2025: The Year in Property - That Was the Year That Was

As we leap into 2026, let’s take one last look back to 2025 and how the private rented sector and property investment in general fared.

Was it another tumultuous challenge for all concerned, with new legislation popping up everywhere, or was it actually a year of consolidation, setting the sector up for better times ahead?

So, as the last of the turkey slips into the wastebin of history and the Ne’er Day hangovers finally find their place in our collective amnesia, we’re going to take one last look at 2025: the year in property.

That was interesting

It is a matter so beyond dispute that to say that interest rates are important to the property market marks you out as the sort of wit who points at water and declares “wet” (and please – no pedantry!)

The property market, and the PRS, dislike fluctuations in interest rates. It makes life harder, raises costs and introduces uncertainty, and no industry sector appreciates that.

Therefore, 2025 was something of a balm to those who have endured the recent periods of interest rate uncertainty, especially following Liz Truss’s ill-thought-out budget a few years ago.

Bank of England Interest Rate History

In mid-2021, interest rates were at an all time low, but one ill-judged piece of political theatre saw them soar from 0.1% to 5.25%, where they would remain for most of 2023 and into 2024. While that’s not a historic high, it was devastating.

Fortunately since mid-2024 we have seen a cautious reduction in rates and while many would wish this fall to be happening faster, it has undoubtedly injected some much-needed confidence back into the markets.

With the falling base rate, mortgage costs also fell, making financing property transactions easier for both domestic and investment buyers. Importantly, finance became much easier to obtain, as lenders began to relax a bit.

Cost of living

Cost of living affects all of us, but it affects us differently based on a number of factors. It matters because it affects landlords and tenants alike, and the response of one can have a serious impact upon the life of the other.

As is often the case, at the time of writing, the Office for National Statistics figures are incomplete; the latest figures taking us only to September 2025. They are however sobering, despite the better news regarding interest rates and lending.

One of the groups hardest hit by cost of living increases in 2025 were tenants in the PRS.

Source: Household Costs Indices from the Office for National Statistics

So why are PRS tenants facing a greater increase in their cost of living? The Guardian seems quite clear about the reasons: rising rents.

That may be true but it’s important to steer clear of “profiteering landlords” tropes, no matter if that’s true in a minority of cases. As the Guardian points out, landlords are facing increased costs and increasing regulation.

Now, increasing regulation may not be all bad, but increasing costs are never good. Some landlords will try to protect their tenants from these costs, others will pass them on in full in the form of increased rents.

Smaller landlords, those with only one or two properties are, anecdotally, more likely to try and cushion their tenants, however they too are subject to constantly rising costs.

Some will choose to operate a zero-profit model, counting on rising property prices to deliver a substantial profit when they finally sell their properties, others seeking to draw a regular income may have little option but to pass on costs.

Regulation

2025 was a significant year for new legislation affecting the private rented sector. In England and Wales the Renters Rights Act was finally enacted, while the Scottish Parliament passed the Housing (Scotland) Actafter much debate.

Without revisiting the details of both of these pieces of legislation, both will impose significant changes on the PRS north and south of the border.

While the sector has been aware of these changes for quite some time (and hopefully preparing for them) there is no getting away from the fact that 2025 has seen the greatest change of regulation within the PRS in some considerable time.

Now, one could argue that, in broad terms, these changes are overdue and ‘a good thing’; equally if you’re a hard-pressed small landlord the view that this really is a step too far would be equally valid.

In our last blog of 2025, where we invited predictions from industry colleagues and peers, there was a general sense that the PRS was moving in the direction of becoming a more professional undertaking.

As the burden of regulation increases, and the effort required to stay on the right side of the law expands, it is likely that casual and accidental landlords are those who will decide that the game’s not worth the candle, and quit the market.

There are those who view this a positive shift, allowing the market to become more professional and more attentive to the needs of tenants, emphasising the service nature of letting.

Others no doubt will declaim the death of the buy-to-let sector and for once, just maybe, they might be right – in the sense that individuals may no longer see property investment and being a landlord as a viable investment option.

Time will tell.

Advice from the property pros

Strictly speaking it is a little too late to offer advice with regards to property investment in 2025!

However, it is indisputable that the events of 2025 will have a substantial and lasting effect on the PRS, both regulatory and economically.

Hopefully the financial stability we have seen emerging over the last year will continue, all industry and service sectors love a bit of predictability, as it allows for planning and projection with confidence.

A reduction in the cost of living increase, if possible, will benefit everyone affected by the PRS, landlords and tenants alike. Time will tell if 2026 delivers a better personal economy for UK residents.

As far as legislation is concerned, while we will undoubtedly see further regulation affecting the PRS, we are unlikely to see anything as significant as the Acts introduced in 2025 for some considerable time.

So, loathe them or love them, the Renters Rights Act and the Housing (Scotland) Act have set the template for the private rented sector for some years to come, and consequently the sector has clarity about how it will conduct its business.

In summary…

Just for clarity, we wrote this before the Scottish budget was delivered (13th January 2026) so obviously no account has been taken of any little gems still to emerge!

Without resorting to hyperbole, 2025 was a very significant year for the PRS. Changes delivered in that year will have long-term effects on the private rented sector, and it will take a little time for those to shake out.

The fact that these changes are now a reality allows the sector to decide how it is going to approach and implement them – in itself a form of stability – and in that respect if no other, welcome.

Smaller landlords aren’t going to disappear completely, but their place in the broader property investment sector may diminish, with the resulting gaps being filled by more corporate landlords.

There are still opportunities for individuals within the sector, but now more than ever, doing your calculations carefully before committing is vital. As ever, this is an area where our experience and knowledge is available to anyone considering buy-to-let.

2025 was an interesting and challenging year, but overall it was heading the right direction. 2026 and beyond will see further evolution in the market, and evolution is always good if you’re looking for opportunities.

Thanks for reading, and Happy New Year!

Written by Chris Wood, MD & Founder of Portolio

Get in touch on 07812 164 842 or email [email protected]