New challenges for landlords merit fresh thinking
Savvy landlords are likely to perceive a mix of headwinds and opportunities arising in the year ahead, as property prices begin a steady but inevitable rise, and as the new government enacts fresh property tax hikes.
In this climate, proactive property portfolio management matters. Without pre-emptive thinking, it becomes challenging for landlords to originate strategies that can help them navigate fresh market developments to their greatest advantage and mitigate what they pay in tax.
Below, our experts weigh in on the changes to the tax landscape and potential fluctuations in the property market, both of which stand to impact UK landlords in the months to come…
SDLT, not CGT is in focus
While a rise in Capital Gains Tax (CGT) is often a budget issue of interest for landlords, the new tax regime that took effect in spring 2025 will not see an elevation in CGT for most.
For the time being, the rate for property gains will remain unchanged. However, a separate change affects the CGT rate for carried interest, which has increased from 28% to 32%.
Instead, it’s Stamp Duty Land Tax (SDLT) which will affect residential and commercial sellers.
From 1st April 2025, SDLT thresholds reverted to their pre-September 2022 levels, ending the temporary increases introduced in September 2022. For all homebuyers, the nil-rate threshold decreased from £250,000 to £125,000. First-time buyers will see their tax-free threshold reduced from £425,000 to £300,000, with the maximum property value eligible for first-time buyer relief returning to £500,000. These changes mean that a first-time buyer purchasing a property just above the new £300,000 threshold will now incur an SDLT charge of £6,250.
The real killer for property landlords and developers is the increase in the residential surcharge from 3% to 5%. An £250k acquisition by any limited company now comes with an SDLT bill of £15,000. That is a significant cost for any investor or developer to swallow.
House price growth across 2025
Analysts are painting a healthy picture of house price growth this year, forecasting an average increase of 4% across the UK, as prices rise in both nominal and real term (Savills).
While average property prices rose by 1.9% in the 12 months to November 2024 (Zoopla), in 2025, this relatively slow rate of growth could be set to accelerate.
Speculatively, certain areas could see property prices grow by much higher rates, particularly in well-known property hotspots. Again, this year, Manchester is being pinpointed as one such property hotspot. Thanks to strong house price growth, a thriving economy, enhanced transport links, and ongoing developments, it is set to stay a highly sought-after market, says Home Owners Alliance.
So, what steps should landlords take? If you can still generate a net monthly return then landlords may stick with what they have, but if monthly cash outflows are becoming a problem, maybe it’s time to have a look at a disposal of assets in favour of fresh prospects.
Put yourself in a strong position
Whether landlords are currently operating a single property or multi-property portfolio, both of the changes laid out in this article are likely to have bearing on how you handle your investments this year.
In addition to these factors, high mortgage rates and potential tenant-friendly legislation changes in 2025 are adding to the difficulties landlords face.
In this evolving landscape, an expert source of guidance can be a lifeline. In terms of portfolio guidance, this includes support in managing cash flow, as well as assessing rental yields, loan-to-value ratios, overall market value, and net-of-debt market value.
You can read more about how Champion supports landlords in the context of high mortgage rates here.
Champion provides expert guidance on portfolio-building strategies and tax-efficient solutions to help landlords like you navigate these complexities effectively.
If you would like to discuss your property portfolio circumstances and aspirations, please call 0161 703 2500 or email david.herd@championgroup.co.uk.
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