London Rent Rises Ease but Tenant Competition Intensifies

London’s rental market is showing signs of stabilisation with average rents easing slightly, yet competition among tenants remains strong due to a reduced supply of available properties. This dynamic is important for landlords as it indicates a balanced market where demand continues to outstrip supply, supporting rental income levels despite seasonal fluctuations.

Market Overview: Tenant Demand and Supply Trends

According to recent data from Foxtons, November saw a 5.1% increase in the ratio of renters per new property listing, rising from 8.9 to 9.4 applicants per instruction. This suggests that while overall demand has softened, competition among tenants remains robust because fewer new properties are coming to market. The supply of new listings dropped sharply by 33% month-on-month, falling from over 34,000 in October to around 23,000 in November. Tenant demand also declined by 22% during the same period.

For landlords, this means that although fewer tenants may be actively searching, those who are remain highly motivated, often competing for a limited number of homes. This competitive environment can help maintain rental prices and reduce void periods.

Rental Price Movements and Tenant Budgets

Average weekly rents in London decreased by 4% to £551 in November, reflecting a slight easing after a period of intense price pressure last year. Despite this monthly dip, rents remain broadly in line with the same month over the previous four years and are 2% higher year-to-date compared with 2024. This indicates a market returning to more typical seasonal patterns rather than ongoing volatility.

Tenant budgets have remained steady, with the average applicant able to spend around £535 per week, unchanged from October. Over the full year, budgets have increased by 2% compared to 2024, except in north London where spending has declined. This stability in tenant affordability is a positive sign for landlords aiming to sustain rental income without significant downward pressure.

Property Size Preferences and Tenant Behaviour

Foxtons’ data reveals a notable divergence in tenant budgets depending on property size. Budgets for studios have fallen by 17% over the past year, while those for one-, two-, and three-bedroom homes have continued to rise. This suggests that tenants are prioritising larger living spaces, possibly reflecting changing lifestyle needs or preferences post-pandemic.

Tenants are stretching their budgets to secure preferred properties, spending on average 99% of their available funds. While 63% manage to rent below their budget limit, 30% exceed it, demonstrating a willingness among some tenants to pay a premium for the right home. For landlords, this highlights the importance of presenting properties that meet tenant expectations in size and quality to command competitive rents.

Implications for Landlords and Letting Agents

The current market conditions underline the significance of maintaining a well-presented portfolio and responding to tenant demand for larger properties. With fewer new listings and steady tenant budgets, landlords can expect continued interest in quality homes, supporting rental income stability. However, the slight dip in rents in November suggests that landlords should remain attentive to seasonal trends and market signals to optimise pricing strategies.

Letting agents and property managers should focus on efficient marketing and tenant engagement to capitalise on the strong competition for available homes. Understanding tenant budget trends and preferences can help tailor property offerings and improve letting success rates.

Looking Ahead: Trusted Partners Hub Launch

The Landlord Association (TLA) is preparing to launch a new Trusted Partners Hub in Q1 2026. This initiative will feature verified and approved service providers aimed at supporting landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other relevant service providers are invited to register their interest to become part of this network. This development promises to enhance the resources available to landlords navigating the evolving lettings market.