As London enters 2026, the capital’s rental market is moving into a new phase. After several years of intense competition, rapid rent growth and limited supply, the market is showing signs of stabilisation though demand remains strong and affordability continues to be a challenge.
With major legislative changes coming into force in 2026, landlords need to be well-prepared for what lies ahead.
Key Trends Shaping the London Rental Market in 2026
Rent Levels:
- Rental growth in London is expected to moderate in 2026, with forecasts suggesting average increases of around 3-4%, compared to much steeper rises in previous years.
- Prime and well-connected areas continue to command higher rents, while outer London boroughs are seeing steadier, more sustainable pricing.
- Although growth has slowed, rents remain historically high, reflecting London’s long-term housing undersupply and strong employment base.
This means, rents are still rising, but the pace is calmer and more predictable, giving both landlords and tenants greater certainty.
Supply and Demand:
- Tenant demand in London has eased slightly compared to peak levels seen in 2022-2024, while rental stock has gradually increased.
- Properties are spending longer on the market, reducing the number of sealed-bid situations that previously defined the London lettings landscape.
- Despite this rebalancing, demand remains robust for well-presented homes, particularly in areas with strong transport links, amenities, and employment hubs.
Competition hasn’t disappeared, but tenants now have more choice, and landlords need to be sharper on pricing and presentation.
Legislation Changes Impacting London Landlords and Tenants in 2026
The Renters’ Rights Act - Effective May 2026
One of the most significant reforms to the private rented sector in decades will come into effect in England from May 2026, directly impacting London’s rental market.
Key changes include:
- The abolition of Section 21 “no-fault” evictions, with landlords required to rely on specific grounds for possession.
- A move to periodic tenancies, replacing fixed-term assured shorthold tenancies for most new lets.
- Rent increases limited to once per year, with tenants able to challenge increases they believe are unreasonable.
- A ban on rental bidding, meaning landlords cannot accept offers above the advertised rent.
- Stronger protections against discrimination, including clearer rules around families and benefit recipients.
These changes are designed to improve tenant security and transparency, while increasing compliance and management responsibilities for landlords.
Practical Actions for 2026
For London Landlords
- Price accurately from the outset: With bidding above asking rent prohibited, setting the right market rent is more important than ever to avoid extended void periods.
- Prepare for legislative compliance: Review tenancy agreements, possession processes and rent review procedures ahead of the May 2026 changes.
- Focus on quality and retention: Energy efficiency, good maintenance and responsive property management are increasingly key to attracting and retaining reliable tenants.
- Think long term: Despite regulatory changes, London remains one of the most resilient rental markets globally, particularly for well-located properties.
Looking Ahead: London’s Rental Market in Transition
2026 is set to be a year of adjustment rather than upheaval for London’s rental market. Slower rent growth, increased supply and major legislative reform are reshaping how properties are let, placing greater emphasis on transparency, fair pricing and professionalism.
For landlords and tenants alike, staying informed and prepared will be essential to navigating London’s evolving rental landscape with confidence.
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