March 2025 was a pivotal month for the UK property market, marked by significant legislation changes, evolving market trends, and important economic factors that are set to shape the rest of the year. As we close out the first fiscal quarter, it’s crucial to understand these shifts to refine and adjust your property investment strategy. In this article, we’ll break down the key shifts in the March 2025 property market and explore how they could impact your approach to property investment moving forward.
Stamp Duty Threshold Increase Deadline
The Stamp Duty thresholds finally lowered on the 31st of March, following the announcement by Chancellor Rachel Reeves back in the October 2024 Autumn Budget. From April 1st, property investors will face higher Stamp Duty Land Tax (SDLT) on their purchases. The thresholds for buyers of a second home are as follows:
| Property Prices | SDLT Rate |
| £0 – £125,000 | 5% |
| £125,001 – £250,000 | 7% |
| £250,001 – £ 925,000 | 10% |
| £925,001 – £1.5 million | 15% |
| £1.5 million + | 17% |
While this hike may seem alarming, now is the perfect time for property investors to reassess their strategies and ensure they’re maximising their return on investment. With careful planning and exploration of available options, you can mitigate the impact of these new stamp duty thresholds.
Bank of England Holds Interest Rate
The Bank of England has decided to hold interest rates at 4.5%, following their meeting earlier this month. This decision marks the lowest interest rate level in 18 months, with BoE Governor Andrew Bailey citing increased global economic uncertainty as a primary factor in their decision. While the rates remain steady, they are expected to gradually decrease over the course of 2025.
This provides a period of stability for investors, allowing for long-term planning without the fear of unexpected rate hikes. As rates are predicted to decrease twice more in 2025, potentially ending the year at 3.5%, it’s a good time for investors to lock in favourable financing terms before rates dip further. With mortgage rates beginning to trend lower, investors can expect more favourable borrowing conditions as the year progresses.
Slowing Rental Growth
Zoopla’s latest rental market report indicates a slowdown in rent inflation, with rents rising by just 3% year-on-year, compared to 7.4% in 2024. This reflects the ongoing affordability constraints facing tenants, exacerbated by the cost-of-living crisis. With annual rent inflation for new lets at its lowest level in 3.5 years, rents are expected to rise by only 3-4% over the next year.
For buy-to-let investors, this suggests a more stable rental market in 2025. While rental growth may be slower, investors should focus on long-term gains. The Northwest, particularly Liverpool and Manchester, stands out as a high-growth area for capital appreciation and rental yields. These cities are expected to see the highest rental growth in the UK, making them prime targets for buy-to-let investors looking for strong, sustainable returns.
UK House Prices Fall Unexpectedly
Halifax have said that the average UK house price dipped to £298,602 in February despite analysts who were expecting a rush before Stamp Duty rises. This decrease, though modest, caught analysts off guard, as many expected a price surge before the Stamp Duty hike. However, this dip should not cause concern for property investors. Mild fluctuations in house prices are common, and this decline aligns with broader economic pressures, including the ongoing cost-of-living crisis.
Investors should remember that property value changes are typically gradual and market-specific. While house prices are marginally down nationally, areas like Liverpool and Manchester are still seeing strong upward price trends, making them attractive locations for expansion. It’s crucial for investors to focus on the long-term outlook rather than short-term market volatility.
Santander Eases Mortgage Rules
Santander has eased its mortgage rules, lending some borrowers up to £35,000 more to fund their home purchases. The bank has adjusted the way they calculate affordability, meaning many customers applying for a mortgage would be able to borrow between £10,000 and £35,000 more.
This adjustment is part of the bank’s efforts to align with the Financial Conduct Authority’s (FCA) recommendations to make mortgages more accessible. As a result, many borrowers will be able to secure larger loans. For example, a typical first-time buyer couple earning £49,000 are now eligible to borrow nearly £14,000 more than before.
This change is a sign of a broader trend towards more flexible lending criteria, which could help stimulate the housing market. For property investors, this could mean greater opportunities to expand portfolios or take advantage of more favourable terms when refinancing. It’s likely that other lenders will follow suit, making it easier to access credit in the coming years.
Buy-to-Let Firms the Biggest in The UK
Buy-to-let businesses have become the largest single type of business in the UK. There are more companies set up to hold buy-to-let property than any other type of business, according to Hamptons.
Buy-to-let businesses are becoming increasingly popular for the tax benefits they provide property investors. Paying corporation tax is more favourable than paying income tax on your rental income, as it can be almost 20% higher than the corporation tax rate, which will allow for greater return on investment. For investors looking to optimise their tax position, starting a buy-to-let limited company could be a smart move.
To learn more about how to set up a buy-to-let company and the benefits it can bring, read our comprehensive guide here.
March 2025 Property Market: Start of a New Quarter
March 2025 has seen the UK property market evolve, with interest rates holding steady, mortgage rules easing, and rent growth slowing. As we enter a new quarter, these shifts present both challenges and opportunities for investors. Understanding these changes and adapting your strategy accordingly will be crucial to navigating the year ahead.
Whether you’re looking to expand your portfolio or make adjustments to your investment approach, now is the time to consider your options and plan for the future. Contact us today and we will connect you with one of our property experts.
