When comparing London’s rental market in 2024 and 2023, the most striking thing is the similarity between the two years.
On the demand side, the number of new prospective tenants was 0.6% higher last year than in 2023, Knight Frank data shows. Viewings were down 0.2%, while the number of tenancies started edged down slightly further, by 6%.
Meanwhile, the number of new listings across prime central and outer London was 3% higher, Rightmove data shows.
The numbers signal some much-needed stability for the lettings market in the capital after several years of stock shortages due to tighter landlord regulations, higher mortgage costs, a growing tax burden for buy-to-let investors and the disruption of the pandemic.
As a result of more balance returning, the picture was also largely flat for rental values.
Average rents in prime central London rose by 0.7% in the year to December 2024, while the increase was 1.3% in prime outer London.
It also feels like “business as usual” in the world of corporate lettings, according to John Humphris, head of relocation and corporate services at Knight Frank. “It has been a solid start to the year with activity that has been queued up for several months,” he said.
Corporate relocations to London and the surrounding area are typically from the energy, finance, professional services, legal and tech sectors.
When you compare activity last year with 2023, there is also little change. The number of enquiries from corporate relocation agents fell 3.6% in 2024, Knight Frank data shows.
However, the end of the year was stronger, with a 15% increase in the final six months of 2024 compared with the same period in 2023. The uptick after July was likely caused by the greater sense of certainty that followed the election.
It is too early to assess whether the economic volatility in the early days of 2025 will have an impact on company relocation plans in 2025.
Meanwhile, the other risk this year is that supply may dip as the Renter’s Rights Bill comes into force.
Just as more stability returns to the market and rental values calm down, the new rules could unintentionally push rents higher by decreasing supply.
The Bill includes proposals designed to tip the balance of power from landlords to tenants, which means it may become harder to evict tenants and risks could increase around rental income. That is in addition to a series of tougher green regulations.
By Tom Bill, head of UK residential research at Knight Frank
