By base property specialists
The latest HomeLet Rental Index for February 2026 paints a picture of stability in the UK rental market. Average rents are broadly flat month-to-month and modestly higher than a year ago, suggesting a sector that has cooled from the frenetic growth seen between 2021 and 2024.
But as always with London, the real story sits beneath the headline numbers.
Across East and Central London — particularly in our core markets across EC and E postcodes — we are seeing a market that is not weakening, but becoming noticeably more cautious.
The national picture: stability after years of rapid growth
The HomeLet Rental Index reports that average UK rents in February stood at £1,301 per month, a slight 0.1% monthly decline but still 2% higher than February 2025.
Outside London, rents increased marginally to £1,120 per month, up 1.8% year-on-year.
This confirms what many industry professionals expected for 2026:
the era of double-digit rental growth is behind us, replaced by a steadier and more mature market cycle.
Regionally, the strongest annual growth has been seen in:
• Northern Ireland: +7.8%
• North East: +4.6%
• Scotland: +4.6%
These markets are still playing catch-up after several years of under-supply.
London, however, operates under very different dynamics.
London rents are cooling — but still rising year-on-year
In Greater London, the average rent now stands at £2,067 per month, representing:
• −0.5% month-on-month
• +2.0% year-on-year
February marks the fourth consecutive monthly fall in London rents, indicating the market has cooled since the peak seen in autumn 2025.
However, this decline should not be interpreted as weakening demand. Instead, it reflects a combination of seasonal slowdown, affordability pressures, and a structural market adjustment ahead of regulatory change.
East London remains one of the strongest performing areas
Despite short-term cooling, East London continues to perform strongly over the long term.
Key annual changes across the capital include:
• Ealing: +8.8% (£2,318 pcm)
• Lewisham & Southwark: +6.3%
• Hounslow & Richmond: +6.3%
• Camden & City of London: +5.3%
• Hackney & Newham: +4.7%
• Tower Hamlets: +3.1%
These figures reinforce a long-standing trend: East and inner London boroughs remain some of the most resilient rental markets in the capital.
Transport connectivity, employment hubs, and lifestyle appeal continue to drive demand.
But the numbers alone don’t fully explain what is happening on the ground.
A “market reset” is influencing the data
One factor rarely discussed in headline analysis is the large number of long-term tenancies currently ending ahead of the Renters’ Rights Act implementation on 1 May 2026.
Across London we are seeing landlords serve Section 21 notices on older, sub-market rent tenancies in order to reset:
• rental values
• tenancy structures
• contractual terms
before the new legislation takes effect.
This creates an interesting statistical effect.
Technically, rents appear to be increasing — because older tenancies that were significantly below market levels are being replaced by new ones at current pricing.
But this is not always the result of organic market competition.
It is, in many cases, a structural reset of the rental baseline.
How the market behaves after 1 May 2026 will likely reveal the true equilibrium.
Tenant behaviour in London has clearly changed
Perhaps the most notable shift in early 2026 is not rental prices — but tenant behaviour.
Across many parts of London we are seeing:
• slower decision-making
• longer viewing cycles
• greater comparison shopping
• less urgency to secure a property immediately
Even high-quality listings are taking longer to convert from viewing to offer.
This does not mean demand has disappeared.
It means tenants feel they have more choice than they did 12–18 months ago, and they are using that leverage to take their time.
The “middle market squeeze”
One particularly interesting pattern emerging across East London is the pressure on what we call the “middle market”.
Properties at the very top of the market still attract well-qualified tenants.
At the other end, entry-level or competitively priced properties are snapped up quickly, driven by demand from tenants seeking affordability during the ongoing cost-of-living squeeze.
But in the £1,000–£1,500 per person monthly range, demand is noticeably more cautious.
Tenants in this segment are often professionals balancing:
• rising living costs
• economic uncertainty
• future mobility decisions
As a result, they are:
• slower to commit
• more likely to compare multiple options
• less willing to stretch their budgets.
Central London is regaining momentum
Interestingly, we are also seeing more centrally located properties letting faster again.
The appeal of being “in town” — closer to work, nightlife, transport and amenities — has regained importance as hybrid working patterns stabilise.
This trend benefits areas around EC1, EC2, Shoreditch and the City fringe, where lifestyle and connectivity combine to create consistently strong tenant appeal.
Affordability remains the defining constraint
According to the February Index, tenants across the UK now spend 32.4% of their income on rent, while London renters spend around 38.3%.
While affordability has improved slightly compared with last year, London remains one of the most expensive rental markets globally.
This is why tenants are behaving more cautiously.
The question tenants increasingly ask is not:
“Can I afford this rent today?”
it is:
“Will I feel financially comfortable paying this rent for the next two years?”
Risk management for landlords is becoming essential
Alongside tenant caution, landlords also face greater regulatory risk as the Renters’ Rights Act approaches.
This makes tenant quality and referencing more important than ever.
At Base, our current default advice to landlords is clear:
Wherever possible, landlords should secure a high-quality rent and legal expenses protection policy alongside thorough referencing.
As possession processes become slower and more complex under the new legislative framework, protecting rental income is becoming a core asset management strategy rather than an optional extra.
What to expect from the London rental market in 2026
Looking ahead, we expect several key trends to define the London PRS over the next 12 months:
1. A clearer market picture after May 2026
Once the Renters’ Rights Act takes effect, the impact of recent tenancy resets will become easier to analyse.
2. Continued demand in well-connected inner boroughs
Areas across East and Central London will likely remain among the most resilient rental markets.
3. Greater tenant selectivity
Choice in the market means tenants will continue to shop around.
4. Increasing professionalisation of the sector
Compliance, referencing and risk management will become central to successful property management.
The London market rewards expertise
The HomeLet data shows that London rents remain resilient, even as the market cools slightly after the autumn peak.
But numbers alone rarely tell the full story.
In reality, the London rental market of 2026 is defined by behavioural change as much as price movement.
Tenants are more cautious.
Landlords face more regulation.
And professional management has never mattered more.
For landlords navigating this evolving landscape, working with specialists who understand London’s micro-markets — particularly across EC and E postcodes — will be the difference between average performance and exceptional results.
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Thinking about your London rental strategy?
If you are a London landlord and want a clearer picture of how your property sits within today’s market — from pricing and tenant demand to regulatory risk — we would be happy to provide an honest, data-driven assessment.
