Tenants across London are finally starting to feel some relief as rental prices fall, according to new market data. After several years of rapid increases, the capital is now seeing rents ease, with landlords facing mounting pressure to keep properties occupied.
Figures from Hamptons show that renters in London are now paying £179 less per month compared to October 2024. That works out to an annual saving of around £2,148 – a significant shift for households who have been hit hard by the cost-of-living crisis and rising housing costs.
In inner London, the latest numbers reveal that the average monthly rent for new tenancies in August 2025 was £2,752. This represents a year-on-year fall of 5.8%, the largest decline recorded since May 2021, when the market was still feeling the effects of the pandemic.
The trend is not limited to central districts. In outer London, average monthly rents for new agreements dropped by 0.6%, with properties being let at around £2,311. While this decline is smaller, it still reflects the broader cooling of the rental market across the city.
Across the rest of the UK, the change has been more modest. Nationally, average rents dipped by 0.4% over the past year, showing that the capital is leading the way when it comes to rental price adjustments.
A major factor behind this slowdown is the behaviour of landlords. Many are attempting to sell their properties before the introduction of the Renters’ Rights Bill in early 2026. The proposed legislation will limit their ability to increase rents and make evictions more challenging, tightening the rules for property owners.
Originally, housing analysts warned that these changes could drive landlords out of the sector, reduce supply, and push rents higher. However, the opposite appears to be happening. A number of landlords are struggling to sell their properties in a subdued sales market, leaving them no option but to reduce rents to keep tenants in place.
Aneisha Beveridge, head of research at Hamptons, said the market has reached a turning point. She explained that after years of steep rises, stretched affordability and softening demand are forcing landlords to adjust expectations in order to attract renters. She also noted that rents have only dropped nationally on an annual basis during six months over the past 14 years, underlining how rare this trend is.
Fresh figures from Foxtons suggest that tenant demand is also easing. Registrations from new renters in London fell by 7% compared with last year, while the number of available rental homes increased by 11% over the same period. This growing supply is putting further pressure on landlords to keep prices competitive.
As a result, Foxtons reported that average rents in London were down by 5% in August, reflecting the need for landlords to offer more attractive deals in order to secure tenants quickly.
Some landlords, however, are finding themselves stuck. Marc von Grundherr, director of Benham and Reeves, said that those attempting to leave the market are often unable to sell at the prices they want. Many are testing the waters of the sales market but are receiving low offers or facing little buyer interest, prompting them to return to the rental sector to maintain income.
This approach allows them to hold on to their properties until conditions improve. By continuing to rent, they can generate income without having to sacrifice the equity they have built up over the years.
Industry specialists are urging landlords to think carefully before selling. Sam Humphries, head of mergers and acquisitions at Dwelly, explained that the current imbalance between the high number of homes for sale and limited buyer demand is causing issues such as price reductions, longer transaction times, and an increased risk of deals falling through.
He said landlords essentially have two options: sell now at a reduced price in the hope of completing before the Renters’ Rights Bill comes into force, or adapt to the new rules and hold onto their investments until the sales market becomes more stable.
Humphries strongly advises the latter approach. He argued that landlords have worked hard to build up equity in their portfolios, and selling during a weak market would risk losing much of that hard-earned value. Instead, he believes they should focus on adjusting to the changing rental landscape and continue benefiting from steady rental income until the market improves.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property