As 2025 begins, property investors find themselves in a fluctuating market. Due to rising costs, a shift in housing preferences, and legislative changes, it can be difficult to know how and where to invest for the best returns. Staying ahead of the trends is critical, now more than ever, so these are the primary strategies landlords and property investors should focus on for a successful year.
[Image source: Deposit photos]
Stay ahead of legislation updates
Change has become the standard for the rental sector, and it’s vital that landlords, both current and prospective, are staying up to date on the laws and regulations. In 2024, the Housing (Scotland) Bill passed the first stage of parliamentary debate and reached Stage 2 in November, where further amendments to the proposal will be considered. The Bill is intended to provide greater security for tenants, prevent homelessness, and restrictions on rent increases, among other changes designed to protect tenants.
These changes can feel daunting, especially to those just entering the buy-to-let market, but it will allow for a higher-quality, better managed market overall. Landlords need to prioritise transparency with their tenants and be responsive when it comes to maintenance issues, especially those that pose safety risks like faulty garage doors or electrical problems, to build trust in the long-term.
Energy efficiency should be a priority
The latest proposals by the Scottish Government state that from 2028, private rented properties could either need to have a fabric EPC rating of C or have certain energy saving features installed, such as cavity wall insulation, draught-proofing or heating controls. Eco-focused changes are coming so getting ahead of the legislation makes financial sense for landlords and investors, and it benefits tenants in the meantime too. Landlords can renovate, and create sustainable homes for tenants, by such changes as improving insulation, installing double glazing and switching to sustainable heating sources.
Grants are available for eligible landlords to help cover the costs of these improvements, and the earlier you can make the changes, the better. Properties with superior energy efficiency tend to command higher rental incomes and reduced vacancy periods, so it’s beneficial for tenants, landlords and the environment.
Pay attention to supply and demand trends
Whilst the UK-wide rental market is starting to stabilise, Scotland continues to show stronger growth with average rents increasing by 6.2% nationally. Edinburgh’s rental market remains very strong, with average rents increasing by 12.4% compared to 2023. Despite these increases, growth is likely to moderate as affordability constraints impact how high rents can rise. However, there continues to be strong demand for rental properties, which is good news for landlords. Strategic marketing plays a crucial role in capitalising on this demand.
In a competitive market, high-quality images of the property and the local area can make your property stand out, especially when supply exceeds demand in certain areas. Additionally, tailor your marketing strategy to align with local demand. For example, if your property caters to families, include photos of spacious living areas and nearby schools or parks. If it appeals to young professionals, feature images of workspaces, modern amenities, or proximity to public transport.
Invest in the right locations
Location is vitally important when it comes to buy-to-let, but it’s also advisable to choose an area you’re familiar with. Ideally, you should invest in a property that’s under an hour from where you live, so you can manage the property more efficiently and can take a hands-on approach to building relationships with the local community.
There are several locations in Scotland that have become profitable for buy-to-let and have high rental demand, including Edinburgh, Aberdeen, Dundee and Glasgow. Where possible, consider where demand is highest, closest to where you live to balance these two requirements. Working with a letting agent provides many benefits, but it can be tough finding an agent if you’re investing outside of your immediate location. Citylets’ letting agent matching service can pair you up with a local agent near you or wherever you’re looking to invest.
Make the most of technology
Tech is making a huge impact in the property sector, changing how properties are managed. Automation tools can be used to help investors deal with maintenance queries and make transactions faster and more secure. It can even help identify potential issues that could arise in the future, so property owners can stay ahead.
There’s a great opportunity for investors to use technology such as AI (Artificial Intelligence), to streamline their buy-to-let management and reduce operational costs in the future with data-driven decision-making.
Think co-living instead of single-let
With the rising costs of single-let properties, there’s a great opportunity for HMO (Houses of Multiple Occupation) rentals to balance the market and affordability for tenants. HMOs are becoming an attractive option for tenants who are looking for central locations without paying high rent costs.
If you’re considering diversifying your investment portfolio in 2025, thinking outside the standard residential property could be the solution, particularly in areas where the market is more competitive. Think of the target demographic for these properties, which tend to be young professionals and students, to provide them with amenities and features that will appeal, such as high-speed internet and communal living spaces.
The property market may have appeared volatile over the past few years, but it’s still a profitable area for investors if you know how to make the right choices. The key to success in 2025 will be in preparation and research, paying attention to legislative changes, keeping operational costs down, and adapting your strategy as the property market shifts.
