At Winkworth, our lettings teams across Prime Central London are seeing a rental market that is notably calmer than the post-pandemic peak, but far from weak.
After several years of intense competition and rapid rent inflation, the market is settling into a more balanced phase — one where supply and demand are better aligned, yet underlying pressures continue to support rental values.
New national data suggests this calmer backdrop will not translate into falling rents. Instead, average rents are expected to keep edging higher through 2026, underpinned by a long-term shortage of rental homes and steady tenant demand, particularly in London’s most established neighbourhoods.
Rents Ease — But Only Briefly
Average advertised rents dipped in the final quarter of 2025, both in London and across the rest of the UK. In the capital, rents fell modestly quarter-on-quarter, leaving annual rental growth at just 0.8% — the slowest pace since the pandemic disrupted the market in 2020.
This slowdown, however, reflects normal seasonality and improving balance rather than a reversal of fortunes. Over the full year, rents still finished higher than where they started, and London continues to command a significant premium thanks to global demand, employment density, and lifestyle appeal.
Across the UK, 2025 marked the lowest annual rental growth rate since 2018 — a sign that the market is cooling from extraordinary highs rather than weakening fundamentally.
The Bigger Picture: A Structural Supply Shortage
While there are now more rental homes available than a year ago, long-term trends tell a very different story. Compared with a decade ago, the number of homes available to rent has fallen by around a third — a contraction that continues to shape rental values, especially in Prime Central London.
This chronic undersupply remains the key driver of rents. Even with competition between tenants easing, there are still more renters than homes in many parts of the capital. In 2025, London averaged seven enquiries per available rental property — lower than recent peaks, but still above pre-pandemic norms.
For landlords, this means demand remains dependable, particularly for well-presented, well-located homes that meet modern tenant expectations.
Signs of Renewed Landlord Confidence
There are also tentative signs that confidence is stabilising among landlords. Mortgage data shows an increase in both new buy-to-let purchases and remortgaging activity, suggesting that some investors are taking advantage of improved borrowing conditions and choosing to hold onto rental stock rather than exit the sector.
This matters for Prime Central London, where long-term ownership and professional management are already more prevalent. Here, landlords are often better positioned to absorb regulatory change and focus on sustainable income rather than short-term growth spikes.
What’s Expected in 2026
Looking ahead, industry forecasts suggest average advertised rents will rise by around 2% in 2026. The reasoning is straightforward: while tenant competition has cooled and affordability is acting as a natural brake, the fundamental shortage of rental property has not gone away.
As Rightmove notes, the improved balance between supply and demand has reduced volatility — but not eliminated upward pressure on rents. For tenants, this should mean a more predictable and less stressful rental experience. For landlords, it reinforces the importance of pricing realistically while maintaining quality.
What This Means for Prime Central London Landlords
For landlords operating in Prime Central London, the outlook is one of steady, manageable growth rather than dramatic swings:
- Rental values are expected to continue rising modestly
- Demand remains robust but more discerning
- Presentation, compliance and management quality are increasingly decisive factors
Homes that are professionally managed, energy efficient, and competitively priced are best placed to outperform the wider market.
How Winkworth Can Help
Whether you’re reviewing your rent for 2026, navigating regulatory change, or considering full management to protect long-term returns, our Winkworth lettings teams are here to help.
