(Commonwealth)_ The UK property market is a dynamic and evolving environment, with investors being optimistic and adopting new strategies to stay profitable against ongoing adversity. The future for 2025 remains overall positive, says Handelsbanken’s 2025 Property Investor Report. Most of the investors surveyed (54%) plan to expand their portfolios throughout 2025, a sign of confidence in the long-term prospects of the sector. In addition, 80% of investors anticipate their current holdings to appreciate in value in the next year.
A major trend influencing investment choices is the geographical and sectoral spread of property assets. With some areas of the North of England outperforming the national average for growth in house prices, investors are now focusing on areas with more potential for capital growth. Handelsbanken research indicates that 73% of investors who plan to expand will diversify geographically, and 75% will diversify by property sector. Such tactical adjustment is indicative of a more adaptable and forward-thinking approach, whereby investors wish to diversify risk and maximize possible returns within a varied and competitive market.
Besides location and sector diversification, sustainability is now a general worry for property investors. Increasingly, investors are choosing to invest in green and energy-efficient buildings due to market pressure and upcoming regulatory changes. Investors now view green amenities like solar panels, heat pumps, and energy-efficient appliances as an added value that enhances the attractiveness of property. Investors believe tenants will be seeking environmentally friendly housing and even willing to pay a premium for such amenities. This alignment of tenant and investor interests has possibilities for higher yields and value growth in the long term.
Regulatory momentum is also further reinforcing a move toward sustainable property investment. Proposed regulatory moves, such as the requirement to achieve a minimum Energy Performance Certificate (EPC) rating of C for rental stock in the UK by 2030, are influencing investor sentiment. The majority of property owners perceive these reforms as a benefit and not an expense, recognizing that increased efficiency standards can translate into higher rents and long-term cost reductions. While 36% of investors are positive about the upcoming EPC regulations, more than half do not anticipate a material impact on their business.
Professionalization among property investors is also on the rise. There has been a sharp rise in the number of investors who keep their properties in limited companies, rather than as individuals, primarily because of advancements in the tax framework. This is a trend that is part of a general movement toward greater sophistication in portfolio management and strategic decision-making among landlords.
Not all investors are likely to expand their holdings despite the overall encouraging prognosis. Around 24% of the respondents intend to reduce their portfolios in 2025, and this shows that, despite the high confidence level, there is still caution. The number of people intending high-value growth has also dropped from 31% last year to 14% this year. This is a sign that investors are hopeful but practical when it comes to market volatility and the impact of external economic factors.
The UK property market remains promising for growth, but the path forward will require adaptability and prudence. Investors are responding to the conditions of today by embracing diversification, where sustainability comes first, and a longer-term focus. These changing strategies are positioning them well within evolving economic contexts and regulatory frameworks. With a strong appetite for growth and a particular focus on future-proofing their investments, UK property investors are showing themselves to be resilient and flexible. The emphasis on innovation and sustainability combined with prudent financial planning means that the industry is well-placed to thrive even in turbulent times.
