
Insight
2025 is poised to be a significant year for the Real Estate sector. We set out below the top 10 areas in which we expect to see developments in 2025.
The Renters’ Rights Bill (the RRB) is set to overhaul the existing rental framework in England during 2025, with the widely deliberated bans on fixed term assured tenancies and assured shorthold tenancies (ASTs), and a ban on “no-fault” evictions.
Fixed term assured tenancies and ASTs are set to be replaced with periodic assured tenancies, allowing tenants to stay in their home until they decide to end the tenancy by giving 2 months’ notice. The abolition of fixed term assured tenancies aims to allow tenants living in substandard properties the option of bringing their tenancy to an end at any time, by the service of a 2 month notice, even if the tenancy has only just been granted.
For tenants who are farm workers (and who are not responsible for the control of the farming or management of the holding) the rules are slightly different, with occupiers continuing to enjoy the enhanced protection they had under assured agricultural occupancy agreements, unless landlords opt out before the tenant enters into occupation. There are, however, some new grounds for termination of assured agricultural occupancies brought in by the RRB.
The ban on section 21 “no-fault evictions” aims to provide tenants with greater security over their homes. This change, in combination with the proposed limiting of rent increases to once per year, is expected to give tenants the confidence to challenge future rent increases under the existing framework in the Housing Act 1988 without fear of retaliatory eviction. However, there are concerns from the British Property Federation that this could lead to an immediate step-up in rental costs once the legislation is in force as landlords try to artificially inflate their asking rents to account for these changes.
The Leasehold and Freehold Reform Act 2024 (the Act) received Royal Assent on 24 May 2024. Although the Act has received royal assent, the majority of the provisions are not yet in force and will need to be commenced through an extensive programme of secondary legislation. Many consultations are expected to take place this year in relation to making it easier to challenge unreasonable service charge costs, setting valuation rates used to calculate the cost of enfranchisement premiums, and implementing new consumer protection provisions so those who pay freehold estate charges have more transparency of what they are paying for and the right to challenge at the First Tier Tribunal. The Government’s aim is to bring these measures into force as quickly as possible.
We expect that in the second half 2025 we will also see the Government publish the draft legislation on a leasehold and commonhold reform Bill.
On 4 December 2024 the Government launched a consultation on reforms to the energy performance of buildings regime. The consultation covers the following areas:
For non-domestic (broadly commercial) properties, there has been previous suggestion in a 2021 consultation that the minimum standard under the minimum energy efficiency standards (MEES) could be raised, such that all commercial properties might be required to have a minimum EPC of “C” by 2027, and “B” by 2030, in order to be rented out. If enacted, this would likely bring a large number of properties into the sub-standard bracket. Whilst the Government has not confirmed whether these updates will be enforced as soon as 2027, the Government (in its December 2024 response to the annual Climate Change Committee report) has committed to finally responding to this 2021 consultation in early 2025. The Government has also announced it intends to consult shortly on MEES from domestic properties with a view to increasing EPC requirements in both the private rented sector, and social rented sector, to a minimum EPC of C by 2030. Landlords will need to ensure they keep up to date with the changes to avoid the risk of breach and would be well advised to start thinking about whether there are any works which can be carried out to improve their properties now so they are ahead of the curve.
This article provides a good overview of the background on MEES.
The Future Homes Standards (FHS) is due to be implemented in 2025 and will have a focus on eliminating dwellings’ reliance on fossil fuels and instead use low carbon energy sources, such as heat pumps and other renewables which are environmentally friendly. The aim of this is to cut new home carbon emissions by 75-80% to contribute to reaching net-zero goals. From 2025, all new homes must comply with the FHS when constructing, extending, or renovating UK homes and the Home Energy Model will be the primary tool used to demonstrate compliance during the building design and planning stages.
The FHS will impact all self-builders and renovators planning new properties or home improvement projects for 2025 and beyond. Even those looking to replace windows or building an extension would need to comply with these higher standards.
Please see our previous article on this here.
2025 will mark the start of a 25-year countdown to net-zero. To help work towards this goal, the UK Green Building Council (the UKGBC) has launched a second consultation on their Climate Resilience Roadmap. The UKGBC is aimed at adapting the built environment to the threats of climate change and the consultation document outlines five key policy recommendations to achieve this. The consultation is open until 6 January 2025 and seeks feedback on updated proposals from the previous consultation in July 2024. The final roadmap is due to be published in March 2025.
As well as the UKGBC, the UK Net Zero Carbon Buildings Standard (the Standard) is another voluntary tool to assist the built environment in achieving net zero. A pilot of the Standard was published in September 2024, setting out carbon targets along with limits that buildings must meet to be classified as net zero.
These tools are likely to become more important over time as greater emphasis is placed on climate change and as responsibility shifts to developers and homebuilders, through the tightening of EPCs, MEES regulations and building control – as illustrated above.
The New Homes Quality Board (the NHQB) is an independent not-for-profit body designed to develop a new framework to oversee reform in the build quality of newly built homes and ensure a high standard of customer service is provided by developers, through the creation of the New Homes Quality Board Code of Practice (the Code). However, since it was first published in December 2021, compliance with the Code has been voluntary. This appears set to change in 2025.
In October 2024, following recommendations from the Competition and Markets Authority (the CMA), the Government announced that it will be exercising its powers under the Building Safety Act 2022 to develop and approve a single mandatory consumer code for all housebuilders operating in Great Britain. These changes are to provide greater protections for households under private management, as well as for individuals purchasing new homes as their own residence.
Whilst the requirements of a single code are yet to be determined, it is likely that a familiarity with the Code will be of use to developers when legislative changes come into force.
The New Homes Ombudsman Scheme (the Scheme) aims to provide homebuyers with greater and more accessible powers of complaint, free of charge, with the decision of the Ombudsman being binding and final.
Alongside, and coinciding with, a single consumer code, the Government also accepted the CMA’s recommendation to activate the Scheme. In 2025, we expect all developers will be required to take steps to participate with the Scheme.
Throughout 2025, we are expecting to see developments related to the Building Safety Act 2022 (the BSA) as the Government considers further reforms. These are expected to include progress with the Remediation Acceleration Plan that was launched on 2 December 2024 and the introduction of the Building Safety Levy in Autumn 2025.
The much-anticipated appeal in Triathlon Homes LLP v Stratford Village Development Partnership and others [2024] UKFTT 26 (PC); [2024] PLSCS 16 concerning remediation contribution orders, is now scheduled to be heard by the Court of Appeal on 19 March 2025. We also expect to hear the outcome of the appeal of Almacantar Centre Point v Various Leaseholders of Centre Point House (LON/00AG/LSC/2023/0012) which will hopefully provide clarity on what is meant by “a cladding system”.
We also await clarity in relation to the Smoke House decision which contradicted the Government’s own guidance on how to calculate height and storeys under the BSA and the Government’s response to the Grenfell enquiry.
To see some of our previous articles on this topic please click here and here.
On 2 December 2024 the Government, rather quickly and unexpectedly, brought into force legislation relating to High Street Rental Auctions (HSRAs) in an attempt to reverse the decline of our high streets.
This new legislation gives Local Authorities the power to compel Landlords to let out properties which are on a designated high street and have been have been unoccupied for the whole of the immediately preceding year or 366 days in the immediately preceding two years (the vacancy condition).
For Landlords whose properties are affected by these new powers, it is important to make sure that you are aware of the powers which have been granted to Local Authorities, and also the obligations that you may be under. For example, if you own a property which becomes subject to the HSRA process, that property will have to be brought up to standard under MEES, the cost of which will have to be borne by Landlords.
In December 2024, we published two articles on HSRAs, which include further information. These can be found here and here.
The Law Commission of England and Wales (the Commission) confirmed in late 2024 that it would begin a new consultation to consider how the right to renew business tenancies (which is called “security of tenure”), set out in Part 2 of the Landlord and Tenant Act 1954 (the Act), is working and whether it meets the needs of business tenants and landlords.
The consultation sets out four different ways in which security of tenure could operate together with the pros and cons of each ‘model’. The consultation document provides a detailed summary of how the Act currently operates, discusses how business tenancies are negotiated and perhaps most interestingly, analyses the commercial leasehold market. The aim of this consultation is to decide which model is the best way forward and then there will be a further consultation on how the Act should be reformed to achieve this.
The initial consultation period will end on 19 February 2025, and it will be interesting to see whether any steps are taken towards a significant shake-up in business tenancies later this year.
To see our previous article on this topic, click here.
If you would like assistance with anything set out above or advice on how to best prepare for the year ahead, please do get in touch.