TL;DR for busy London landlords & operators
• Supply up almost everywhere (>20% YoY), but London only ~5%—the capital remains tight (Slide 2 / p2).
• Demand has cooled from the frenzy yet stays above 2019; enquiries per listing are softer but still elevated (Slide 6 / p6).
• Buying vs renting: even with improved mortgage availability, London is least likely to flip to “buy is cheaper” under common stress tests (Slide 4 / p4).
• Rent growth is now lowest for four years for new lets; stronger in more affordable areas and lower rent bands (Slides 7 & 9 / pp7 & p9).
• Affordability is the hard ceiling: rents likely to under perform earnings in the near term (Slide 8 / p8).
• Yields still attractive, but the risk free premium is slim in London (~+0.6pp), raising the bar on operational performance (Slide 11 / p11).
• Policy watch: SDLT reform scenarios, EPC upgrades by 2030 and London’s heavy share of SDLT receipts could reshape capital flows (Slides 13–16 / pp13–16).
What’s happening to supply and demand in the London rental market?
• More homes to rent per agent across the UK (>20% YoY), but just ~5% in London—so the capital remains relatively supply constrained (Slide 2 / p2). Drivers: would be sellers becoming landlords, modest new acquisitions, and fewer tenants competing for the same unit.
• Demand has cooled from peak levels as net migration eases and FTBs re enter the sales market—but enquiries per listing are still above pre pandemic in London (Slide 6 / p6). Translation: normalising rather than weakening.
What this means for landlords: marketing and pricing power is more balanced. Presentation, EPC performance, and resident experience now decide absorption and voids, not just scarcity.
Is renting still cheaper than buying in London?
Stress tests on a typical 80% LTV purchase show that at 6.5% stress rates, more areas nationally look buy viable; at 8.5%, far fewer do—and London remains the least likely to flip under either assumption (Slide 4 / p4). For many renters here, renting remains the rational choice even as mortgage rates ease.
Where are rents still growing—and where are they not?
• New let rental inflation is at a four year low across major cities (Slide 7 / p7).
• Growth is inversely correlated with local rent levels: by July 2025, areas with average rents <£1,000 pcm saw ~4.4–4.5% annual growth; at >£2,250 pcm it was ~1.0% (Slide 9 / p9).
London implication: outer London and value priced stock (think Zones 3–6 and commuter edges) should out perform headline city averages in 2026; top end segments will need keen pricing or service/ESG differentiation to avoid softness.
The affordability ceiling: why “price to value” is back
ONS based analysis shows big city affordability is stretched; renters respond by sharing more or accepting less space per person. Zoopla expect rents to track earnings over the long run, but under perform in the near term as affordability bites (Slide 8 / p8).
For asset plans, assume lower nominal rent growth, and focus on reducing total cost of occupation: energy efficiency, repair speed, fair renewals, and transparent fees.
Yields, finance and returns: good—but less forgiving
• Gross rental income run rate managed by agents is up ~37% in five years and ~19% in three, with 4–5% pa expected even if unit volumes grow slowly (Slide 10 / p10).
• Gross yields look fine, yet the premium over gilts is thin in London (~+0.6pp) vs UK (~+1.3pp)—so voids, capex overruns and service failures hit harder (Slide 11 / p11).
• New BTL purchase lending is growing from a low base; the stock of BTL loans hovers around ~2m, signalling a gradual reset rather than a surge (Slide 12 / p12).
Policy watch for London portfolios
• EPC to 2030: big improvement since 2008, but upgrading remaining E/F/G stock is the next capex test—plan multi year, void aligned retrofits (Slide 13 / p13).
• Budget 2025 scenarios: replacing SDLT with an annual property tax could boost sales liquidity; 5–10% pricing impact above £500k is plausible; CGT on main residence gains >£1.5m and possible NI on landlords are on watch (Slide 14 / p14). London + South East deliver >60% of SDLT receipts—we’re most exposed to any reform (Slides 15–16 / pp15–16).
Actionable strategies (by asset type)
Single let & small blocks (BTL)
• Price to value in the £1,000–£1,500 pcm band where growth headroom remains (Slide 9 / p9).
• Build a 5 year EPC roadmap with payback/IRR by measure; sequence works around natural voids (Slide 13 / p13).
• Use rate dips to refinance prudently; model cashflows at conservative reversion rates (Slides 4 & 12 / pp4 & 12).
Build to Rent (multifamily)
• Tilt product towards “mass market plus”: durable specs, energy light ops, resident experience that reduces total occupation costs. Upper end corporate demand is more price sensitive as FTBs return (Slides 5 & 14 / pp5 & 14).
• Explore SFR (single family rental) formats in Zones 3–6 where family demand is deep and churn is lower (Slide 14 / p14).
PBSA
• Win on affordability + service: well specified, sensibly priced studios/ensuites can capture demand that would otherwise spill into PRS; invest in digital CX and maintenance SLAs to lift retention in a lower growth cycle (Slides 7–9 / pp7–9).
FAQs
Are London rents still rising?
For new lets, growth is the weakest in four years city wide, with stronger growth in more affordable sub markets and lower rent bands (Slides 7 & 9).
Is it cheaper to buy than rent in London now?
Usually not. Under common 6.5–8.5% stress tests at 80% LTV, London is least likely to flip to “buy is cheaper” (Slide 4).
Will affordability cap London rent rises in 2026?
Yes—affordability is the main headwind and rents are set to under perform earnings in the near term (Slide 8).
Where are the best opportunities for yield?
Value bands (<£1,500 pcm) and outer London/SFR strategies look more resilient; top end segments need sharper positioning (Slides 9, 11 & 14).
What policy shifts should I plan for?
Possible SDLT reform, EPC upgrades by 2030, and London’s outsized share of SDLT mean capital flows and pricing could re price (Slides 13–16).
Why base (and why now)
We’re a full service London lettings and property management team that blends data, proptech and proper service - born in Shoreditch, co founded by Kristjan (“The Viking”) Byfield and An “Big Red” Deckers. We’re proudly transparent, fair and inclusive - and we manage homes like people live in them (because they do).
Services for London landlords & operators
• Rent & pricing strategy powered by Zoopla LAB insights
• Full stack property management (void control, repairs, renewals)
• EPC retrofit planning with ROI modelling
• Lease up and BTR/PBSA operations (CX, amenity programming, digital workflows)
• Portfolio dashboards and data rooms for lenders/investors
