Economy

London asking rents set new record as rental supply drops 9 percent

Average advertised rent reaches 2 825 pounds a month with tenant demand up 6 percent, landlords keep exiting as remortgaging eats into yields

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Londoners share what it really takes to survive renting in the capital Londoners share what it really takes to survive renting in the capital standard.co.uk
Letting agents across the UK have seen the number of available rentals halve, according to new research (Yui Mok/PA) Letting agents across the UK have seen the number of available rentals halve, according to new research (Yui Mok/PA) standard.co.uk
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The average asking rent in London has reached a record £2,825 a month, Rightmove reported, as the supply of homes available to rent in the capital fell 9 per cent over the past year while tenant demand rose 6 per cent.

Annual rental growth in London is running at 3.2 per cent, against 2.4 per cent outside the capital — where the average advertised rent passed £1,400 for the first time, at £1,418 a month. The mechanism is the same nationwide at lower volume: the number of available rental homes across the UK is down 2 per cent, demand is down 2 per cent, and rents keep setting records because the supply side keeps shrinking.

The shrinkage has an identifiable cause. Elevated mortgage rates continue to make property investment less attractive, Rightmove noted, and landlords reaching the end of cheap fixed-rate deals face materially higher monthly costs when they remortgage. New buy-to-let investment has been relatively subdued for some time. Matt Smith, the property website's mortgage expert, said moving onto a higher rate can have a significant impact on monthly costs and rental yields for landlords still holding cheaper loans.

The rises are no longer confined to new lets. Aneisha Beveridge, head of research at Hamptons, said the largest increases now happen inside existing tenancies, where landlords narrow the gap between long-standing rents and current market levels — in many cases catching up rather than pushing beyond the market.

Between 2021 and 2023, annual rental growth in Britain ran at around 10 per cent. The pace is slower now; the direction has not changed. Rightmove's Colleen Babcock said supply remains constrained and continues to put upward pressure on rents even with demand more measured than at the peak.

London's new record was set on a stock of rental homes 9 per cent smaller than a year earlier.