Everywhere in England has seen rents rise over the past 12 months, but nowhere more so than the London rental market where prices continue to soar.
The latest figures from HM Land Registry have revealed that rental prices in the UK increased by 8.7% in the year to January 2025, as supply continues to dwindle behind strong tenant demand in much of the country.
While this level of average price inflation is down from the highs of last year, where rental growth spiked with a record-high annual increase of 9.2% in March 2024, it continues to rise a faster pace than house prices in most parts of the country.
However, it is the London rental market that stands out, with huge price inflation of 11% over the 12 months to January. While average rents in England now stand at £1,375 per month, London rental property now costs tenants an average of £2,227 per month.
At the other end of the scale, the figures show that the lowest rents can be found in the North East, at an average of £710 per month, while rental prices are rising at the slowest rate in Yorkshire and the Humber with a 5.3% annual increase.
London rental market bouncing back?
London rental price growth hit a peak in November 2024 when average rents increased by 11.6%. While it is now rising at a slower pace, rental price inflation continues to hover well above the national average.
At the same time, the sales market paints quite a different picture, with London remaining at the bottom of the list for house price growth in the latest HM Land Registry figures. In the year to December 2024, London saw 0% house price inflation; while prices in the North East increased by 6.7% on average in the 12-month period.
London remains the most expensive place to buy a property in the UK, while also being the most expensive place to rent as a private tenant. However, the London rental market is extremely sought after, with thousands of graduates and professionals looking to move to rental property in the capital every year, including many from overseas.
Estate agency Foxtons has also reported a resurgence in tenant interest in recent months, with the number of tenants making offers on London rental property increasing by a third since December 2024.
It also reports an increase in rental supply in the city, with a 51% rise in the number of available rental homes during the same time period, indicating buy-to-let landlords are still drawn to the capital thanks to its strong rental demand.
Gareth Atkins, managing director of lettings, said: “Foxtons’ analysis of new listings in the London rental market reveals a slight increase from this time last year, but a 55% increase in available properties compared to the same period of 2023 – highlighting a notable expansion in supply.
“While the coming spring market should bring an uptick in demand, the substantial growth in supply is contributing to increased competition among available properties.”
He added: “The London lettings market is therefore looking as if it will stabilise as we move into the spring offering predictability for both renters and landlords.”
Will landlords keep buying in London?
The impending stamp duty change in April – when more property sales will fall within the threshold eligible to pay the tax – could impact buyer patterns and decisions, with location potentially being a major factor as buyers try to mitigate the increased costs.
Some analysts believe this could impact the more expensive markets to a greater extent, as they will generate the highest bills, while lower priced homes and investment properties could see a rise in demand.
The latest data from Hamptons shows that London has seen the number of landlords purchasing property fall by more than anywhere else in the UK, with only 7% of purchases in January this year being made by landlords in the capital. This is likely to impact the number of London rental homes available as time goes by, which could further push up rents as supply falls further behind demand.
However, Hamptons has also revealed that a growing number of tenants are staying put for longer, which could see rental price growth slow down in the capital and elsewhere.
Read the full report from Hamptons here.
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