London Rents jump up to 10%
Overview: London Rental Prices Surge Amid Persistent Demand and Supply Imbalance
London’s rental market has experienced a substantial 10% year-on-year increase, with landlords actively adapting to maintain competitiveness.
Despite inflationary pressures and shifting tenant preferences, the capital’s rental sector remains resilient.
This sustained upward trend is driven by rising demand, limited supply, and evolving rental strategies by landlords seeking to retain long-term tenants while achieving strong yields.
Rental Growth Trends by London Boroughs
We observe significant regional variations in rent increases across London. Inner boroughs such as Camden, Islington, and Westminster have seen the most aggressive growth due to a resurgence in post-pandemic city living.
Meanwhile, outer zones like Croydon and Barking & Dagenham remain hotspots for affordability-driven migration.
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Why London Rents Are Rising: Key Market Drivers
Chronic Undersupply of Rental Properties
The UK government’s failure to meet annual housing targets, combined with landlords exiting the market due to increased regulation, has led to an acute shortage in rental stock.
This mismatch between supply and demand continues to fuel upward pressure on rents.
Rising Mortgage Costs Passed to Renters
Landlords facing higher interest rates are adjusting rental prices to preserve profit margins. Buy-to-let mortgage rates have doubled since 2022, compelling many to increase monthly rent to break even or remain profitable.
Shift to Higher Quality Rental Units
Tenants are now prioritising energy-efficient homes, proximity to hybrid work hubs, and furnished accommodation. Landlords investing in modernisation and EPC upgrades are commanding premium rental rates.
How Landlords Are Staying Competitive in a High-Rent Environment
Strategic Rent Pricing
We note that successful landlords are adopting a value-driven pricing model.
Rather than setting the maximum market rent, they’re slightly undercutting local averages to secure long-term, stable tenants. This strategy helps minimise void periods and tenant turnover.
Flexible Lease Terms
Shorter tenancy agreements and built-in break clauses are increasingly used to attract mobile professionals and international tenants seeking flexibility in uncertain times.
Investment in Amenities and Sustainability
Landlords retrofitting properties with smart meters, efficient heating, and double glazing are seeing stronger tenant demand. Properties with EPC ratings of C or higher are not only more lettable but also benefit from potential green incentives.
The Tenant Perspective: Coping with Higher Rents
While rental growth benefits landlords, tenants are adjusting their expectations. Many are relocating to Zone 3 and beyond, co-living in larger spaces, or negotiating inclusive bill packages to offset rising costs.
Regulatory and Policy Considerations
Renters Reform Bill Implications
The anticipated abolition of Section 21 ‘no-fault’ evictions is pushing landlords to review their tenant vetting processes and tenancy structures. Proactive compliance is now a competitive differentiator.
EPC Requirements 2025
Properties that fail to meet new EPC standards risk becoming unrentable. Landlords acting early to upgrade insulation, boilers, and lighting are ahead of legislative timelines and reaping higher yields.
Expert Tips for Landlords to Maximise Rental Returns
- Benchmark Rent Quarterly: Use data from Rightmove, Zoopla, and the ONS to track shifts in local pricing.
- Invest in Energy Efficiency: Properties with EPC ratings A–C rent faster and at higher rates.
- Offer Furnished Units: Especially in urban areas, this appeals to international tenants and professionals.
- Professional Property Management: Agencies can streamline repairs, rent collection, and compliance, leading to better tenant satisfaction and retention.
FAQs
What is causing rents in London to rise so rapidly?
A mix of low housing supply, increased demand, rising landlord costs, and post-pandemic lifestyle shifts are the key factors.
Is it a good time to invest in London buy-to-let properties?
Yes, particularly in boroughs, seeing infrastructure development, high rental yields, and tenant demand for upgraded housing.
Are landlords legally allowed to increase rent in 2025?
Yes, but rent increases must comply with tenancy agreement terms and relevant legislation, such as Section 13 notices for periodic tenancies.
How can landlords avoid void periods in a competitive market?
By offering value-for-money rent, high-quality living standards, and responsive property management.
Useful Resources
The British Landlords Association is a national landlord association for UK landlords and one of the largest landlord associations in the UK. Join us now for £79.95!
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Disclaimer:
This post is for general use only and is not intended to offer legal, tax, or investment advice; it may be out of date, incorrect, or maybe a guest post. You are required to seek legal advice from a solicitor before acting on anything written hereinabove.
