London rents are continuing their upwards trajectory, with asking rents reaching a record high of £2,695pcm, yet the pace of growth is slowing according to Rightmove.
The most recent of 13 consecutive quarterly increases (0.1 per cent) equates to an extra £1 per month on average and, while London rents are now 2.4 per cent higher than this time last year, they are growing at the slowest rate since 2021.
This is in contrast to the market outside the capital, where rents fell 0.2 per cent, the first drop since 2019.
Meanwhile, for landlords, the average yield of a rental property in London is now 5.6 per cent, the lowest across the country after an annual increase of 0.1 per cent, making the capital less profitable than elsewhere in the country.
The data also suggests that the Renters’ Rights Bill, which includes an end ‘no fault evictions’ and is due to come into effect later this year, could be encouraging more London landlords to sell than in other parts of the country. Rightmove finds that nearly one in four, or 24 per cent, of London properties for sale on its platform in 2024 were previously rented out. This compares to one in five (20 per cent) in 2023.
The corresponding numbers outside London were 15 per cent in 2024 and 13 per cent in 2023.
London’s rental hotspots
In terms of where in the capital is seeing rental growth, the data points to the outer boroughs suggesting that London tenants have been competing for homes in traditionally better-value locations further from the city centre.
The average rent in inner London is £3,180pcm, a 2.2 per cent increase on last year, while asking rents in outer London are £2,341pcm on average, up 2.7 per cent on 2023. Drilling down to a local level, the majority of areas exhibiting a significant increase in rents were in outer London and had good transport links.
Topping the list is Thornton Heath in Croydon, which saw a 14 per cent year-on-year increase, and benefits from a quick trainline that gets you into central London in 25 minutes. Harlesden in Brent has also seen rapid rental growth in the last year with increases of 12 per cent. This area is set to be the location of the Motherland spin-off, Amandaland, as the show’s star Amanda relocates to South Harlesden (or So-Ha as she calls it) from Chiswick.
Rents in Greenford, Ealing, were also up 12 per cent annually. The area is renowned for its transport links, both within and outside London; the A40 runs through it and out westwards, while North Greenford is served by Sudbury Hill station, on the Piccadilly line, and Greenford itself is on the Central line.
The only inner London area that showcased significant rental growth was Bayswater in Westminster. This area has been the centre of a £3 billion regeneration project that will see the former Whiteley department store transformed into 139 luxury apartments, a Six Senses wellness hotel, 20 shops and restaurants, a Third Space gym and an Everyman cinema. The area has seen 11 per cent year-on-year rent increases.
“While new tenants are still paying more than they were at this time last year, the pace of growth continues to slow,” says Rightmove’s Colleen Babcock.
“However, though this is the big picture of market activity, agents on the ground still tell us that the market is very hot, and some areas have improved more than others when it comes to the supply and demand balance.
“Our own data shows that the average rental property is still receiving 10 applications per property, which is lower than the peak, but still double the pre-pandemic norm.”
List of London rental hotspots
|
Area |
Borough |
Average rent growth year-on-year |
|---|---|---|
|
Thornton Heath |
Croydon |
14 per cent |
|
Harlesden |
Brent |
12 per cent |
|
Greenford |
Ealing |
12 per cent |
|
Barnes |
Richmond upon Thames |
12 per cent |
|
Biggin Hill |
Bromley |
11 per cent |
|
Bayswater |
Westminster |
11 per cent |
|
East Finchley |
Barent |
11 per cent |
|
Deptford |
Lewisham |
10 per cent |
|
Northolt |
Ealing |
10 per cent |
|
East Bedon |
Hounslow |
10 per cent |