Bread and jam. Ham and cheese. Wind and rain. All things which are ineffably linked, and to this short list we’ll add another, the private rented sector (PRS) and regulation.

This hasn’t always been the case, however the darker deeds of a few individuals, especially in the latter 20th century, pretty much guaranteed that parliament would eventually take a hand in regulating the industry.

As the nature of the PRS has changed, regulation has also evolved, mostly in the form of national legislation, although with increased devolution within the UK, keeping track has become slightly more challenging.

This year, 2025, is likely to see some far-reaching changes to legislation which affects the PRS, so this seems an appropriate moment to review the forthcoming legislative changes to the PRS in 2025.

With decades of combined experience in the PRS, we’ve weathered many changes to our industry, so let’s dig in and see what we might expect over the coming twelve months.

Housing (Scotland) Bill

In both Scotland and England, the most important new laws are still going through the legislative process in their respective parliaments.

In England, the Renters’ Rights Bill will almost certainly pass into law without major changes, thanks to the overwhelming Labour majority. In Scotland, matters are less cut and dried.

If you’d like an excellent overview of the provisions and intentions of the Housing (Scotland) Bill, we’d heartily recommend the commentary from the University of Strathclyde’s Law school.

Before you shy away from this suggestion like startled ponies, it is far from dry academic prose, and sets the forthcoming bill in its proper context. It is, however, a reasonably long read, so go make a fresh coffee first!

One of the most reported proposals is the creation of Rent Control Areas (RCA). SAL, the Scottish Association of Landlords offered some updated information regarding the likely rent structure within RCAs.

In short, local authorities will have to show the Scottish Government sufficient data to justify the imposition of rent control regulations, which will determine the rate at which rents, new and ongoing, can be increased.

The broader question; whether RCAs will actually improve the housing situation in Scotland would take up far too much space to be tackled here. There are many other matters covered within the Bill, see Strathclyde’s summary for further information.

Renters’ Rights Bill

Labour’s intentions with regards to housing were flagged in their manifesto and they wasted little time in getting draft laws before Parliament. Unlike the Conservatives who preceded them, they have time and the majority to see these changes through.

The full government summary of the Bill and its provisions can be found on the UK Government website.

The headline in the press with regards to the Renter’ Rights Bill is the abolition of no-fault, or Section 21, evictions. This was a Conservative pledge, although it was dropped shortly before the 2024 general election.

It is pretty much a racing certainty that this, along with the other provisions contained in the Bill will find their way onto the Statute Books, so landlords south of the border will have to start considering how this will affect them.

It is expected that the Bill will become law by summer this year, 2025, although that doesn’t mean that all of its provisions will become active at that point.

Other legislation affecting the PRS

LBTT and the Additional Dwelling Supplement

Despite the decision to raise LBTT on additional dwellings to 8% in the 2024 budget, the Scottish government will be proceeding with a review of LBTT in spring 2025.

This will examine various aspects of the residential and non-residential arrangements of the tax. So, ironically, this is a good thing – the review not the rise and we wait to see what comes out of it.
It’s worth noting that MDR – Multiple Dwelling Relief – hasn’t changed and is still available on purchases of six properties or more.

Mental Health Moratorium

The Bankruptcy and Diligence (Scotland) Act 2024 introduces protections for individuals in dire financial state who suffer from serious mental illness. While unlikely to affect landlords seriously, they should be aware of its provisions.

Cladding remediation

The Housing (Cladding Remediation)(Scotland) Act 2024 seeks to address – no surprises – the serious issue of faulty or inadequate building cladding.

Again this particular piece of legislation is unlikely to affect the majority of landlords, but be aware that it is there and expected to become law early this year.

Energy Efficiency

The Scottish Government’s original plan to impose a minimum EPC level of C from 2025 was rolled back and is now expected to apply from 2028.

Advice from the Property pros

Although this might look like a tidal wave of legislative changes to the PRS in 2025, many of these changes will not impact the majority of landlords or investors.

The Housing (Scotland) Bill contains much and should make it onto the statute books, however many of its provisions will not take effect immediately and there is a parliamentary election due in 2026 which could change things dramatically.

The concept of Rent Control Areas has attracted many column inches, however whether or not local authorities will apply to create such RCAs in the future, and whether or not they will be successful in doing so remains to be seen.

Organisations such as the Scottish Landlords Association and Propertymark are very active in lobbying the government and while we are undecided as to whether or not the current government likes the PRS, they are apparently listening.

Given the housing crisis affecting Scotland and the rest of the UK, no government of whatever political stripe, can afford to ignore a sector which provides a substantial percentage of homes.

In summary…

Legislative change in 2025 is ultimately like legislative change in any year. Inevitable, often unwelcome, sometimes necessary but like the weather something we all have to put up with.

Endless press stories about landlords fleeing the market speak more to the paucity of good journalism and imagination than to the reality of the housing market.

Yes, landlords are selling up, but how many stories have you read about investors buying properties; about new landlords entering the market? Damned few – but those things happen all the time too.

Legislation on its own is seldom the cause of landlords deciding to quit. It may be a factor, but it will inevitably be just one of many. Much more importantly is the state of the economy and the possibility of making a decent return on investment.

In closing – there is much to keep an eye on as far as the market is concerned, and upcoming legislative changes to the PRS in 2025 are just one factor amongst many.

Don’t let headlines determine your investment choices. If property investment is of interest, get in touch and we can discuss all the pros and cons of the buy-to-let market so that you can make an informed decision about its suitability for you.

Written by Chris Wood, MD & Founder of Portolio

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