Predictions for the Welsh lettings market in 2025

As we move into 2025, significant changes in the rental market are likely to impact both landlords and contract-holders. With evolving regulations and economic factors shaping the landscape, preparation and adaptability will be key.

Landlords are facing an era of increased scrutiny and higher standards. The introduction of more rigorous compliance measures by the government aims to ensure better housing quality and greater accountability. These changes, along with local councils having greater enforcement powers, mean landlords must stay informed and ensure their dwellings meet legal requirements. Seeking expert advice is essential to navigating these updates successfully and avoiding penalties.

What’s likely to happen to rents in 2025?

A shortage of rental stock remains a key issue in many parts of the UK. According to Zoopla’s latest rental market report, the supply of homes for rent was 24% lower than the pre-pandemic average as of September. While demand remains strong, affordability constraints in larger cities have started to temper rental growth, with rents in adjacent suburban areas continuing to rise.

Average rent growth for new lets is currently slowing, with rates hovering around 3-4%. However, landlords may price new occupation contracts optimistically due to high demand. With minimum wage increases in April and average income growth outpacing inflation, this could help many contract-holders manage rising costs.

For tenants, locking in a new occupation contract soon could provide financial stability by securing current rent rates for the next year.

What does our Lettings MD say?

Allison Thompson, National Lettings Managing Director at Leaders Romans Group (LRG) which we're part of, shares her perspective:

“As we approach 2025, the lettings industry is entering a phase marked by stabilisation and opportunity. Rental inflation has moderated due to affordability constraints, with demand remaining strong in areas with limited rental stock. This environment positions landlords with well-maintained dwellings to benefit from stable yields.

“While around 12% of property sales come from landlords exiting the market, this is happening gradually rather than as a mass exodus. Many landlords are adapting by upgrading their dwellings to meet the growing demand for energy-efficient homes, aligning with contract-holders’ increasing prioritisation of sustainability. This strategic approach could give proactive landlords a competitive edge.

“Mortgage rates, now stabilising in the low 4% range, may ease pressures on homebuyers and gradually increase first-time buyer activity. However, the Private Rented Sector remains critical in providing housing for those not yet ready to purchase, ensuring continued demand for rental dwellings.”

Over the next five years, real estate consultants JLL predict rental growth will outpace inflation and wages, with average rents expected to rise by 17% by the end of 2029.

While the broader outlook is positive, rental conditions can vary widely by location. Whether you're a landlord considering how to adapt your property portfolio or a contract-holder seeking a stable rental, local expertise is invaluable.

If you’d like tailored advice on navigating the rental market, our lettings experts are here to help. Get in touch with your nearest branch for professional insights and support.