Where is the London rental market headed?

After several years of exceptional rent increases and fierce competition for properties, London’s rental market is entering a different phase. Rents are still rising and supply remains constrained, but growth is considerably slower than at the height of the post-pandemic rental boom.

According to the Office for National Statistics (ONS), the average London private rent reached £2,317 per month in July 2026, up 3.0% year-on-year. London remains the most expensive region in England in which to rent.

Meanwhile, Rightmove reported that the average advertised London rent reached a record £2,791 per month in Q2 2026, following a 2.0% quarterly increase. These figures measure different parts of the market, but both point towards the same broad conclusion: rents are continuing upwards, albeit at a much more moderate rate than in recent years.

Supply remains the key issue

London’s underlying problem remains a shortage of rental property.

Rightmove reported that the number of available rental homes nationally fell below the previous year’s level in Q2 2026 for the first time since 2022. Competition is nevertheless far below its post-pandemic peak, suggesting London may be moving towards a less frantic, but still undersupplied, rental market.

That matters because, while affordability may limit how quickly rents can increase, a substantial fall in rents is difficult to envisage without a meaningful increase in available homes.

What is the Renters’ Rights Act doing to the market?

The Renters’ Rights Act 2025 represents one of the biggest changes to England’s private rental sector in decades. Its principal tenancy reforms came into force on 1 May 2026.

Among the changes, Section 21 ‘no-fault’ evictions have been abolished, assured shorthold tenancies have been replaced by periodic tenancies, rent increases are limited to once a year, rental bidding above the advertised price is prohibited, and landlords must follow revised procedures when seeking possession.

Full legislation and explanatory notes are here. 

The key question for London’s rental market is whether the reforms will encourage some landlords to sell, reducing rental supply and potentially putting further upward pressure on rents.

At present, it is too early to answer that conclusively. The main reforms have only been operating since May 2026, meaning there is not yet sufficient post-implementation evidence to isolate the Act’s impact on London rents or landlord numbers from other factors such as taxation, mortgage costs and wider economic conditions.

There are early indications that landlord supply remains under pressure, but these should not be interpreted as proof that the Renters’ Rights Act itself is responsible.

Further regulation is also being introduced as the Act is implemented, making compliance, documentation and professional property management increasingly important for landlords.

Government guidance on enforcement can be found here and Government guidance on the new possession process can be found here.

So, where is the London rental market headed?

The most likely direction is moderation rather than reversal.

Affordability pressures should make another period of double-digit rental growth difficult to sustain. However, limited supply continues to support rents, while the Renters’ Rights Act adds a new regulatory environment for landlords at a time when the economics of property investment are already challenging.

For tenants, that should mean a market that is less competitive than at its peak, but still expensive. For landlords, accurate pricing, compliance and professional management are becoming increasingly important.

The big variable to watch over the next 12–18 months will be landlord supply. If the new regulatory environment contributes to a meaningful reduction in rental stock, rents could face renewed upward pressure. If supply stabilises while tenant demand softens, London could instead settle into a period of relatively modest rental growth.

For now, the evidence points to a London rental market that is cooler than it was – but still fundamentally undersupplied.