Average London rents rose by 1.3% over the past year, down sharply from 8.7% a year ago, according to Zoopla. The average monthly rent now stands at £2,188, making London the city with the greatest slowdown in rental inflation. Inner London areas, led by Kensington & Chelsea, saw rental inflation dip below 1%. Despite the slowdown, London continues to have the highest rents in the UK, averaging £2,190 per month.
The supply-demand imbalance is expected to persist through 2025, although Zoopla notes signs of improving market conditions. Rental inflation is likely to be limited in areas with already high rents due to affordability constraints. However, more affordable areas may see rents rise faster than earnings over the coming year.
Zoopla reports that the private landlord sell-off has peaked. The next phase depends on when conditions are right for landlords to reinvest and expand rental supply, which would require lower base rates and higher yields. One-off pandemic-driven factors that fueled rental demand in 2022 have since faded, and tighter visa rules are reducing pressure from higher migration levels.
