London rents fall as landlords struggle to sell ahead of Renters' Rights Bill

London rents have continued to ease, with tenants in the capital paying substantially less than a year ago as supply dynamics shift ahead of the Renters' Rights Bill. New-lets data from Hamptons show the average monthly rent agreed in inner London in August 2025 was 2,752 pounds, down 5.8% from August 2024. That amounts to about 2,148 pounds less in annual rent payments for London tenants compared with October 2024, according to the property adviser. Across Britain, the national picture shows rents down approximately 0.4% over the past 12 months. In outer London, the average monthly rent for new lets fell 0.6% year on year to 2,311 pounds. These shifts come as landlords weigh the timing of sales against tighter rules expected under the Renters' Rights Bill, which is slated to become law in early 2026 and would curb evictions and cap rent increases in some circumstances.

Rents in London have historically tracked demand and buyer sentiment, with the latest data underscoring a broader cooling in the city’s rental market. Aneisha Beveridge, head of research at Hamptons, said after years of rapid growth, the tide is turning as affordability pressures tighten and demand softens. “With affordability stretched and demand softening, landlords are having to adjust to attract tenants,” she said. The London market also appears to be experiencing a shift in seller expectations, with some landlords looking to exit by selling while others opt to stay in for rental income, a turn described by market watchers as a temporary pivot rather than a wholesale retreat from buy-to-let.

London tenant activity and inventory data add nuance to the rent declines. Foxtons’ renter registrations in London are down 7% compared with 2024, while the year-to-date supply of rental homes is up about 11% on the same period last year. In August, Foxtons reported an overall decline in average rents, aligning with the broader trend of softer price growth in the capital. Marc von Grundherr, director at Benham and Reeves, said landlords who want to exit the market are finding the market “a little subdued,” particularly in London, and many would-be sellers are dipping their toes into the sales market only to find the water too cold. He said that when offers are not sensible, landlords often revert to renting to maintain income and preserve equity until conditions improve.

Dwelly, a technology platform for letting agents, echoes the view that buyers are scarce relative to the number of homes for sale. Sam Humphries, head of mergers and acquisitions at Dwelly, described an imbalance between ample stock for sale and weak buyer demand as driving price reductions, longer transaction timelines and a higher risk of deals collapsing. His advice to landlords is pragmatic: if they can afford to wait, they should do so and continue earning rental income rather than rushing to sell at depressed prices. He added that the current period offers a clearer path to preserving capital until the market stabilizes and conditions improve. "The imbalance between the abundance of homes for sale and limited buyer demand is leading to price cuts, longer transaction timelines and a higher risk of sales collapsing," Humphries said. "Landlords can either accept a lower price now in the hope of completing before the Renters' Rights Bill comes into effect, or wait it out, adapt to the legislative changes, and continue benefiting from consistent rental income." This stance aligns with industry guidance urging landlords to assess options carefully in a market where supply dynamics are shifting ahead of new legislation.

The Renters' Rights Bill is central to the current mood in the market. While it is designed to strengthen protections for tenants, it also raises questions about how landlords price and time sales and how remortgaging decisions may change as costs evolve. Some landlords with existing buy-to-let loans may face higher monthly costs if rates reset or mortgage products become less favorable. Industry advisers emphasize the importance of early planning: homeowners and buy-to-let borrowers alike are urged to explore options, compare rates, and consult brokers to map a course through a landscape where borrowing costs can move quickly. In practical terms, market observers suggest locking in or hedging rates well in advance of rate resets, though borrowers should weigh the costs of prepaid arrangements against potential savings over the life of the loan. While these mortgage considerations are not the sole determinant of rent trends, they can influence landlords’ decisions about when to hold, refinance or sell.

Looking ahead, analysts caution that the full impact of the Renters' Rights Bill on the London market will depend on its specific provisions and how they are implemented. In the near term, rental markets in inner London appear to be cooling modestly as supply remains buoyant and demand stabilizes, with landlords testing pricing and lease terms to attract tenants who face affordability constraints. The broader pattern across Britain suggests that while rent declines may be concentrated in major cities, the national pace of rent movements remains modest. For tenants, the shift could mean more negotiating room on new leases; for landlords, a choice between selling for potentially lower prices now and continuing to rent in a market where prices could be more constrained in the near term. As the industry awaits the final framework of the Renters' Rights Bill, market participants say the prudent move for many landlords is to prioritize steady income and portfolio resilience over aggressive pricing—at least until conditions improve and the policy environment clarifies.