Spring Statement 2025 – key updates for landlords

The Spring Statement didn’t include any tax rises, but billions of pounds in spending cuts were confirmed.

The announcement, made by Chancellor Rachel Reeves alongside a forecast from the Office for Budget Responsibility (OBR), contains a range of measures that could impact landlords.

Read on for more on how spending cuts could impact the rental market, plus the ongoing effect of 2024 Autumn Budget tax changes.

Spending cuts and growth forecast
Ambitious housing targets
Impact of Autumn Budget tax changes
What next for the Renters’ Rights Bill?

Spending cuts and growth forecast

Rachel Reeves stuck true to her promise that she wouldn’t ‘tax and spend’, but she did confirm a range of spending cuts. There will be £5 billion of cuts to the welfare bill and £6 billion to international aid.

The government has also pledged to cut the running costs of the civil service by 15 per cent, aiming to save £2 billion by 2030.

As for economic growth prospects, the OBR halved its growth forecast for 2025 from two per cent to one per cent.

This comes after the Bank of England halved its growth forecast for the UK in February.

Official figures show that the UK economy shrank by 0.1 per cent in January, following growth of just 0.1 per cent in the final three months of 2024.

However, the OBR has upgraded its growth forecast to 1.9 per cent for 2026, 1.7 per cent for 2027, 1.7 per cent for 2028, and 1.8 per cent for 2029.

How could this impact the rental market?

Slow economic growth could have a negative impact on rental demand, while cuts to people’s benefits could limit the amount they’re able to spend on rent.

As a result, rental growth could be slower this year. Average rents are still expected to rise in 2025, albeit not at the rate seen in recent years.

For landlords, this means potentially lower average yields, so it’s important to stay on top of your finances and make savings where possible.

Rising Inflation and high interest rates

Landlords with buy-to-let mortgages and those looking to invest this year will be impacted by inflation of 2.8 per cent and interest rates that remain above four per cent.

At its latest meeting in March, the Bank of England Monetary Policy Committee held the base interest rate at 4.5 per cent.

It’s been hinted that the next base rate decrease could take place in August. Lower interest rates could encourage more landlords to buy property, while those on tracker buy-to-let mortgages could see their monthly repayments decrease.

Labour government announces ambitious housing targets

Rachel Reeves used the Spring Statement, described by the Conservatives as an ‘emergency Budget’, to set out a range of lofty housebuilding targets. She said the government’s Planning and Infrastructure Bill will allow housebuilding to reach a 40-year high, with targets of 305,000 new homes a year (equating to 1.3 million homes over the next five years).

The government has also set aside an extra £2 billion to put towards affordable and social housing in 2026.

More homes could ease the UK’s housing crisis, providing increased options for tenants and homebuyers. A rise in housebuilding could open up opportunities for landlords looking to invest. However, if the imbalance of housing supply and demand is eased considerably, there could be a negative impact on rental growth.

Ongoing impact of Autumn Budget tax changes

Last year, the Chancellor announced £40 billion worth of tax increases to fill a black hole in public finances.

One change, increasing the stamp duty surcharge from three per cent to five per cent, was directly aimed at landlords and second home owners.

And from April, the stamp duty threshold is being halved from £250,000 to £125,000. This means landlords who buy properties will be hit with higher stamp duty bills than ever before.

The government has also promised to lift the freeze on income tax thresholds from the 2028-29 tax year. This change would in theory lead to lower income tax bills as people’s wages increase.

What’s the latest on the Renters’ Rights Bill?

The government has pledged to make the biggest changes to tenancy laws in a generation with its Renters’ Rights Bill. The bill includes plans to ban Section 21 evictions, limit rent increases, and make it easier for tenants to keep pets.

While specific policy such as rental reforms weren’t part of the Spring Forecast, many landlords will be wondering when the proposed changes could become law.

The progress of the Renters’ Rights Bill has stalled since its second reading in the House of Lords in February. However, it was recently confirmed that the committee stage will begin on 22 April. This is when the House of Lords will consider tabled amendments and scrutinise the bill line by line.

The government’s original plans to introduce new laws by spring or summer 2025 now seem highly unlikely, with late 2025 or even early 2026 more realistic.