Property Market 2025 | The UK property market experienced strong growth and notable changes throughout 2024. As the year comes to a close, the outlook for 2025 is taking shape. The developments of 2024 have set the stage for the market ahead, foreshadowing trends that are poised to dominate in 2025. In this article, we will explore these emerging trends and provide insights into what you can expect from the property market in 2025.
2025 Property Market Forecast
House Price and Rental Growth
The UK property market saw substantial growth in 2024, with house prices increasing by 1.5%. This trend is expected to continue, with house prices predicted to grow by 3% on average. More affordable regions of the UK, like the North West, are expecting even greater house price growth, reaching 5%. This price increase will be particularly appealing for investors who are looking to sell parts of their property portfolios. Investors will see a great return on investment, as their capital continues to appreciate.
In conjunction with the rise in property prices, average rent is also expected to rise. Savills forecast 3.5% rental growth for 2025. Zoopla predicts rents to increase in more affordable areas over 2025, with this being part of an overall ‘catch-up’ with the rest of the country. The demand for rental properties is expected to remain strong due to the ongoing affordability of homeownership for first-time buyers and the limited expansion of the social rented sector. Additionally, migration driven by work and study opportunities will contribute to this demand.
Investors with buy-to-let property in areas like Manchester and Liverpool can expect to see some of the biggest increases in rental yields. Manchester’s rental market is predicted to have a cumulative rental growth of 22.8% by 2028. Buy-to-let Manchester properties offer an increasingly attractive opportunity for investors looking to capitalise on long-term returns.
Increased House Building
Part of the Labour Government’s 2024 election manifesto was to build 1.5 million homes over the next five years. The Autumn Budget announced by Chancellor Rachel Reeves reemphasised the Government’s commitment to that pledge. Committing £5 billion to house building, Labour are helping meet the demand for housing in the UK.
This presents a significant opportunity for investors to capitalise on the UK’s regeneration efforts. Reeves highlighted the Liverpool waterfront as a key area receiving substantial investment, with over 2,000 new homes planned. Off-plan investment offers a lucrative option, allowing investors to enter at a lower cost and maximise their returns.
With the increase in housing development, there are more off-plan investment opportunities available. As the UK Government attempts to meet the demand for housing in 2025, investors can capitalise on the influx of off-plan property developments to create a long-term financial strategy.
For more information on the changes introduced in the 2024 Autumn Budget: What The Autumn Budget 2024 Means For The Property Market
Liverpool’s Property Investment Opportunities
Liverpool’s regeneration efforts are set to intensify in 2025. The Liverpool waters development is rejuvenating the city’s historic docklands and will progress further in 2025. The Government’s Autumn Budget announcement of the development of 2,000 homes on the Central Dock will create brand new off-plan investment opportunities. With the introduction of more homes, the Liverpool buy-to-let market will become more desirable.
The new Everton Stadium is set to open in June ahead of the 2025/26 Premier League season. The stadium will generate over £1.3 billion, stimulating the Liverpool economy and aiding the regeneration efforts of the city. The stadium is a major commercial draw for the city, benefiting businesses in and around the L3 Liverpool postcode. Buy-to-let investors could strongly benefit from short-term lets in this area, with increased demand to the area’s injection of amenities.
Investing in Liverpool’s property market in 2025 offers significant potential for long-term returns. With property values projected to rise by over 20% over the next decade, investors can expect their Liverpool properties to appreciate significantly. Additionally, through Liverpool’s rental prices increasing by 3.5%, Liverpool’s buy-to-let market will become more attractive as investors can extract higher yields. Investors entering Liverpool in 2025 are presented with a promising opportunity to capitalise on strong capital appreciation and rental growth, ensuring positive returns over the coming years.
Stamp Duty Threshold To Increase
The 2024 Autumn Budget significantly altered Stamp Duty Land Tax (SDLT). Currently, buyers will pay no SDLT on properties priced between £0 and £250,000, and this threshold is higher for first-time buyers at £425,000. Stamp Duty on the purchase of second homes also rose to 5% and must be paid within that threshold, with some caveats.
The current thresholds are:
- £0-£250,000 (£425,000 for first-time buyers) = 0%
- £250,001-£925,000 = 5%
- £925,001-£1.5m = 10%
- £1.5m+ = 12%
On March 31st, the thresholds are set to change and will come into effect on the 1st of April. These new thresholds will be:
- £0 to £125,000 = 0%
- £125,001 to £250,000 = 2%
- £250,001 to £925,000 = 5%
- £925,001 to £1.5 million = 10%
- Over £1.5 million = 12%
For first-time buyers, the threshold will be at 300,000. Added relief is available for properties priced up to £500,000.
The lowering of the Stamp Duty threshold is expected to accelerate house sales in the beginning of 2025. Investors will be looking to beat the Stamp Duty deadline and ensure they can keep the cost of their investment as low as possible. This could make the market particularly competitive between January and March of 2025.
This will push investors toward lower-cost locations, like Manchester and Liverpool, to reduce Stamp Duty costs. It is possible that we see investors expand their portfolios outward toward SDLT exempt properties, such as mobile homes, houseboats, caravans and commercially-listed properties. Generally exempt from Stamp Duty, Student property investment remains a strong option, making it an attractive choice for property investors.
HMRC’s SDLT calculator breaks down the cost of SDLT, helping you determine much is due on your property.
Our guide to Stamp Duty in 2024 provides a comprehensive breakdown of the changes. Read Here.
The Rise Of Eco-Friendly Housing
With the worldwide commitment to lowering carbon emissions, the UK is attempting to align with this global shift.
The Labour Party has already committed to building 300,000 eco-friendly houses each year, featuring renewable energy systems, advanced thermal insulation, and smart energy management technologies. The Government is aiming to make zero-carbon buildings the standard in the UK.
The previous Government had originally planned for rental properties to guarantee a minimum EPC grade of C by 2025, however this was abolished. Labour have repurposed this commitment and have set a date of 2030 for landlords to ensure their properties have an EPC rating of C.
Speaking at COP29, Prime Minister Keir Starmer pledged to cut emissions by 81% by 2035, and this commitment will almost certainly lead to more legislation announced in 2025 for UK property. Around one fifth of the UK’s emissions comes from residential buildings, and the Government will most likely try to reduce that. This could see grants for retrofitting houses with improved insulation and more efficient energy appliances. As more new builds are completed, these properties will accrue more value due to their higher energy efficiency ratings.
Investors should consider the eco-friendliness of a property before purchasing. This will future-proof property investments against costly retrofits, which will become more common as the UK reduces emissions. In the context of the ‘cost-of-living crisis’, properties with lower energy bills and higher EPC ratings will be in greater demand on the buy-to-let market. Tenants are increasingly seeking more energy efficient properties due to their more affordable utility bills and increased eco-consciousness. Investors will be able to extract higher rental yields due to demand and will see their property’s capital appreciate greatly as these properties become more desirable to tenants.
To read more about the benefits of eco-friendly property investment, click here.
The Broader Economic Landscape And Its Effect On The Property Market
The UK Economy
The UK economy grew by 1% over the course of 2024, and this growth is expected to continue with the IMF predicting further growth of 1.5% in 2025. UK interest rates have dropped twice consecutively for the first time since 2021, but this reduction is expected to slow. Andrew Bailey, Governor of the Bank of England, said rates will likely continue falling gradually, but ‘not too quickly’.
The gradual reduction in interest rates will only reassure the property market of the sector’s stability. While mortgage rates have gone up in response to the Bank’s decision, these are expected to fall over 2025. With a steady, predictable property market forecast for 2025, investors should find navigating the market smoother than in recent years.
Spring Financial Statement
There are two financial announcements every year in the UK: One in the spring and one in Autumn. Following on from the 2024 Autumn Budget, the spring financial announcement will continue to further the Government’s policy platform.
The changes to the SDLT threshold announced in the Autumn Budget will take effect following the official announcement. In addition, further adjustments to taxes, tariffs, and rates are likely to follow. This is especially relevant in light of Donald Trump’s election as the next President of the United States. His policies on trade, including potential tariffs on European countries like the UK, could shape future economic dynamics. Prime Minister Starmer’s proactive approach to international relations successfully positions the UK to navigate any challenges and capitalise on opportunities arising from any changes in the global economic landscape.
Student Tuition Fees Rising
Student tuition fees are set to rise by 3.1% for the 2025/26 academic year, a modest increase that may encourage universities to focus even more on providing high-quality, accessible education. Despite financial challenges, many universities are innovating to manage resources and continue offering a wide range of courses.
UCAS had originally forecast a 5.8% increase in the student population, but the actual growth was only 1.3%. This suggests a more selective approach to university enrolment, with students gravitating toward institutions that offer the best opportunities. This trend could boost demand for student housing in cities with top-tier universities, such as Liverpool, Manchester and Nottingham, making these areas even more attractive as student property investment locations. As a result, the university landscape is evolving, offering new opportunities for both students and investors alike.
Discover our premier Purpose-Built Student Accommodation in Nottingham, Graduation House.
The 2025 Property Market Presents A Golden Opportunity
The UK property market is set to experience significant change in 2025 and it is important for investors to be prepared for this. Through careful planning and research, investors can continue sourcing the best property investment opportunities and maximise their return on investment. The UK remains one of the best places to invest in property and that is expected to continue.
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