Over the past 15 years, the UK’s residential investment market or Private Rented Sector (PRS) has shifted significantly, moving from net acquisition to net disposal of residential investment stock.
But could the tide be about to turn for the residential investment market in 2025? Partner, Russell Miller, a residential investment expert and LPA Receiver at Vail Williams, explores.
The housing market has faced many a challenge in recent years, all of which have affected its lure as an investment class. Between 2016 and 2024, the proportion of residential property sales classed as investments reportedly dropped from 16% to just 10%.
There are several reasons for this, from legislative changes increasing the cost of property investment and less favourable tax treatments diminishing returns for landlords, to wider market conditions affecting the buy-to-let sector.
As a result, the supply of rental properties in the market has diminished, driving rents upwards due to basic supply-and-demand dynamics.
Meanwhile, many landlords faced higher mortgage payments, have increased rents just to break even.
In some cases, landlords are making monthly losses and have been relying on other income sources, in the hope that capital values rise. Unfortunately, this can lead to defaults and forced sales, as assets are handed over to residential Fixed Charge Receivers.
So, what can landlords and investors expect for the year ahead? Will 2025 bring a residential investment market revival?