London rental growth outpaces declining house prices in most boroughs
Since early 2026, rental prices in London have risen steadily across the majority of boroughs, while house prices have generally declined. This trend highlights the resilience of the private rented sector amid a faltering sales market.
Analysis by Benham and Reeves reveals that from January to July 2026, average monthly rents increased by 0.47% across London, whereas average house prices fell by 0.10% per month. This divergence has implications for landlords, letting agents and investors navigating the capital’s property market.
Camden recorded the highest rental growth at 1.16% per month, despite house prices dropping by 0.13%. Other boroughs such as Islington, Brent, and Hammersmith and Fulham also saw rents rise significantly while sales values declined. Conversely, only six boroughs experienced stronger house price growth than rental increases, with Barking and Dagenham leading on sales gains.
Detailed borough-level rental and sales trends
Benham and Reeves compared the average monthly rates of change in house prices and private rents across London’s 32 boroughs. The majority—26 boroughs—showed rental growth outstripping house price growth since the start of the year.
Among the boroughs with the strongest rental growth, Camden stands out with a 1.16% monthly increase in rents alongside a 0.13% monthly decline in house prices. Islington followed with rents rising 0.85% monthly despite a 0.43% drop in sales values. Brent and Hammersmith and Fulham also posted rental rises of 0.67% monthly, while house prices fell by 0.18% and 0.20% respectively.
Only three boroughs saw rents fall, but their declines were minimal compared to sharper house price drops. Westminster’s rents decreased by 0.01% monthly, whereas house prices fell by 1.27%. Kensington and Chelsea saw rents dip by 0.05%, with house prices down 1.06%. Lambeth rents fell slightly by 0.01%, while house prices declined 0.27%.
Six boroughs recorded stronger house price growth than rental increases, all with positive sales growth. Barking and Dagenham led with a 0.82% monthly rise in house prices compared to 0.15% rental growth. Kingston upon Thames, Barnet, Ealing, Bexley, and Havering also saw sales values outperform rents.
Context of London’s rental market strength amid sales slowdown
London’s housing sales market has been subdued in 2026, with buyer demand weakening and prices cooling across many boroughs. This contrasts with the rental sector, which has benefited from sustained tenant demand and limited available stock.
The divergence between rental and sales markets reflects broader economic and regulatory factors. Rising interest rates and tighter mortgage lending criteria have constrained many buyers, pushing more households towards renting. Meanwhile, the implementation of the Renters’ Rights Act has introduced new obligations for landlords, affecting portfolio management and tenant relations.
For landlords, the rental market’s relative strength offers some offset to pressures from increased regulation and operational costs. However, the ongoing decline in house prices may impact investment strategies and borrowing capacity for buy-to-let landlords.
Practical implications for landlords and letting agents
Landlords in London’s stronger rental boroughs may see opportunities to increase rents or reduce void periods, given the upward rental growth trends. Letting agents should monitor local market data closely to advise clients on realistic rent setting and renewal strategies.
Conversely, landlords in boroughs experiencing rental declines or flat growth should be cautious about rent increases and consider tenant retention measures. The contrast between rental and sales markets also suggests that landlords contemplating sales should weigh current house price trends carefully.
Compliance with the Renters’ Rights Act remains critical, as landlords manage increased documentation and tenant protections. Agents play a key role in ensuring tenancies meet legal standards and that rent adjustments are supported by evidence, especially as tribunals require robust justification for rent rises.
Uncertainties and what landlords should watch
The rental market’s resilience may be tested by economic shifts, changes in government policy, or evolving tenant behaviour. It remains uncertain how sustained rental growth will be amid inflationary pressures and potential further regulatory changes.
Landlords should stay informed about local licensing requirements and any updates to safety and property standards. The impact of the Renters’ Rights Act on eviction processes and rent reviews continues to evolve, necessitating careful record-keeping and professional advice.
Monitoring borough-specific data will be essential, as London’s property market is highly segmented. Landlords and agents should prepare for possible volatility in both rental and sales sectors over the coming months.
Considerations for landlords managing London portfolios
- Review rent levels regularly against local market data to ensure competitiveness without risking voids.
- Maintain thorough records of rent reviews, tenant communications, and compliance with safety and licensing regulations.
- Assess the financial viability of holding versus selling properties in boroughs with declining house prices.
- Prepare for increased administrative demands under the Renters’ Rights Act, including evidence for rent increases.
- Engage letting agents with expertise in navigating the regulatory environment and local market nuances.
Supporting landlords through changing rental market conditions
The Landlord Association (TLA) offers resources and support tailored to landlords and letting agents managing properties in London’s dynamic rental market. Membership provides access to up-to-date compliance guidance, practical tools for documenting rent reviews and tenant communications, and insights on navigating the Renters’ Rights Act.
TLA’s new property management and compliance platform, ORBIT, is currently available in BETA testing. It is designed to help landlords organise rental documentation, record key actions such as rent changes and inspections, and access compliance resources in one place. This can be particularly valuable for landlords managing portfolios across multiple boroughs with varying market conditions.
Exploring TLA membership and ORBIT BETA access can help landlords stay organised and informed as London’s rental market continues to evolve.
Looking ahead, landlords should keep a close eye on market data and regulatory updates, ensuring that their property management practices remain compliant and responsive to tenant demand and legislative changes.
Sources: Letting Agent Today
TLA - The Landlord Association