London’s rental market sees rents remain flat but demand rise

Tenant demand for rented homes in London grew by 9% last month, compared to February, according to Foxtons.

The lettings agent highlights that renter demand has fallen 14% year-on-year as the market returns to more typical trends.

It says that the number of new renters per instruction also fell year-on-year, with an average of three fewer renters competing for each property.

Despite this, there was a slight increase in new renters per instruction compared to February, with East London experiencing the highest rise of 23%.

‘Inflation has dipped to its lowest point’

The firm’s managing director of lettings, Gareth Atkins, said: “Inflation has dipped to its lowest point in two and a half years, with interest rates expected to follow.

“This should give buy to let landlords the green light going into Q2.

“Furthermore, sales stock is now at its highest in eight years, increasing competition among sellers, which could give pause to landlords who were tempted to sell.”

He added: “We should see London’s companies begin recruiting drives and lettings activity pick up prior to the busy period in summer.

“However, average rent prices are expected to remain broadly flat in response to affordability pressures, which would enable more renters to secure their homes in the capital.”

Budgets for tenants remain higher

The rental budget for tenants remains higher than in previous years, with a 3% rise this year, compared to 2023.

Foxtons says that central London continues to command the highest budgets, with an average of £579 per week.

The number of new properties coming onto the market increased in January and February but cooled in March.

However, there has been a 15% year-to-date increase in new instructions compared to the first quarter of 2023.

Average rents in London

The data also reveals that average rents in London have remained largely flat, with a marginal 1% fall year-on-year.

There is some variation across the different regions, with North and West London experiencing increases of 3% and 5% respectively.

Rents in central London saw a 5% drop.