,000

You can sign up to start using the system now, to make sure you’re familiar with it by the deadline – see the latest notes on GOV.UK.

Speak to our local letting experts at your nearest Leaders branch for more guidance.