Tenant Competition Eases as Rental Supply Grows

New data from Foxtons reveals that competition among tenants in London’s lettings market eased significantly in December 2025. The number of applicants per new rental listing rose by almost 20% compared with November, indicating more available homes for prospective renters. By the end of the year, average tenant budgets stood at £553 per week, a modest 2% increase on 2024 levels. This combination of rising supply and steady demand suggests a rebalancing of the market that benefits both landlords and tenants.

Modest Rent Growth Amid Increasing Supply

Gareth Atkins, Managing Director of Lettings at Foxtons, commented on the market trends: “Whilst the conversation was dominated by renters’ rights last year, we called it correctly: modest rent growth, with new listings steadily increasing despite the noise.” He emphasised that the key driver is supply influencing competition among landlords rather than legislation hindering the market. Looking ahead to 2026, Atkins expects “moderate growth with intensifying competition,” advising landlords to price their properties with “surgical precision” using real-time data rather than guesswork. This highlights the importance for landlords to remain data-informed to maximise rental income in a market with increasing choice for tenants.

Renter Budgets and Behaviour

Tenant spending limits showed a slight decline in December, dropping 2% below November’s figures as seasonal caution took hold. Over 2025, studio flat budgets saw the sharpest reduction, falling by 17%, whereas budgets for one-, two-, and three-bedroom flats experienced modest increases. Despite these fluctuations, renter behaviour remained broadly stable, with the proportion of budgets used to secure properties slipping by only 1% month on month. Approximately 63% of tenants secured lets below their stated budget ceiling, while 30% paid above it, indicating a flexible and dynamic rental market.

Seasonal Demand and Supply Trends

As expected, renter demand softened during the Christmas period, falling by 22% from November due to fewer moves taking place. However, fresh rental listings increased from around 23,000 to 25,000, providing tenants with more options. Supply momentum built throughout 2025, particularly in the latter half of the year, with a 6% uplift in available homes across London. This increase helped reduce competition pressure and broadened choices across all London regions. Although activity slowed in November, partly due to landlords delaying decisions ahead of the Autumn Budget, the market rebounded swiftly, with new instructions for 2025 finishing 8% higher than the previous year.

What This Means for Landlords

The rise in rental supply and easing tenant competition means landlords face a more balanced market where pricing strategy is crucial. With more properties available, landlords must use accurate, up-to-date market data to set competitive rents that attract tenants without leaving money on the table. The modest rent growth and flexible tenant budgets suggest opportunities for steady income, but also the need for landlords to be responsive to market signals. Overall, the London rental market is stabilising after a period of intense competition, offering a more sustainable environment for letting agents and landlords alike.

Suggested internal link anchors

• London rental market
• tenant competition
• rental supply
• rent growth
• tenant budgets
• lettings market trends
• landlord pricing strategy
• rental listings
• seasonal rental demand
• Autumn Budget impact

TLA update

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