Tenant demand rises as supply falls

London has 10% fewer homes to rent than a year ago, yet enquiries from prospective tenants have risen by 7%, according to Rightmove.

Studios and one-bedroom properties are attracting the fastest growth in demand, despite advertised rents averaging £1,904 a month.

Across Great Britain, tenant enquiries remain 2% below last year’s levels.

However, the number of homes available to rent nationally is 0.4% higher.

Buyers may delay

The platform’s property expert, Colleen Babcock, 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.”

She added: “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.”

Smaller homes demand

Enquiries for studios and one-bedroom homes in London are up 10% year on year, compared with a 4% increase nationally.

Outside that comparison, demand for London’s two-bedroom properties has risen by 6%.

Three-bedroom homes have recorded a smaller increase of 2.5%.

Nationally, enquiries for those two property sizes have fallen by 4% and 6% respectively.

September demand turnaround

London tenant demand had averaged around 7% below 2025 levels until the end of August, before moving ahead of last year’s equivalent level on 7 September and remaining above it.

Rightmove measures demand through enquiries sent by prospective tenants to letting agents on its platform.

The North East is the only other area recording annual demand growth, with enquiries up 1%.

Meanwhile, London’s average advertised rent stands at £2,763 a month, up 3.1% year on year, compared with a national average of £1,578, which has risen by 2.4%.