A combination of the war, its economic impacts and changing mortgage rates has meant that residential buyers are holding off buying in London and renting for longer instead, increasing rental demand and putting further upward pressure on rent prices.

Chestertons’ latest quarterly trends report suggests a 21% slowdown in sales enquiries year-on-year in March, which it says has fed directly into the rental market.

The company reported an 4.1% year-on-year increase in viewings in March as tenant demand increased. It also witnessed a 15% rise in offers month-on-month.

Rental supply continues to be constrained in the capital, especially with landlords leaving the market as a result of tax pressures and the Renters’ Rights Act, which comes into force later this week (May 1)

But Chestertons said the review also showed early indications of increased international demand, including interest from the Middle East in short-term lettings.

Stronger competition in the rental market

Adam Jennings, head of residential at Chestertons, said: “The 21% drop in enquiries in March looked dramatic, but it was early-stage demand that paused. People are taking longer to commit. There’s more checking, more hesitation, and more negotiation – but not a lack of intent. At the same time, that delay is pushing people into the rental market, which is why we’re seeing stronger competition and upward pressure on rents.

“If rates settle and the wider picture becomes clearer, we’d expect buyer demand to come back quite quickly – and with supply still tight, that could translate into a fairly sharp rebound in activity.”