October 2026 London Rental Market Review - HomeLet Rental Index insights and what we're experiencing across Shoreditch, the City Fringe and East London By Kristjan Byfield, co-founder of base property specialists
There are certain things you come to rely on after 22 years working in London's lettings market. August and September will be busy, October will mark the beginning of the slowdown, and by the middle of December most people will have rather more pressing things on their minds than finding a new home. It's a seasonal pattern that has shaped how letting agents market properties, how landlords plan for vacancies and how tenants organise their moves for as long as I can remember.
This year, however, we're seeing the first real signs that the Renters' Rights Act is beginning to interfere with that familiar rhythm, and not necessarily in the ways many people anticipated.
At base, we're currently carrying more available rental properties than we ever have at this point in the year. Ordinarily, that might suggest a market struggling to absorb stock, particularly as we head towards the quieter winter months. But that isn't what we're experiencing. Demand remains subdued but active, with typically five to ten enquiries per listing rather than the twenty or thirty-plus we became accustomed to during more frantic periods. Importantly, those enquiries are generally coming from serious applicants, and properties are still letting. The unusual volume of available homes is being driven primarily by a wave of notices from existing residents, including some circumstances that reveal how dramatically the new tenancy framework is changing the behaviour of London's renters.
Against that backdrop, HomeLet's October 2026 Rental Index reports that average London rents have slipped slightly from September's record high, annual rental growth has slowed to 1.9%, and affordability has deteriorated despite the moderation in rental inflation. Those are interesting figures in their own right, but the bigger story is what sits behind them. London's private rented sector is moving into a new phase, and understanding the operational changes taking place could prove considerably more valuable to landlords than simply knowing whether the average rent has risen or fallen by a few pounds.
London's rental growth is returning to normal, but that doesn't mean the market is weakening
The October HomeLet Rental Index, produced in conjunction with Dataloft by PriceHubble, places the average monthly London rent at £2,260, down 0.5% from September's £2,272. Annual growth has slowed to 1.9%, compared with 3.3% in September and 5.1% in August. Nationally, average rents have also eased, falling 0.9% month-on-month to £1,375, although they remain 2.2% higher than a year ago. Excluding London, the UK average stands at £1,164, representing annual growth of 2.3%.
For anyone accustomed to the extraordinary rental inflation of recent years, those numbers might appear disappointing. Personally, I find them rather reassuring. We've argued for some time that London's rental market was likely to settle back towards its historical pattern of more moderate annual increases, typically around 3%, once the exceptional pressures of the post-pandemic period and the adjustments surrounding the Renters' Rights Act had worked their way through the system.
Throughout much of 2026, we were particularly cautious about the rental growth being reported because a proportion of it reflected landlords resetting long-standing, below-market tenancies ahead of legislative change. In some cases, residents agreed revised rents to remain in their homes. In others, landlords recovered possession and relet at prevailing market levels. Those increases were genuine, but they weren't necessarily evidence of fresh upward pressure on comparable properties across the wider market. As that process has largely concluded, the figures should increasingly reflect underlying conditions rather than the correction of historical underpricing, although changes in the mix of newly agreed tenancies will always influence any rental index.
Our expectation remains that London will settle into a period of more sustainable rental growth, broadly around 2-3% annually, with considerable variation between locations and property types. That's a forecast based on our experience rather than a guarantee, and affordability remains the obvious constraint. London is still an exceptionally desirable place to live, but even the strongest demand eventually encounters the reality of what households can afford.
For landlords, a market delivering modest, consistent rental increases alongside strong occupancy and reliable residents can be considerably more attractive than one experiencing dramatic rent inflation accompanied by rising voids, greater financial stress and unpredictable tenant behaviour. Successful property investment is ultimately about sustainable net returns, not simply achieving the highest possible headline rent.
Hackney and Tower Hamlets: why borough averages can be dangerously misleading
One of the most striking aspects of October's report is the enormous variation in rental performance across London. HomeLet records annual growth of 8.3% in Ealing, 8.1% in Wandsworth and 6.4% across Hackney and Newham. Camden and the City of London have increased by 5.5%, while Tower Hamlets has recorded a 6% decline. That represents a difference of more than twelve percentage points between neighbouring East London markets, which is quite extraordinary when you consider how closely connected their rental populations can be.
Our own experience across Shoreditch, Hackney, Whitechapel, Aldgate and the City Fringe paints a more nuanced picture. Hackney continues to perform exceptionally well, with our properties achieving some of the highest rents we've ever recorded. That shouldn't come as much of a surprise. Hackney combines excellent housing and transport connections with the things that make a neighbourhood genuinely enjoyable to live in: parks, independent retailers, restaurants, cultural venues and a strong sense of community. These are not superficial considerations. For many Londoners, they're precisely why they choose to live in a particular area and why they're prepared to pay a premium to remain there.
HomeLet's longer-term figures reinforce Hackney's appeal, with average rents across Hackney and Newham increasing by 49.7% over five years, the strongest performance recorded in the capital. That is remarkable growth, although investors should be careful not to assume the next five years will deliver anything comparable. Affordability has already become a significant constraint, and past performance tells us relatively little about the sustainability of future increases.
Tower Hamlets, meanwhile, is a good example of why landlords should be wary of treating a borough as a single rental market. Despite HomeLet's reported decline, our properties in E1 and the City Fringe continue to attract healthy interest, with rents holding firm and moderate increases still being achieved. My suspicion is that the borough-wide figures are being influenced by weaker performance in certain areas, particularly segments of the high-end apartment market where a concentration of similar properties creates greater competition. That's a plausible explanation rather than something the HomeLet data can establish conclusively, but it demonstrates the limitations of relying on an average without understanding the properties behind it.
A well-maintained period conversion in Whitechapel, a contemporary apartment near Aldgate East and a luxury flat in a large Canary Wharf development may all fall within Tower Hamlets, but they operate in quite different markets. Their appeal, competition, resident demographics and achievable rents can vary enormously. Even within the same development, presentation, condition, layout and the quality of management can influence the outcome.
This is where I believe local expertise becomes commercially invaluable. A landlord looking at a 6% borough-wide decline might reasonably worry that their investment is losing ground, while another might see Hackney's growth and assume they can simply apply the same increase to their own property. Neither conclusion is necessarily justified. The only meaningful valuation is one that considers the specific home, its immediate competition, current applicant behaviour and the quality of the accommodation being offered.
Affordability is becoming the defining constraint on London's rental market
Perhaps the most concerning figure in October's report is that London households entering new tenancies are now spending an average of 38.9% of their gross income on rent, compared with 37.8% in October 2025. Nationally, the equivalent figure is 32.7%. These figures deserve attention because they illustrate just how much of a household's financial capacity is being absorbed by housing before tax, National Insurance and the everyday costs of living are even considered.
It's worth remembering that HomeLet's affordability figures relate to households entering new tenancies rather than every existing renter. Changes in the incomes and circumstances of those moving can therefore influence the result, but the broader pressure is difficult to ignore. Within our own portfolio, we generally deal with residents whose incomes are above the London median, so affordability is often more comfortable than the capital-wide figure suggests. Nevertheless, we're increasingly seeing the consequences of financial pressure at the more affordable end of the market, and I think this is an area policymakers should be watching very carefully.
One of the less welcome developments is the growing competition for lower-priced rental homes from households who might historically have occupied more expensive properties. Faced with rising living costs, moderate-income applicants are understandably looking to reduce their monthly commitments. The difficulty is that when those households begin competing for homes traditionally occupied by lower-income residents, they increase demand in precisely the segment where affordability is already most stretched. Applicants with stronger incomes and more comfortable referencing profiles can become formidable competition for people with fewer financial options.
This is a consequence we warned about during the development of the Renters' Rights Act. Greater security and stronger protections for residents are reasonable objectives, but legislation cannot remove the underlying economics of supply and demand. Where regulatory changes increase the perceived financial risk of letting property, landlords may also become more cautious about the applications they accept. That can make accessing housing more difficult for people whose circumstances are less straightforward, even when they would make perfectly good residents.
None of this should be taken as an argument for unfair or discriminatory tenant selection. Quite the opposite. It reinforces the importance of consistent, evidence-based assessment, appropriate financial safeguards and an understanding that the interests of landlords and residents are closely connected. A rental market that becomes increasingly inaccessible to ordinary working households is not a healthy market, however impressive its headline rents may appear.
For landlords, the commercial implication is relatively simple. We've reached a point where significant parts of London's rental market appear to be approaching their affordability ceiling. That doesn't mean rents cannot rise further, particularly for exceptional homes in desirable locations, but it does mean the days of assuming every property can command another substantial increase are probably behind us for now. Presentation, service and value for money are becoming increasingly important differentiators, and landlords who ignore that are likely to discover that an ambitious asking rent is of little use if suitable applicants simply cannot justify paying it.
The Renters' Rights Act is changing tenant behaviour in ways few people anticipated
If the rental figures suggest a market returning to normal, the behaviour of residents tells a rather different story. October has brought an unusually high number of notices across our portfolio, leaving us with more properties available at this time of year than we've ever previously experienced. This isn't being driven by a sudden deterioration in demand or a wave of dissatisfied residents. Instead, we're beginning to see the practical consequences of periodic tenancies, and some of them are proving rather more disruptive than the policy discussions might have suggested.
Historically, the London lettings market followed a fairly predictable annual cycle. Activity would build through spring, accelerate into summer, peak around August and September and then begin to slow from mid-October. By the middle of December, most people would be concentrating on Christmas rather than arranging viewings and removals. This pattern shaped everything from marketing schedules to landlord expectations around void periods, and after 22 years in the business we'd become rather good at anticipating it.
This year, however, the traditional summer rush shifted earlier. July and August were exceptionally busy for us, while September was comparatively quiet because so much of our available stock had already been let. We also saw applicants begin searching significantly earlier than they historically would have done, typically two to three months before their intended move rather than four to six weeks. That behaviour now appears firmly established, requiring properties to be marketed earlier to reach applicants who are planning further ahead.
The more surprising development is what we're seeing now. The volume of October notices suggests we could experience one of our busiest ever periods between mid-October and mid-November, precisely when the market would traditionally be winding down. Whether that activity will continue into December remains uncertain, but the implications for landlords are significant. A property becoming available unexpectedly in late November or December faces a different market from one coming to market in August, and the financial consequences of getting the pricing or marketing strategy wrong can be substantial.
One particularly interesting issue involves shared homes, where the shift to periodic tenancies is changing the balance of responsibility between housemates. Under the previous fixed-term model, residents sharing a property were generally committed to the tenancy for its duration, subject to any break clause or agreed release. If one person wanted to leave, they often had a strong incentive to help find a suitable replacement because their contractual obligations would otherwise continue.
With periodic joint tenancies, the legal position can be very different. Subject to the applicable notice requirements, a valid notice from one joint tenant can bring the joint tenancy to an end for everyone, even where the other residents would prefer to remain. The practical consequence is that one person's decision to move can create considerable uncertainty for an entire household.
We're already seeing examples of this. One resident decides to leave, but the remaining housemates either cannot find a suitable replacement or simply don't have the time to organise the process. These are busy professionals who weren't planning to move or change their household arrangements, and suddenly they're faced with advertising for a new housemate, arranging viewings, meeting applicants and trying to agree a solution within a limited timeframe. In some cases, the household ends up vacating altogether.
It's an interesting example of how legislation intended to give residents greater flexibility can also create unexpected insecurity for those sharing a home. That doesn't necessarily make the principle of periodic tenancies wrong, but it does highlight the need to consider how individual rights interact with collective tenancy arrangements. I suspect landlords, agents and residents will spend the next few years learning how best to manage these situations, particularly as the practical and legal implications become clearer.
For landlords with properties let to professional sharers, this deserves particular attention. An unexpected notice may now arise from circumstances entirely unrelated to the property's condition, the rent being charged or the quality of management. Understanding the legal position, maintaining good communication with every resident and having robust procedures for dealing with changes in household composition will become increasingly important.
The landlord market is changing too, and compliance is driving much of it
While the behaviour of tenants is attracting considerable attention, I think the transformation taking place amongst landlords could ultimately prove even more significant. We're continuing to see growing numbers of owners approaching base for professional property management, and the nature of those enquiries has changed considerably over the past couple of years.
Historically, landlords choosing an agent often focused heavily on how quickly a property could be let and what rent might be achieved. Those questions still matter, of course, but they're increasingly accompanied, and sometimes overshadowed, by concerns about compliance, regulatory knowledge, maintenance systems, communication and the ability of an agency to protect the owner from avoidable financial and legal risks.
We're meeting landlords who have self-managed successfully for years but now recognise that the technical demands of residential property management have moved beyond their available time or expertise. Some have made that decision after researching the growing list of obligations themselves, while others have had a rather uncomfortable awakening following a compliance review. We're also seeing landlords move away from existing managing agents after discovering significant gaps in their compliance arrangements or becoming dissatisfied with the standard of service being delivered.
That last point is particularly important. Engaging a professional agent doesn't automatically mean a landlord is receiving professional management. The quality of systems, staff training, record-keeping and operational oversight varies enormously across the industry, and landlords should be asking much more detailed questions about how their properties are being managed.
At base, we've long believed that excellent people, robust processes and intelligently selected technology need to work together. None of those elements is sufficient in isolation. Technology without capable staff can create as many problems as it solves, while excellent people working with inadequate systems will eventually struggle to deliver consistent service as regulatory requirements and administrative workloads increase.
This matters because compliance isn't a one-off exercise completed when a tenancy begins. It's an ongoing responsibility involving property standards, safety requirements, documentation, communication, maintenance and the ability to demonstrate that appropriate action has been taken when required. As further reforms are introduced and existing obligations become better understood and enforced, landlords will need increasingly reliable systems and records.
For those willing to invest the necessary time, training and resources, self-management will remain a viable option. There are some exceptionally knowledgeable private landlords operating in London, and I have enormous respect for those who take their responsibilities seriously. But for the traditional hobby landlord, someone managing one or two properties informally alongside an unrelated career, the economics and risks are becoming much harder to justify.
I suspect we'll see more of these owners either engaging specialist management companies or choosing to exit the sector altogether. At the same time, professional portfolio landlords and institutional investors are likely to continue expanding where the investment fundamentals make sense. The divide between the accidental landlord, often letting a former home because of changing personal circumstances, and the professional investor operating a structured property business appears to be widening.
We may also see similar consolidation amongst letting agents. Businesses that have underinvested in technology, training and compliance infrastructure could find the cost of operating sustainably increasingly difficult to absorb. In a more demanding regulatory environment, the ability to maintain detailed records, respond promptly, manage risk and deliver consistent service becomes essential rather than optional.
For landlords, that raises an important question about the long-term resilience of the company managing their investment. Choosing the cheapest agent may look attractive when comparing fees, but the calculation changes considerably if those savings are achieved through inadequate staffing, outdated processes or weak compliance systems. The right management partner should contribute positively to the property's financial performance while protecting the owner and providing an excellent experience for the resident.
What does this mean for London buy-to-let investors?
For investors, October's figures reinforce the importance of looking beyond headline rental growth and focusing on the fundamentals of individual assets. London remains an exceptionally desirable place to live, and the long-term demand for well-located residential accommodation is unlikely to disappear. However, the ability to generate strong returns will increasingly depend on acquisition decisions, financing, property condition, operating costs, resident retention and the quality of ongoing management.
The contrast between Hackney and Tower Hamlets is a useful illustration. A landlord considering an acquisition in either borough should be far more interested in the performance of comparable properties within the immediate neighbourhood than the average annual change across the entire borough. The type of accommodation, target resident demographic, local competition and likely maintenance costs can all materially affect the investment case.
Void periods also deserve greater attention, particularly as the traditional seasonal pattern becomes less predictable. Consider a property marketed at £2,500 per month. Holding out for an additional £100 per month might sound attractive, generating £1,200 in additional annual income. But if achieving that higher rent results in an extra three-week void, the lost income is approximately £1,750. It would take around seventeen and a half months of receiving the additional £100 to recover that loss, before accounting for any other costs associated with the vacancy.
That doesn't mean landlords should automatically accept lower rents. It means pricing needs to be considered as part of a wider commercial strategy, taking into account the owner's financial circumstances, the strength of demand, the property's competitive position and the potential cost of waiting.
For those considering larger acquisitions, the continuing professionalisation and potential consolidation of the sector may create opportunities. Some landlords will decide that the increasing complexity of management no longer fits their circumstances, while others may seek to restructure or dispose of portfolios. Investors with access to capital, strong operational support and a disciplined approach to due diligence could find opportunities in that transition, although the compliance position and long-term sustainability of rental income will be critical.
Ultimately, the next phase of London's buy-to-let market is likely to reward investors who approach residential property as a serious business rather than a passive investment that can largely be left to look after itself.
Winter 2026 and beyond: a calmer rental market, but a more complicated one
Looking ahead, I still expect London to experience its traditional Christmas slowdown. There are some things even major legislative reform is unlikely to change. People take holidays, spend time with family and generally prefer not to organise a house move during the darkest, coldest and most financially demanding weeks of the year. I'd therefore be surprised if we didn't see activity become particularly subdued from mid-December through to mid-January.
What could be different is the period immediately before that. Based on the notices we've already received, I suspect we may experience one of our busiest mid-October to mid-November periods in 22 years. That would represent a meaningful departure from the traditional seasonal pattern, and one we'll be monitoring closely as we work through the first winter under the new tenancy framework.
The bigger question is whether these changes represent temporary adjustments or the beginning of a more fundamental shift in how London's residents plan their moves. Will periodic tenancies ultimately smooth out the seasonal peaks and troughs we've become accustomed to, or will the traditional summer rush remain dominant because of employment patterns, academic calendars and the simple preference for moving during warmer months? We don't yet have enough evidence to answer that confidently, but the next few months should provide some valuable clues.
My expectation for 2027 is a comparatively calmer rental market, with moderate annual increases rather than the extraordinary growth experienced during parts of the past five years. Some neighbourhoods and property types will continue to outperform, particularly where location, condition and quality of management combine to create a compelling proposition. Others may face greater pricing pressure as affordability constraints become more pronounced.
I also expect the professionalisation of the private rented sector to accelerate. As further regulation is introduced and existing requirements become better understood and enforced, landlords will increasingly need specialist knowledge, robust systems and reliable operational support. Technology and AI will play an important role, but they won't replace the need for experienced people making sound decisions. If anything, the increasing complexity of the sector makes genuine expertise more valuable.
Which brings us back to October's HomeLet figures. London's average rent has fallen slightly, annual growth has slowed and affordability remains under considerable pressure. Yet beneath those headlines, we're witnessing changes that could have a much more lasting impact on the market. Tenants are behaving differently, shared households are facing new challenges, seasonal patterns are shifting and landlords are reassessing the risks and responsibilities of owning rental property.
For anyone serious about investing in London's private rented sector, those developments deserve far more attention than whether the average monthly rent has moved by £12.
After 22 years in the business, I'm still enormously positive about London's residential rental market. This is one of the world's great cities, with an extraordinary concentration of employment, education, culture and opportunity. People will continue to need homes here, and private landlords will continue to play an essential role in providing them. But the sector is becoming more technical, more demanding and less forgiving of poor decisions.
The greatest risk facing London landlords over the next few years may not be falling rents or reduced demand. It may be continuing to operate as though nothing has changed.
About Kristjan Byfield and base property specialists
Kristjan Byfield is the co-founder of base property specialists, an independent London lettings and property management agency established in 2004 and based in Shoreditch. With 22 years of experience operating across London's private rented sector, base specialises in residential lettings, compliance and full-service property management, with particular expertise across Shoreditch, Hackney, Tower Hamlets, the City Fringe and East London.
Kristjan is also a founding member of Zoopla's Lettings Advisory Board, on which he has served since September 2021, and contributes regular market commentary to the HomeLet Rental Index.
Is your London rental property being managed for the market we have now, or the one we had five years ago?
The rules of renting have changed, and the consequences of getting property management wrong are becoming increasingly significant. At base property specialists, we combine detailed London market intelligence with comprehensive lettings, regulatory compliance and property management services, helping landlords protect their assets, maximise sustainable returns and deliver an excellent experience for their residents.
Whether you own a former home, manage an established buy-to-let portfolio or are considering your next London investment, we'd welcome the opportunity to discuss how your property is performing and whether your current management arrangements are delivering the protection, expertise and service you should expect.
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Data source: HomeLet Rental Index, October 2026, produced in conjunction with Dataloft by PriceHubble. Rental figures are based on achieved rents for newly agreed tenancies. Operational observations, market interpretations and forward-looking predictions are those of Kristjan Byfield and base property specialists.
