London Rents are Cooling Down — what it means for landlords and tenants in South-West London

For the past couple of years, headlines when it has come to the London lettings market have been dominated by record rents, excessive competition, a shrinking pool of properties to let, and tenant affordability stretched to the limit.

But recent figures suggest the London rental market is finally starting to cool.

A recent report by property group Zoopla shows that rents nationwide are now rising at their slowest pace in 4 years. They have risen over the last year, but only by 2.8% in that 12-month period. Figures recorded at the same time last year showed rents had risen by 6.4%.

In fact, their data also shows that rents have risen by a massive 21% over three years – compared to just a 4% overall increase in overall property values.

But when it comes to London, a report in the Financial Times this week has revealed that the effect on the usually red hot London lettings market is being felt further still – for the ‘Prime London’ market in particular, but with knock on effects for London as a whole.

Rents here have risen ahead of the national average, by 3.3% overall compared to that 2.8% figure mentioned previously, but rent increases aside, the London rentals market has seen a significant cooling down. Lettings transactions are down 21.7% and new listings have reduced by 5.2%.

The FT puts this down to a drop away in the numbers of so-called ‘non-dom’ tenants taking up residency in London, perhaps as tax implications start to bite.

I would suggest another explanation, based on what we've been writing about for some months (see previous blog article here): the pool of rental properties available is beginning to shrink – albeit slowly – with a number of private sector landlords choosing to offload their lettings properties. Why? Due to changing tax regimes and upcoming legislation changes under the guise of the Renters Rights Bill (and soon to become Act of Parliament).

Nevertheless, if rent values are starting to cool down also due to falling numbers of tenants at the same time, we have to recognise this as a bit of positive news — especially for tenants.

At Your Home Managed, we welcome anything that helps bring balance to the market. No one wants to see tenants priced out of London living, and a more sustainable rental market is good for everyone in the long run — landlords included.

When rents were increasing by double-digit figures year on year, squeezing tenants out of the market, whilst it may have seemed like landlords and letting agents would see that as good news, many were deeply sceptical about how sustainable or safe it was in the long run.

Of course, for South London landlords, a cooling market does come with some important considerations.

When there’s a shrinking pool of tenants, whatever the cause, landlords need to be proactive to ensure their property stands out… attracting good tenants, securing good rental values, and keeping void periods to a minimum.

Here are five practical steps to stay ahead if you are letting a property out in South West London:

1️⃣ Price sensibly, not optimistically

We are reaching a stage where the balance is starting to shift, and with more rental homes on the market, tenants are less likely to jump at the first property they see. Overpricing can quickly lead to longer void periods and later price reductions.

It is pragmatic to set a fair and realistic asking rent from day one, based on current market evidence and local knowledge. A well-priced property will attract stronger interest, helping you secure the right tenants quickly, rather than risking a prolonged empty period.

That said, we recognise the change due to kick in once the Renters Rights Bill becomes law, and above asking rent offers will no longer be allowed to be accepted. That is a dilemma to come, but for the next few weeks and months, price fairly, price sensibly, and get let.

Do your own research to get an idea of current asking rents; talk it through with a seasoned lettings professional; have a rental-income goal, but also a timeline goal – both things matter.

2️⃣ Presentation matters

Tenants in a cooling market can afford to be a little more selective, and presentation really does make a difference.

Homes that are clean, well-presented, freshly decorated, and well-maintained will naturally attract better interest (and better tenants).

In the past, the residential sales side of the property industry has run miles ahead of lettings in terms of the way properties were marketed. That is starting to change. High-quality photos, videos, great marketing descriptions, and an inviting first impression all help your property stand out – plus, a solid campaign on social media channels too.

It is no longer enough to put up a dull snap taken on an old iPhone, an existing tenant’s clothes hanging on the backs of chairs, beds unmade, washing up yet to be washed up…; so next time you have a void, get the cleaners in, get the decorators in, dress the property like a show home and get the professionals in to take some top quality snaps.

You do it once, but you have the best marketing collateral possible for years to come.

3️⃣ Flexibility is key

In today’s market, tenants value flexibility: on move-in dates, furnishing options, and increasingly, the ability to rent with pets.

The upcoming Renters’ Rights Bill will make it easier for tenants to request pet-friendly terms, so landlords who are open to reasonable pet requests – with the right clauses in place, of course – may well benefit from stronger demand.

Being flexible, where possible and within reason, can help secure longer-term tenants and reduce costly turnover.

4️⃣ Focus on tenant retention

Keeping good tenants in place is valuable! For a landlord, it means reducing the risk of void periods, marketing costs, and the time and hassle of finding new tenants.

Regular communication, quick responses to maintenance issues, and fair handling of renewals all help keep tenants happy and encourage longer stays.

It doesn’t mean that your rent won’t increase either. Do that fairly – in line with current market conditions – and your tenants will have no reason to jump ship. Tenants respect the fact that rents go up over time – what they don’t respect is being taken for fools or exploited for gain.

A good, experienced Letting Agent like ourselves at Your Home Managed knows how to manage rent reviews and can be literally worth their weight in gold over the course of time (OK maybe not literally… but they could literally be worth their weight in silver, and certainly bronze!)

5️⃣ Stay ahead of legal changes

The Renters’ Rights Bill is progressing quickly through Parliament, and significant changes are on the way. That will include new rules around notices, rent increases, pets, and minimum housing standards.

London landlords who stay informed and prepare early will be best placed to stay compliant and avoid legal or financial risks.

We’re already reviewing all tenancy documents, processes, and policies for our managed landlords – so if you need advice, please get in touch. We’re here to help.

A balanced market is better for everyone

The cooling South-West London rental market presents some challenges, but it also offers opportunities for landlords who take a proactive approach.

At Your Home Managed, we believe a well-maintained, well-managed property – fairly priced and with a strong agent-tenant relationship – will always perform well, whatever the market is doing.

Positioning your property properly in today’s shifting market is key – but with a little thought and fair thinking, and perhaps a little advice from professional letting agents in London, the private rental sector in the capital really can be something that benefits all – tenants and landlords alike.