Rising Supply and Wavering Confidence Are Reshaping the London Rental Market
The rental market in London is in a process of change.
For the last few years, landlords have been operating in a high-demand, low-supply environment, where properties were snapped up in hours, let alone days, and we have seen rents rise beyond expectation. The average rent in London is now £2,200, based on figures from the Office for National Statistics (ONS).
But as we head into the second half of 2025, the tide has started to turn. Not dramatically, but noticeably.
At Your Home Managed, we think it’s crucial that landlords understand what’s really going on; not just delivering the headlines, but unravelling the story. It allows you to be able to adapt your lettings strategy with confidence.
So let’s take a look at what’s changed, why, and what that means for you if you are letting out property in South London.
London Rents are Still High – but Rental Price Growth is Slowing
According to the latest Q2 data, average asking rents hit £1,365 per month outside London, and at one point as high as a hefty £2,712 per month here in the capital. That’s still extremely high by historical standards. But behind those headline numbers, the pace that rents are growing has started to ease up.
More supply is hitting the market. Despite stories of landlords exiting the market to escape Renters Rights legislation and higher tax regimes, across the UK rental listings are in fact up 15% year on year. What is more unusual to see in lettings are reductions – so it is a surprise to learn that 24% of those properties have already reduced their rent at least once, as reported in The Guardian, seemingly drawing on data from Rightmove.
In straightforward terms, it is not that demand has disappeared; it hasn’t. But realistically, tenants suddenly have more choice – and choice allows tenants room to breathe, and for competition to ease off. That alters the balance.
Tenants Are Feeling the Pinch
At the same time, consumer confidence is on slightly shaky ground.
Deloitte’s latest consumer tracker shows a marked dip in how people feel about their financial security, especially around jobs and earning.
It is no surprise really, when so much is said about the cost of living crisis. Confidence fell by 2.6 points between April 1 and June 30, dropping to -10.4% on their scale, the lowest level recorded since early 2024, a period of seemingly near-universal unease under Rishi Sunak’s government, with inflation still sky high at the time.
What’s interesting in the face of this is fresh data from the British Retail Consortium, with retail sales up 1.8% in volume and 3.5% in value, showing that people are still spending more than they might on non-essentials like leisure and clothing. Perhaps that is a result of warmer, sunnier weather than normal in June and July propping up sales figures, but perhaps it also hints at a “soft landing” rather than a crisis when it comes to consumer spending.
In our view, in any case, it all suggests that the Great British Public, including tenants, aren’t panicking in a wholesale way, but they are tightening up. When people feel uncertain about their future, they tend to pause big decisions, like committing to a higher rent or relocating elsewhere. They may spend ‘in the moment’, because they can – but they worry about longer term spending, in case things change
Are Tenants in London Starting to Hold Off?
It all means that some renters are hesitating – but enough that the market is also starting to feel it.
If 24% of properties to let are reducing their asking prices, you can be sure something is going on!
We’re seeing more people opting to stay put for longer, renewing existing agreements instead of moving – even making do with fewer bedrooms than might be ideal for growing families (not in an unlawful way – but a sign of changing behaviours).
Others are delaying lifestyle-upgrades – moving to larger properties as wages grow for example, in favour of saving – or are relocating only when the numbers clearly stack up. There is less risk being taken, and that also shows when tenants are searching. When they do look for somewhere new, our observation is that they have become much more selective.
In an overheated market, tenants tend to compromise – on price, on space, on location, whatever it may be! Now, feeling less certain about the future coupled with having more options available, they are understandably taking their time. That manifests itself in more viewings, more push back on price, greater expectation for a better quality of property and better service.
As a landlord, it’s important to clock that. React, update tired properties when empty, fix maintenance issues early, and – dare I say it – choose a responsive, service-focussed managing agent (and should you wish to know about how we operate at Your Home Managed, please do find our Services page here).
What Does it Mean for Landlords in South London?
A more resistant market does not mean you need to slash rents. On the contrary, a more resistant market is a more discerning market. We don’t want landlords to lose money – but we do believe that it can pay to raise your properties to the level they ought to be to command the rents that might have been achieved when the market was hotter. It is a good investment, in any case – more rental income, for a start, but a better property in less need of ongoing maintenance.
Here is our advice to landlords in south London right now:
1. Don’t chase top-line rent at the expense of voids.
A two-week gap can wipe out a month’s worth of “extra” rent. In a market with more competition, pricing your property correctly from day one makes absolute commercial sense – and with rents the level they still are in London, it will pay off in the long term.
2. Presentation is key.
Tenants are being more selective, which means details matter. Well-maintained, freshly presented properties stand out, especially if yours is one of many on the market. Our lettings fee includes the cost of professional photography. When it comes to marketing, don’t leave it to chance – have your property stand out from the crowd.
3. Be open to negotiation.
In some cases, offering a small concession – maybe an earlier move-in date, a fortnightly cleaner, or perhaps bills included – can seal the deal and avoid a void. If the rent level makes sense, why not?
4. Stay in tune with tenant sentiment.
It’s not just about affordability. South London tenants want stability, responsiveness and clear communication. They don’t expect a full concierge… but nevertheless, this is where great property management absolutely comes into its own. Where tenants feel looked after and in safe hands, things always run smoother – for landlord and tenant both.
When it Comes to Buy-to-Let, Strategy Beats Sentiment
It’s easy to get caught up in emotion, especially when the press focuses on extreme examples. But there isn’t a crash, and even if prices have adjusted slightly, there is no cause for alarm. Rents in some parts had risen by over 14% over one 12 month period, when we were reporting on the state of the market recently. That was unsustainable, and perhaps this is a market rebalancing. Prices are still much higher than a year ago – according to the ONS, still 11.5% higher, in fact. Nobody has lost money here.
Landlords who approach letting property with the right strategy, who provide quality accommodation, price accordingly but realistically, engage in proactive management, and who are open to a little flexibility, will stay ahead of the curve and not only attract but also retain good tenants.
Being a modern landlord in south London is not about reacting to the market, it is about staying in control of it by predicting what comes next. But approach it with fairness and quality at the forefront, and you’ll never go wrong.
