How Changes in Property Tax Laws Will Affect Landlords 2025

As a landlord, you should know how the latest changes in property tax laws will affect you in 2025. Understanding these changes can help you stay ahead and make the most of your investments.

This year brings important changes, from new rent regulations under the Renters' Rights Bill 2025, which introduces new landlord rules, such as the abolition of Section 21 evictions, to shifts in property ownership structures like commonhold.

Additionally, new rules for landlords in 2024 UK, such as those related to leasehold reforms, will continue to impact the market.

The Renters’ Rights Act

The Renters' Rights Act is bringing important changes to how tenancies work in the UK. Here are the key points you need to know:

• Abolition of Fixed-Term Tenancies:Fixed-term tenancies will automatically become periodic tenancies, allowing tenants to leave with two months' notice. This means more flexibility in tenancies, potentially leading to higher tenant turnover under these new rules for landlords.

• The End of Section 21:Section 21 "no-fault" evictions are being phased out. Landlords will need to use Section 8 notices with specific legal grounds for eviction. Evictions will require valid reasons and may involve longer notice periods, reflecting the shift in new landlord rules.

• Rent Payment Rules: Rent must be paid monthly, and landlords can't request more than one month's rent in advance. This reduces upfront costs, making renting more accessible.

• Section 13 for Rent Increases: Landlords must use a Section 13 notice to increase rent, ensuring that rent is reviewed annually and aligned with market rates. Rent increases must be justified and follow a formal process.

• Pets in Rentals: Landlords can no longer automatically ban pets. They need a valid reason to refuse a tenant keeping a pet. Unless there's a good reason, tenants have the right to keep pets on the property.

Leasehold and Freehold Reform Act 2024

The Renters' Rights Bill 2025 is part of a broader set of changes affecting landlords, but it's the Leasehold and Freehold Reform Act 2024 that directly impacts leasehold properties. Here are the key changes and how they will be implemented:

• As of January 31, 2025, leaseholders no longer need to wait two years to extend their lease or buy their freehold. This simplifies and speeds up the process for leaseholders looking to secure long-term ownership or extend their leases.

• Starting March 3, 2025, more leaseholders in mixed-use buildings can take over management as the non-residential floor space limit increases to 50%.

• Leaseholders gain more control over their properties, potentially reducing costs and improving services.

• The government plans to increase transparency over service charges, making it easier for leaseholders to challenge unreasonable costs.

• Leaseholders will have clearer information about what they pay for and can dispute unfair charges.

The Future of Leasehold

The shift towards commonhold as the default tenure for new developments marks a major change in property ownership. The UK government has expressed a long-term goal to phase out leasehold and promote commonhold, a system where flat owners own their units and share responsibility for communal areas.

However, a complete abolition of leasehold will take time due to legal and financial complexities.

What Should Leaseholders Do?

• Check Lease TermsUnderstand your rights and potential future costs.

• Consider Extending Your Lease: New reforms may make this process cheaper and simpler.

• Stay Updated on Policy Changes: Government legislation could affect property values and ownership rights.

These changes are part of broader new landlord rules and property tax changes in 2025, including updates to stamp duty land tax. The Renters' Rights Bill 2025 also plays a significant role in shaping the future of property ownership and management.

Stamp Duty Land Tax (SDLT) Increases

Changes in Stamp Duty Land Tax (SDLT) are set to impact property acquisitions in 2025. Here's what you need to know:

• Reversion to Previous SDLT Thresholds:SDLT thresholds are reverting to pre-pandemic levels, increasing the tax burden on property purchases. Landlords will face higher upfront costs when acquiring new properties.

• Impact on Investors, Owner-Occupiers, and First-Time Buyers:Investors will see increased costs, while owner-occupiers and first-time buyers might face higher entry barriers due to increased taxes. This could slow down property market activity as buyers weigh the higher costs, especially under the new landlord rules and Renters' Rights Bill 2025.

• Strategies for Landlords: Landlords can consider timing purchases strategically, exploring tax-efficient structures, or focusing on refurbishing existing properties. By adapting their investment strategies, landlords can mitigate the impact of SDLT increases and maintain profitability in the property market.

In 2025, new rules for landlords will face many changes. Adjust your strategies to fit these changes.

If you have questions about the changing Property Tax Laws or need more clarity on how the new landlord rules and the Renters' Rights Bill 2025 might affect your investments, don't hesitate to look for expert guidance. dns accountants specialise in providing landlords with support and advice.

Our team can help you navigate the complexities of SDLT, understand the implications of commonhold, and develop strategies to maintain profitability. Contact dns accountants today at , email contact@dnsaccountants.co.uk, or book a free consultation to ensure you're well-prepared for the future of landlording in 2025.