London rents still increasing amid uncertainty

As London based landlords show uncertainty relating to the up coming legislative changes soon to shake up the PRS, prime London location rents are still creeping higher, according to the Knight Frank Lettings Index.

The average rent in central London climbed by 0.7% this year to February. There was also a 1% increase seen in the prime areas of Greater London, or POL, Prime outer London. There were far greater increases 3yrs ago where we saw growth in these same areas of 20%. But with the Renters Rights Bill looming, with landlords scared by potential harder evictions of poor tenants, and all reforms in the tenants favour, along with rising mortgage rates, we are seeing hesitation in the market. New listings in prime central and outer London was 12% higher than 3yrs ago, but 5% lower than the same time in 2024, this slowdown in supply will have an impact on rents where we are still seeing small increases continuing.

The rental demand is 1% higher than the same time in 2024 from new prospective tenants, and corporate demand from companies wanting rental properties is also higher than 2024, with relocations to London coming from numerous sectors, including energy, finance and legal.

Stock levels are dwindling though, especially in the lower value properties, and tenants will feel the impact of this from the rising rents.