London’s rental market bucks the national trend
- New analysis from the UK’s largest property platform Rightmove reveals that rental demand in the capital is up 7% in September while Great Britain overall is 2% below last year
- Rental demand in London had been running around 7% below 2025 levels on average throughout 2026 until the end of August before moving into growth in September
- Rightmove’s Daily Demand Tracker shows that tenant demand in London has moved above 2025 levels since the first week of September and has remained ahead since
- Smaller rental homes (0-1 bedrooms) lead the charge with a +10% demand increase compared to last year
- The increase comes despite the number of available rental homes in London being 10% lower than at the same point last year
- The average advertised rent in London is currently £2,763pcm (+3.1% year-on-year), compared to the national average of £1,578pcm (+2.4% year-on-year)
- The North East is the only other area currently recording rental demand growth, up 1% compared with last year
New analysis from the UK’s largest property platform Rightmove reveals that demand from prospective tenants in London has risen above last year’s levels this month, bucking the wider national trend.
Rightmove’s Daily Demand Tracker shows that tenant demand in London moved above the equivalent 2025 level on 7th September and has remained ahead since. Rental demand is measured by the number of enquiries sent to letting agents by prospective tenants on Rightmove.
While rental demand in London is now 7% higher than at the same point last year, demand in the capital had averaged 7% below 2025 levels over the year to date, highlighting the scale of the recent turnaround. By contrast, rental demand across Great Britain overall remains 2% below last year’s levels.
London is now one of only two areas currently recording year-on-year rental demand growth. The North East is also seeing demand rise, while every other region remains below 2025 levels.
The increase comes despite a reduction in the number of homes available to rent in the capital compared to last year. While the number of available rental properties across Great Britain is 0.4% higher than at the same point last year, London’s rental stock is 10% lower.
London’s rental market also remains significantly more expensive than the national average. The average advertised rent in London is currently £2,763pcm (+3.1% year-on-year), compared to the national average of £1,578pcm (+2.4% year-on-year).
Much of the increase in demand is being driven by smaller rental homes. Demand for 0-1 bedroom rental properties in London is up 10% year-on-year, compared with a 4% increase nationally.
Despite being the fastest-growing part of the market, smaller rental homes in London remain significantly more expensive than elsewhere. The average advertised rent for a 0-1 bedroom property in London is currently £1,904 per month, compared with £1,150 nationally.
Demand for larger rental homes is also rising in the capital, though at a slower pace. Demand for two-bedroom properties is up 6% year-on-year, while demand for three-bedroom homes is up 2.5%. By contrast, demand for two-bedroom and three-bedroom rental homes nationally is down 4% and 6%.
Colleen Babcock, Rightmove’s property expert said: “One possible factor behind London’s recent rise in rental demand is that some would-be first-time buyers may be taking longer before committing to a purchase. Affordability remains a challenge for many aspiring homeowners in the capital, particularly when it comes to saving for a deposit and bridging the gap between house prices and earnings.
“Mortgage rates remain relatively high and close to some of the highest levels seen in recent years, while the gap between house prices and earnings in London continues to make home ownership a challenge for many aspiring buyers.
“That could be encouraging some movers to stay in the rental sector for longer while they assess their options, save for a deposit or wait to see how support schemes such as the proposed Your First Home initiative develop. It’s too early to draw a direct link, but it may help explain why demand for smaller rental homes in London is currently rising faster than the national average.”
Ouali Chriqy MNAEA, Estate Agent at eXp UK said: “London has an established private rented sector, with a large proportion of renters living in flats and smaller homes. The recent increase in demand for smaller properties is a clear indication of where the strongest rental demand is coming from. These homes are particularly attractive to younger renters, single households and people moving to London for education or work, providing the flexibility they need without the long-term commitment of buying. At the same time, high house prices and affordability constraints mean that, for many people, renting is not simply a preference but the more viable option.”
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