2025 | Challenges and Opportunities Under the Tree

2025 – a truly intense year!

It has been a challenging year for London and, to a different extent, for Milan, which continues to attract international investors, partly thanks to the Italian flat tax. Two very different cities, two markets with unique dynamics: while London can move more quickly and with greater liquidity, Milan still requires time and precision to identify opportunities purchased at the right price (especially in the current market). The fact remains that, everywhere in the world, the growth of our property value starts at the very moment of selection, through a careful and critical assessment.

London always turning and evolving

Nothing stands still, especially in a global city like London, the heart of an innovative and international UK, which continues to face internal challenges while maintaining its status as a solid and transparent property market. Among the ongoing urban redevelopment projects, Earl’s Court stands out as one of the most significant, finally moving forward after years of stagnation thanks to approval by the Hammersmith & Fulham and Kensington & Chelsea councils.

With an estimated investment of around £10 billion, the project will transform the former Earl’s Court Exhibition Centre into a new sustainable urban district of 44 acres, featuring approximately 4,000 homes, office spaces dedicated to innovation and technology, large green areas, and cultural and commercial amenities. Led by the Earls Court Development Company in partnership with Delancey, APG, and Transport for London, the project focuses on zero-emission infrastructure and a new urban identity for West London. Preliminary works are expected to start in 2026, with first deliveries around 2030 and gradual completion in the early 2040s, potentially boosting long-term attractiveness and property values in the area.

My Dear Tenant

Meanwhile, the Renters’ Rights Bill is taking action, redefining the landlord-tenant relationship. From 1st May 2026, tenants in the UK will enjoy stronger protections. The abolition of Section 21, which allowed eviction without specific reason, marks a historic step. Contracts will become periodic, rent increases will be limited to once a year, with the possibility to legally challenge unfair hikes. Silent auctions and offers above the advertised price will be banned, making the rental market more balanced and transparent.

Landlords will need to invest more, meet higher quality standards, and manage more complex contracts. Some small landlords may exit the market, further reducing supply. On the other hand, more structured and organised operators see opportunities in a more stable environment with lower turnover.

Prices slowing and cautious confidence

According to Rightmove, in November the average asking prices in the UK fell by 1.8% month-on-month, and in London by 2.4%. The ONS reports an annual decrease of 1.8%. Forecasts indicate further slowdown in the short term, in a context of still limited confidence. Housing supply is at its highest level in nine years, though many properties have undergone price reductions, strengthening buyers’ negotiating power.

Financial and tax planning

During the year, potential tax changes regarding stamp duty, capital gains, and high-value properties led many buyers to postpone decisions until after the 26th November Budget. The recent Bank of England base rate cut to 3.75% has slightly eased credit pressure, making leverage more attractive for medium- to long-term investors.

The Autumn Budget strengthens public revenues while maintaining regulatory stability, allowing for more informed planning. The message is clear: costs are rising, but the market fundamentals remain solid. From 6th April, 2027, new property income tax rates (+2 percentage points) will come into effect, while in 2026 the dividend tax will also increase, impacting investors operating through companies. Strategic financial and tax planning is essential.

From 2028, the High-Value Council Tax Surcharge will be applied to properties over £2 million, primarily affecting prime and super-prime segments, while its impact on regional buy-to-let investors will remain limited.

Rental demand remains strong

Despite higher fiscal pressure, the rental market continues to benefit from structural supply shortages. Demand remains high, particularly in regional cities, where more accessible entry prices, strong employment, and low vacancy risk keep cash-flow-oriented buy-to-let investments attractive.

Looking ahead

From 2026 onward, the UK rental market will become increasingly regulated and transparent. Tools such as the Landlord Ombudsman and the new national database will raise standards and tenant protection, ensuring a well-functioning market. Emerging areas in London will continue to grow, while central districts will consolidate their appeal.

At the same time, the Italian property market shows growing interest, particularly in cities such as Milan and Rome, attractive to international investors thanks to the flat tax and opportunities in both residential and commercial segments.

Those who innovate, invest in asset quality, and adapt with a clear vision will find concrete opportunities both in the UK and Italy, even in complex and constantly evolving contexts.

Merry Christmas to you and your dearest loved ones and Happy New Year!