2024 saw a new UK Government introduce an autumn Budget branded as a ‘budget for growth,’ though businesses and forecasters remain cautious. In the US, the return of a Trump administration has already influenced policies and global markets. Amid political and economic uncertainty, staying informed on key legal changes impacting the real estate sector is crucial. This insight highlights the key challenges for investors, occupiers, and developers in 2025.
Planning
In 2024, the UK Government announced major planning reforms, targeting 1.5 million new homes and improved infrastructure. While the sector welcomed the focus, concerns remain over a lack of detail and the feasibility of these goals.
The updated National Planning Policy Framework (NPPF) introduced ‘Grey Belt’ land to meet housing targets, requiring councils to review greenbelt boundaries. Further guidance on this and other changes is expected in 2025.
The Planning & Infrastructure Bill, due in March 2025, aims to streamline decision-making for major projects. Additional reforms include updates on compulsory purchase, AI growth zones, and a centralized Nature Recovery fund. Developers await these details to gauge their impact on future projects.
Leasehold Reform
Significant residential leasehold reforms are underway. The Freehold and Leasehold Reform Act 2024, which bans new leasehold houses (with exceptions like retirement housing) and updates rules on service charges and sales information, is not yet fully in force. The government has acknowledged flaws in the Act, particularly around valuation and lease extensions, and secondary legislation is expected throughout 2025.
The Renters’ Rights Bill, set for spring 2025, will transform the private rented sector by abolishing assured shorthold tenancies (ASTs) and section 21 evictions. It also introduces a landlord ombudsman and a database, raising administrative costs. Concerns remain over exemptions and changes impacting landlords.
Additionally, the Leasehold and Commonhold Reform Bill, due in late 2025, aims to regulate existing ground rents and revive commonhold tenure. On the commercial side, the Landlord and Tenant Act 1954 is under review, with the consultation open until February 2025, offering stakeholders a chance to influence future reforms.
Business Rates
Meaningful reform of business rates remains uncertain, despite the tax generating £26 billion in 2024-25 and supporting a quarter of Local Authority funding. Retail, hospitality, and leisure sectors face significant strain under the current system.
A new Bill will introduce lower multipliers for properties with rateable values under £500,000 by April 2026-27, funded by higher taxes on high-value properties like warehouses. However, Labour’s pledge to replace business rates entirely seems unlikely to materialize within one term, as broader reforms remain years away.
Artificial Intelligence
AI is set to play a growing role in real estate, driving efficiency and productivity. Key applications include data-driven investment platforms, virtual property tours, advanced due diligence tools, and property management solutions to enhance tenant engagement.
A new report predicts that the UK will drive the global real estate sector’s recovery, with growing stability and capital value gains boosting investment in structurally resilient sectors.
END
Leave a Reply