Prime London & UK rental market update Q2 2026
The Renters’ Rights Act (RRA) is now in force across the UK – biggest regulatory change in the rental market for decades. In the lead up to the change, which includes the abolition of Section 21 no-fault evictions, there is evidence that some landlords, especially those with fewer properties, and accidental landlords have chosen to exit the market.
Also affecting their decision will be the higher mortgage rates as well as the upcoming additional income tax charge coming in in April 2027.
Key facts:
- Prime London rents rose by 2.0% in the year to March 2026, compared to 2.1% growth in 2025
- Average UK asking rents were up 1.9% on the year, compared to 2.8% a year ago
- We expect a cumulative 5.5% rise in rents in prime central London in the next two years, 6% in prime London and 6.5% across the UK.
Some 65% of vendors across our prime London offices asked for a joint sales and rental valuation at the end of last year, up from 25% the year before, highlighting how property owners are investigating sales and rental options. While larger landlords are investing in some of these rental properties hitting the market, others are moving into the sales market, reducing overall supply in the rental market. This comes as rental demand remains strong, and these factors are putting some upward pressure on rents.
In the prime London market, the sharp rise in rents in 2022 and 2023 means that affordability constraints will limit the scale of rental rises however, and we are forecasting +3% rental growth in prime London this year. There is a chance the headline figure of growth may rise in the coming months as landlords reset rents in between tenancies under the RRA.
Rents in prime central London climbed by 0.5% for houses and 0.4% for flats in the first three months of the year, while in the wider prime London market rents were up 0.7%. The rental market in South West prime London is outperforming, with a 1.2% rise in rents in the first three months of the year for flats and houses, underlining the demand in domestic-driven rental prime markets in the capital.
UK rental market
The rate of growth in asking rents across the UK has slowed over the last year, with the headline rate of growth slowing to 1.9% in the year to March, compared to 2.8% a year ago, according to data from Zoopla. The more lagging ONS measure of rents is also showing slowing growth, with the pace of rental rises at 3.25% in the year to April, compared to 7.4% growth a year ago.
As in the prime market, sharp rental rises in recent years mean affordability constraints will be a factor in how quickly rents can re-set when tenancies change. While the demand/supply imbalance has evened out compared with recent years – with demand being more consistent and evidence of more homes being listed for sale across the wider UK market – there is still strong demand not being met by supply which will underpin rents in the coming years.
As can be seen from the map below, stronger rental growth is still being registered in the more affordable markets in the North of England.
Not only are landlords dealing with new legislation under the RRA, and an upcoming rise in income tax in 2027, but also the confirmation that all rental properties must meet EPC C standards by 2030. It is a positive aim that homes will become more energy efficient, but for landlords who own a property under this energy efficiency rating, there is a decision to be made around making this investment. The rules say that landlords must raise the EPC rate, or spend at least £10,000 in an effort to do so. This will keep pressure on supply of homes in the rental sector.
As the conflict in the Middle East continues, a growing number of prospective buyers are likely to adopt a ‘wait-and-see’ approach while mortgage rates remain more volatile, and stay in the rental market for longer, helping to boost overall demand.
The outlook is for modest rental growth, with local variations depending on supply and affordability levels.
Forecast:
| Year | UK Rents | Prime London Rents | Prime central London Rents |
|---|---|---|---|
| 2025 | +4.0% | +2.1% | +1.7% |
| 2026 | +3.0% | +3.0% | +2.5% |
| 2027 | +3.5% | +3.0% | +3.0% |
Christopher Morris
Partner – Head of London lettings
Head office
T +44 (0) 20 7354 6666 Email Christopher
Read more in the Q2 2026 residential series
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