London bucks the trend as tenant demand rises amid national dip

Demand from prospective tenants in London has risen annually, bucking the wider national trend, Rightmove data shows.

The portal’s Daily Demand Tracker shows that tenant demand in London moved above the equivalent 2025 level on 7th September and has remained ahead since.

Rental demand is measured by the number of enquiries sent to letting agents by prospective tenants on Rightmove.

Tenant demand in London is currently 7% higher than at the same point last year, Rightmove said.

Demand in the capital had averaged 7% below 2025 levels in the year to date, highlighting the scale of the recent turnaround.

One possible factor behind London’s recent rise in rental demand is that some would-be first-time buyers may be taking longer before committing to a purchase.”

By contrast, rental demand across Britain overall remains 2% below last year’s levels.

London is now one of only two areas currently recording year-on-year rental demand growth, Rightmove said.

The North East is also seeing demand rise – up 1% annually – while every other region remains below 2025 levels.

The increase comes despite a reduction in the number of homes available to rent in the capital compared to last year. While the number of available rental properties across Britain is 0.4% higher than at the same point last year, London’s rental stock is 10% lower.

London’s rental market also remains more expensive than the national average. The average advertised rent in London is currently £2,763 a calendar month, up 3.1% year-on-year, compared with the national average of £1,578, which is an increase of 2.4% annually.

Much of the increase in demand is being driven by smaller rental homes, the research shows.

Smaller rentals

Demand for studio or one-bedroom rental properties in London is up 10% year-on-year, compared with a 4% increase nationally.

Despite being the fastest-growing part of the market, smaller rental homes in London remain significantly more expensive than elsewhere. The average advertised rent for a studio or one-bedroom property in London is currently £1,904 a month, compared with £1,150 nationally.

Demand for larger rental homes is also rising in the capital, though at a slower pace. Demand for two-bedroom properties is up 6% year-on-year, while demand for three-bedroom homes is up 2.5%. In contrast, demand for two-bedroom and three-bedroom rental homes nationally is down 4% and 6%.

Buying challenges

Colleen Babcock, Rightmove’s Property Expert, says: “One possible factor behind London’s recent rise in rental demand is that some would-be first-time buyers may be taking longer before committing to a purchase.

“Affordability remains a challenge for many aspiring homeowners in the capital, particularly when it comes to saving for a deposit and bridging the gap between house prices and earnings.

“Mortgage rates remain relatively high and close to some of the highest levels seen in recent years, while the gap between house prices and earnings in London continues to make home ownership a challenge for many aspiring buyers.

“That could be encouraging some movers to stay in the rental sector for longer while they assess their options, save for a deposit or wait to see how support schemes such as the proposed Your First Home initiative develop. It’s too early to draw a direct link, but it may help explain why demand for smaller rental homes in London is currently rising faster than the national average.”