Although the introduction of the Renters’ Rights Bill will no doubt make this a pivotal year for the private rented sector (PRS), we expect Oxfordshire’s lettings market to continue to thrive. The fundamental factors supporting the buy-to-let market remain solid: demand is higher than supply, properties are letting quickly and at strong rents, and void periods are minimal. Of course, it is not this simplistic and the upcoming changes from rental reform makes forecasting complex. Nevertheless, here is our considered view of the PRS for the coming year:
Supply
The gap between supply and demand narrowed in the last year, as overseas trips for job relocations or sabbaticals brought welcome stock to Oxfordshire’s rental market. According to Zoopla, rental supply increased nationally by 12% year-on-year (see graph) – though it remained 18% less than in 2019. However, supply has remained constrained by a moderate number of landlords selling their property (it was not the mass exodus some headlines would lead you to believe). There is nothing to suggest any significant influx of supply in 2025 and so this imbalance will remain an ongoing feature of the market this year.
Demand
While tenant demand has come down from its record highs of recent years, it does remain at an elevated level. From internal FK data, the number of applicant leads (phone calls and emails) we received in 2024 fell by 13% year-on-year with many tenants staying put, leaving the rental sector to buy, or relocating away from Oxfordshire or even the UK. However, the number of enquiries in 2024 was still 66% higher than pre-pandemic levels and we do not anticipate a significant decrease in 2025.
Interest rates
Mortgage rates have steadied, and a number of tenants became first-time buyers last year, exiting the rental market and, as a consequence, adding to rental supply. Although interest rates may take time to fall due to creeping inflation, markets are pricing in three or four interest rate cuts by the end of the year1 and so first-time buyer demand is likely to remain robust. Better buy-to-let lending rates may also come to the market providing opportunity for landlords looking to expand their portfolio.
Rents
Average rents remained strong across our nine offices last year with properties in the best condition achieving the strongest rents. Tenant expectations will remain high while rents remain at these levels and so properties in great condition will continue to perform well. There is, of course, a ceiling when it comes to prices for properties, but with no obvious source of extra supply and no signs of demand dropping, we predict continued rental growth in 2025 albeit at a slower pace.
Investing in your property
We have always advised landlords to invest strategically in their properties to make sure they remain competitive. As mentioned above, tenants expect quality if they are paying premium rents. In the second half of last year, we saw more landlords taking the opportunity to meet these expectations whether that meant fully upgrading their property or making improvements within their budget. For example, a one-bedroom apartment in Cowley (see main photo) which had a new kitchen, flooring and furnishings leading to a 12.1% rent increase. Our renovations team can advise you if you’re looking to modernise your rental property in 2025 – [email protected].
Energy Performance Certificate Ratings
The Government announced their plans last year for rented homes to reach a performance certificate rating of C (or above) by 2030. They were set to consult on this by the end of the year, and so we anticipate hearing further detail on this and any incentives, enforcement timelines or cost caps this year. The Energy Efficiency and Net Zero government department also plans to update both EPCs and the Minimum Energy Efficiency Standards rules that underpin them in order to improve the system ahead of the 2030 deadline.
Renters’ Rights Bill
The Renters’ Rights Bill was introduced to parliament on 11 September last year and made steady progress throughout the autumn. The House of Commons Report Stage will be held on 14 January and this is usually immediately followed by the Third Reading. The bill will then move to the House of Lords, and predictions are that the Renters Rights' Bill could become law in the spring. It was widely publicised that Labour vowed to ban Section 21 no-fault evictions on their first day in power. Ministry of Justice figures released in November showed that the number of households in England served with a Section 21 notice between July and September last year hit an eight year high (8,245)2 as landlords are acting before the new legislation. We anticipate this will continue up until the point that Section 21 evictions are banned.
Oxfordshire’s Private Rented Sector
The PRS is an essential part of the UK property market, especially in Oxfordshire. Not only for those not ready to buy, but those who come to this area for the relatively short-term (fixed study, research or work contracts for a few years). Rental demand has always been strong, and we do not foresee that changing in the future so the opportunity for landlords to provide quality rental supply and to be successful is ripe. Landlords who are willing to invest in energy-efficient upgrades and adapt to upcoming legislative changes are likely to be the most successful in this ‘new’ market.
1. https://www.thisismoney.co.uk/money/mortgageshome/article-11885727/When-rates-start-fall-Base-rateforecasts.html
2. https://propertyindustryeye.com/landlords-rush-to-force-out-tenants-ahead-of-section-21-ban-as-eviction-notices-hit-eight-year-high/
