Will Events in the Middle East Affect the South London Property Market?

Watching the 24-hour news cycle can feel strangely desensitising – a constant stream of global events, vivid and unsettling, yet often felt to be somehow distant.

Recent headlines have been very different. The rhetoric between the US, Israel and Iran escalated quickly, with US and Israeli strikes suddenly coming on a massive scale, not just targeting infrastructure, but senior leadership – and leading to the death of Iran’s leader, Khamenei, along with other regime figures.

Iranian drone and missile reprisals followed, with explosions and casualties in Bahrain, Dubai, Saudi Arabia and Qatar. By the morning of Monday, 2 March 2026, crude oil had surged 12–14%. By Monday afternoon, following Iranian counter-strikes on Qatar, gas prices had risen by 50%. By Tuesday, targeted strikes against the British RAF base in Cyprus brought the conflict into Europe, and another step closer to home – both geographically and emotionally – with a British Warship now dispatched to the Mediterranean Sea.

Many people in this part of South London have personal ties to the Middle East, or family living and working in that region. These events carry a particular weight that goes beyond mere headlines, and we can only hope that this conflict does have a swift resolution, and that as few innocent people as possible are affected, in all parts of the world.

As a local business, however, serving local people, we also must note that whilst geographically these sorts of events may seem somewhat distant, even if emotionally they are not, economically speaking, no events on this scale are ever truly remote.

Here is what conflict in the Persian Gulf might mean for the lettings market here in London, and how they could affect the decisions you may be weighing up right now.

The Residential Sales Market: A Brief Overview

Before we look at the Lettings market in isolation, in particular the market here in South London, it is worth summarising the housing market position as a whole, including the Residential Sales market, not least because landlords themselves usually straddle both sides – buying, holding, and sometimes selling – and of course are usually owners of their own home.

The South London property market has bubbled nicely since the beginning of the year – indeed, seeing a recovery from the general contraction of the market in 2025, since around the time of the Autumn Budget in November.

It ties in with a story of national property market improvement, with the Halifax and Nationwide both recording a notable jump in prices in January, settling in February, and Rightmove reporting rising listing numbers and asking prices in line with that, signalling a healthy public attitude to buying and selling homes.

The Bank of England base rate sits at 3.75% following the December 2025 cut, and markets have been pricing in a further reduction at the MPC’s 19 March meeting as core inflation has fallen back towards its target 2% level (CPI currently at 3%, as per January 2026, down from 3.4% in December 2025).

These recent events in Iran mean that the path of inflation is less certain, but overall, the direction of travel remains downward.

We are not, at this stage, advising landlords to view their assets any differently as a result of what happened this weekend. The fundamentals in South London remain strong. But, it could depend how long the conflict lasts in this urgent, dramatic phase, and how shipping is disrupted through the Straits of Hormuz. The longer it goes on, the greater the economic effect will be.

There is still an expectation amongst analysts that the Bank of England will cut its base rate, but there is less optimism that this will now happen when they meet on March 19. Many are now pricing in only one further cut this year, later in the year, until the wider economic impacts are known.

For landlords contemplating whether to sell, a gradually softening rate environment is broadly supportive of buyer demand and therefore capital values.

Those looking to buy and waiting for lower mortgage rates would be wise to seek advice from a qualified advisor now, as rates may not come down as far as they were expected to, had you been having those sorts of conversations a few weeks ago. It may even move your goalposts – perhaps making it more sensible to purchase now, based on current rates, before property prices potentially rise further.

The full picture for landlords has grown more nuanced.

Oil Spikes, Energy Bills, and the Rental Equation

The UK does not import oil directly from Iran, or at least, not in a meaningful way. But energy markets are global.

A price shock anywhere transmits everywhere. Higher crude oil means higher petrol and diesel costs within weeks, or perhaps even within days. Those feed into gas and electricity bills over the medium term, and into the cost of food, logistics, and virtually everything else.

Households are already operating at elevated energy costs relative to pre-pandemic levels, even with recent price cap improvements. A further rise, even a modest one, removes headroom from monthly budgets at both ends of a tenancy.

For tenants in South London, particularly those in the professional lettings markets, rising fuel and food costs will leave less available for rent and reduce the speed with which they can move or upgrade. It is the sort of environment that may push more people toward shared accommodation or encourage tenants to stay in one place for longer.

For landlords, the effect is equally direct. Those with HMOs, especially, will need to factor in utility bills, where they are included within the rent, and those who let out properties where service charges apply might feel the pressure on costs immediately. Maintenance and refurbishment work is also likely to cost more, as contractors push up prices to absorb the extra cost of materials and fuel.

The South London lettings market is characterised by demand that tends to outstrip supply. In that environment, cost pressures tend to fall harder on tenants.

Inflation, Wages, and Tenant Affordability

Over the past few months of 2025 and the beginning of 2026, inflation has been moving in the right direction. The worst of the energy shock from the Ukraine conflict had been working its way out of the system, and the Bank of England had begun to signal cautious optimism. A smooth return toward the 2% target looked increasingly plausible.

A renewed energy spike complicates that picture, although it does not necessarily derail it. Central banks can and do ‘look through’ externally driven spikes. Nevertheless, it creates bumps in the road that were not there a fortnight ago.

For letting agents and landlords, inflation matters in two ways.

First, if it delays wage growth or erodes real incomes, tenants become more stretched, making rent increases harder to justify or indeed push through – particularly in light of the Renters’ Rights Act, the first phase of which will be implemented from May 1, as that will allow tenants to object to increases deemed to be unfair or out of line.

Secondly, if it causes the Bank to slow its rate-cutting cycle, buy-to-let borrowing costs will remain elevated for longer, meaning fewer new landlords stepping into the sector – or, perhaps as many new landlords, but at a slower pace.

With there being an undeniable risk of some landlords deciding to sell their rental properties at the moment, due to a combination of higher costs, tighter regulations and pending requirements to improve energy performance, anything that deters new landlords stepping in risks reducing the number of rental properties available, adding more upward pressure on rents.

Slower Rate Relief: What It Means for Buy-to-Let

Markets had been pricing in a base rate cut at the MPC’s 19 March meeting. That expectation has not disappeared, but it has reduced. If energy prices remain elevated and feed into broader inflation expectations, the hawks on the committee will have continued reason to urge caution. The vote was close last time, and the casting vote, as before, may fall to Governor Andrew Bailey himself.

For buy-to-let landlords approaching a refinancing window, a slower rate-cutting cycle means prolonged higher borrowing costs. For those on tracker mortgages, the relief they had been anticipating, and perhaps already budgeting for, may come later or more gradually than expected.

The Spring Statement on 3 March was a low-key affair, very much an update rather than an announcement of new taxes or support. That stability is welcome in one sense; there are no fresh shocks. But it also means there is no relief on rental or compliance costs, EPC upgrade requirements, or the general squeeze on margins that many landlords have been absorbing for the past two years.

Some landlords will absorb these pressures and hold. Others will look to raise rents where the market allows. And some – particularly those already questioning the regulatory environment – may decide this is the moment to sell, which could tighten South London’s constrained rental supply further.

The South London Lettings Outlook

The South London rental market had been under pressure through 2025, particularly from decreased movement from tenants.

Fortunately, the market has rebounded somewhat in these early weeks of 2026, supported by persistent growing demand from professionals and families, given the city’s broad employment base.

That said, there is some vulnerability on the supply side. If landlords do choose to exit in greater numbers, whether motivated by regulation, rising costs, or simply the natural end of their lettings journey as pensions mature, the reduction in available rental stock will put upward pressure on rents, especially problematic if tenant budgets are being squeezed by general inflation.

As mentioned, this may drive more tenants to either seek shared accommodation, or stay in their accommodation for longer.

Should You Act Now, or Wait?

We are not recommending any immediate changes to rental pricing or portfolio strategy on the basis of what has happened this weekend, but we would advise landlords to keep a close eye on it – and we will continue to keep you informed of market changes.

In particular, we will be looking at how oil prices and inflation data develop over the next few weeks – and that is the pattern we would urge anyone to wait to see before making significant decisions.

If you are a tenant moving for reasons of work, family, or study, the geopolitical backdrop is noise. You should continue to move when your circumstances require it – something that in fact is made easier for you under the changes coming in from the Renters’ Rights Act on May 1.

If you are a landlord, the fundamentals have not changed overnight, and it is certainly still worth being deliberate rather than reactive in your decision making, particularly if you are weighing up whether to sell and exit the space.

As ever, it is a moment to look carefully at the numbers rather than act on instinct in either direction.

The same applies to new landlords, or investors considering the lettings market – in particular those looking at the HMO market, as utility bills are often the landlord’s responsibility in the shared housing sector.

The South London property market remains strong, and even in pockets where we have seen occupancy rates drop, compared to other market sectors and other parts of the country, they are still incredibly high, and rents locally are robust.

Geopolitical uncertainty tends to make cautious people more cautious. Which is why it is a good idea to take advice.

Talk to Us

We can’t tell you where oil prices will be in three months. What we can do is help you understand how the wider picture affects your portfolio, your tenancy, or your next move — and make sure any decision you take is grounded in clear, local knowledge.

Whether you’re a landlord reviewing your options, a tenant thinking about your next step, or an investor trying to make sense of the yield picture in South London right now, we are here to help. Get in touch and let’s have a conversation.