Prime London rental growth strengthens amid Renters’ Rights Act impact

Prime London rental growth strengthens amid Renters’ Rights Act impact

Prime London’s rental market saw its strongest growth in 18 months during July 2026, with average rents rising 5.3% annually. Increased lettings and new instructions coincided with the Renters’ Rights Act coming into force in May.

Data from LonRes for July 2026 shows a 1.5% annual rise in lets agreed and a 3.6% increase in new rental instructions across prime London. The supply of available rental properties also grew, with 6.8% more homes on the market compared to the previous year.

Average rental values in prime London climbed by 5.3% year-on-year in July, marking the strongest growth since February 2025. These values remain 41.0% above pre-pandemic levels recorded between 2017 and 2019. All three main prime London catchment areas recorded similar annual rental growth rates in July, although there had been notable variation earlier in the year.

Rental growth details and Renters’ Rights Act influence

Prime central London (PCL) experienced the most significant turnaround, moving from a 3.7% rental decline in February 2026 to a 5.7% increase in July. Outer prime London areas have seen steadier, more consistent rental growth over recent months.

LonRes suggests that the Renters’ Rights Act, which commenced in May 2026, may have contributed to the accelerated rental growth. The Act introduced a ban on ‘bidding wars’ among tenants, a practice previously common in competitive rental markets. Prior to the Act’s introduction, industry commentators predicted that supply could tighten as landlords adjusted to the new legal environment, resulting in upward pressure on asking rents.

Interestingly, the largest rental growth was recorded in prime central London, where over 20% of properties are exempt from the Renters’ Rights Act due to their annual rent exceeding £100,000. This exemption means these high-value properties are not subject to the Act’s restrictions, yet rental values there have risen sharply alongside areas fully covered by the legislation.

Context of rental growth in prime London

The prime London rental market has faced various pressures in recent years, including pandemic-related shifts in demand, regulatory reforms, and changing tenant behaviours. The Renters’ Rights Act represents a significant regulatory change, aiming to improve tenant protections by limiting practices that could inflate rents or disadvantage renters.

Before the Act, bidding wars were a feature of the prime lettings market, often pushing rents above advertised levels. The ban on such practices is intended to create a fairer rental process, but it may also reduce the incentive for landlords to offer lower rents, especially if supply tightens.

The increase in available rental stock, as reported by LonRes, suggests that more landlords are listing properties, possibly encouraged by rising rents and the stability offered by the new legal framework. However, the overall market remains sensitive to economic factors such as inflation, interest rates, and housing supply constraints.

Practical implications for landlords and letting agents

For landlords in prime London, the current environment offers opportunities to achieve higher rental income, but also requires careful management of compliance with the Renters’ Rights Act. Letting agents must ensure that advertising and tenancy processes comply with the ban on bidding wars and other tenant protections introduced by the Act.

Landlords with high-value properties exempt from the Act should be mindful that market dynamics are influenced by the broader regulatory context. While exemptions exist, the overall market’s response to the Act can affect tenant expectations and competition.

Letting agents should monitor rental instructions and lettings closely to identify trends and adjust marketing strategies accordingly. The increase in available stock may signal more competition among landlords, making professional management and tenant relations even more important.

Remaining uncertainties and what to watch

It remains uncertain how sustained the rental growth will be across prime London, especially as the full effects of the Renters’ Rights Act continue to unfold. The interaction between exemptions for high-rent properties and the broader market impact requires ongoing observation.

Further regulatory changes or economic shifts could alter supply and demand dynamics. Landlords and agents should stay informed about any government announcements or guidance updates related to tenancy law and rental market regulation.

Additionally, the impact of the Act on tenant behaviour and landlord decision-making may evolve, potentially influencing eviction processes, tenancy renewals, and rent reviews in the coming months.

What landlords should consider now

• Review tenancy agreements and letting practices to ensure compliance with the Renters’ Rights Act, particularly the ban on bidding wars.
• Monitor market rental values and adjust asking rents in line with current trends and legal constraints.
• Maintain clear and accurate records of rental instructions, lettings, and communications with tenants to demonstrate compliance.
• Assess the impact of exemptions for high-rent properties on portfolio strategy and tenant mix.
• Keep abreast of regulatory developments and official guidance from government and trade bodies.

Supporting landlords through regulatory change

The Landlord Association (TLA) offers members access to compliance resources and practical information tailored to the evolving rental market. TLA’s new property management and compliance platform, ORBIT, is currently available in BETA testing. It is designed to help landlords and letting agents organise property records, manage rental documentation, and monitor regulatory updates.

ORBIT’s features relevant to adapting to the Renters’ Rights Act include tools for recording tenancy agreements, tracking rent changes, and maintaining evidence of compliance with advertising and letting regulations. Members can explore TLA membership to access these resources and support their property management activities as the rental market adjusts to new legal requirements.

Explore TLA member compliance support and learn more about ORBIT BETA access to stay informed and organised amid ongoing rental sector changes.

Looking ahead, landlords and letting agents should continue to evaluate market conditions and regulatory impacts carefully. Staying proactive in compliance and tenant engagement will be essential to managing portfolios effectively in the current prime London rental environment.

Sources: Letting Agent Today