London rents fall as landlords delay selling ahead of Renters' Rights Bill

London rents fell in August as landlords sought to offload properties ahead of the Renters' Rights Bill, which is due to become law in early 2026 and tightens eviction and rent-increase rules. Data from Hamptons show inner London average rent for new lets in August 2025 was £2,752, down 5.8% year on year, and renters in the capital are paying £2,148 less a year or £179 less a month than they were in October 2024. The decline marked the largest year-on-year drop since May 2021.

In outer London, new lets were down 0.6% year on year to an average of £2,311 per month. Across Britain overall, average rents have fallen 0.4% over the past 12 months, underscoring a broader softening in the rental market as buyers and tenants adjust to higher borrowing costs and tighter housing supply dynamics.

Some landlords are reportedly trying to sell properties ahead of the Renters' Rights Bill, aiming to exit the rental market before tighter restrictions take full effect. Others see the bill as a catalyst for a longer transition, choosing to hold assets and maintain rental income until market conditions improve.

Aneisha Beveridge, head of research at Hamptons, said: "After several years of rapid rental growth, the tide is finally turning. With affordability stretched and demand softening, landlords are having to adjust to attract tenants." She noted that there have only been six months in the last 14 years when rents have fallen nationally on an annual basis, highlighting the unusual shift inside London.

Separately, Foxtons reported a slowdown in London tenant registrations, down about 7% compared with 2024, while the number of rental homes available year to date is up about 11% versus the same period in 2024. That shift in supply and demand dynamics supports the view that landlords are recalibrating pricing to keep properties filled as the market shifts.

Marc von Grundherr, director of Benham and Reeves estate agents, said landlords who want to exit the market are finding it harder to secure favorable sale offers and are reverting to renting. "The housing market is currently a little subdued, particularly in London. Many landlords who are keen to exit are dipping a toe into the sales market only to find the water too cold. When they struggle to sell or fail to receive sensible offers, they are reverting to the rental market. This allows them to maintain income until conditions improve and they can sell without seriously denting the equity they've built over the years," he said.

Sam Humphries, head of mergers and acquisitions at Dwelly, a technology platform for letting agents, said landlords should avoid selling in the current market if they can afford to. He explained that an imbalance between the abundance of homes for sale and limited buyer demand is driving price cuts, longer transaction timelines and a higher risk of sales collapsing. His advice: landlords can either accept a lower price now in the hope of completing before the Renters' Rights Bill takes effect, or wait it out, adapt to the legislative changes, and continue benefiting from rental income until sales conditions improve. Dwelly’s stance is to favor the latter, given the risk to equity in a subdued sales environment.

The broader housing market context is echoed by lenders and advisers who urge early action on mortgages. This is Money and its partner L&C emphasize that buy-to-let and residential borrowers should explore remortgage options promptly, locking in rates six to nine months in advance where feasible, and be mindful of how adding fees to the loan can affect long-term costs. While these are general tips for borrowers, they reflect a market now balancing higher financing costs with an elevated urgency among landlords who may need to refinance during a climate of shifting rents and rising stock.

Looking ahead, analysts expect the Renters' Rights Bill to influence both the supply side and rental pricing dynamics in London. Even as some landlords pull back from sales, others may remain in the market to preserve cash flow, choosing to ride out the transition rather than accelerate divestment. The net effect could be a more complex pattern of rent changes, with urban pockets like inner London experiencing sharper declines while other areas adjust more gradually. For now, the London rental picture reflects a city negotiating a new balance between affordability, landlord strategy, and policy change, within a wider national context where rents have also softened modestly over the past year.