Prime rents are resilient in the face of the Renters’ Rights Bill

Prime rental values have continued to edge upwards in recent months despite the looming Renters’ Rights Bill, Savills says.

Its latest figures show prime central London saw its sharpest rise since mid-2023.

However, Savills recorded the strongest gains in regional towns and cities, where rents grew by 1.9% during the quarter.

The return of international students helped push up values in Birmingham (3.5%) and Manchester (1.6%).

Across most prime markets, flats have outperformed houses, reflecting tenants’ preference for proximity to workplaces and amenities.

Landlords are worried

Jessica Tomlinson, a research analyst at Savills, said: “The Renters’ Rights Bill has been simmering in the background for the past two years but is finally in its final stages of scrutiny.

“It’s potential to reshape the lettings landscape looms large, and landlords and tenants can expect a shift in their experience of the market, which for some will feel more radical and sooner than expected.”

However, she notes that real impact from the upcoming legislation has been minimal so far.

Only 6% of landlords ending tenancies this year have pointed to the Bill as a reason for selling, while just under a third of Savills agents believe new regulation is the main concern for landlords.

Rent price direction

While the overall market has shown resilience, landlords and tenants continue to hold contrasting views on rent price direction.

In outer prime London and regional areas, 73% of tenants expected rents to fall in recent months, whereas 88% of landlords in outer London and nearly half in the regions forecast further rises.

Ms Tomlinson said: “We may see more landlords reassess their position once the Bill becomes reality, but the weak sales market may reduce the opportunity to exit the rental market for some.

“In anticipation of the Bill becoming law, landlords are likely to hold steady on rents, or indeed raise the asking price, to preserve competitive demand among tenants.

“While in some markets, landlords will be more concerned about securing reliable, high-quality tenants.”

Buyers are renting

Prime central London followed a similar pattern, with flats rising by 1.1% over the quarter compared with 0.2% for houses.

This has been driven in part by international buyers opting to rent rather than purchase in the capital.

Yields have strengthened across all prime London zones, particularly for flats in West, North and East London, where returns now exceed 5%, a big improvement on recent years.