Navigating the First Fall in Rents for 15 Years: Practical Steps for London Landlords | Landlord News | Rentals & Sales

Understanding the 2025 Rent Decline: What Landlords Need to Know

For the first time since 2010, average rent levels in Great Britain have recorded a decline—a 0.7% drop across the country, with London seeing an especially notable 2.7% fall. This shift follows a steady upward trend over the past decade and signals a changing market landscape.

Five out of eleven regions, including London, South East, East Midlands, Yorkshire & Humber, and Wales, saw rent reductions by the end of the year. Concurrently, rental stock increased by 6% compared to 2024, now nearing pre-pandemic levels—just 8% below 2019. Importantly, this rise in available properties is driven primarily by weaker tenant demand rather than a surge in new landlord listings.

Why This Matters for London Landlords

London landlords face the largest rent dip, which directly impacts rental income and portfolio valuations. For single-unit landlords or those with HMOs, this might mean tighter margins, especially if mortgage costs or maintenance expenses remain constant or increase. Portfolio landlords should note that this trend could affect overall yield and cash flow, necessitating a review of rent-setting and investment strategies.

Accidental landlords who may rely on rental income to cover mortgage payments might feel increased pressure if rents continue to drop or vacancies lengthen.

Practical Implications Across Your Operations

Rent Pricing Strategy: With the average rent falling, landlords must avoid overpricing properties. An inflated asking rent risks longer void periods and tenant churn. Benchmarking local rents is critical—use sources like local letting agents, Rightmove, or Zoopla to track comparable listings weekly.

Tenant Demand Monitoring: The increase in stock alongside weaker demand suggests tenants have more choice. This shifts bargaining power towards renters, making it essential to maintain property standards and offer competitive terms to attract and retain tenants.

Financial Planning: Prepare for continued volatility by revisiting budgets and cash flow forecasts. Factor in potential rent decreases and longer void periods. For portfolio landlords, scenario planning around different rent and occupancy levels can inform decisions on property sales or refinancing.

Regional Variations: The rent decline is not uniform. Landlords operating outside the five affected regions might still experience stable or rising rents. Tailor your strategy to your specific market, and keep abreast of regional data updates.

Immediate Next Steps for Landlords

Review Current Rent Levels: Compare your rents with recent market data. Adjust new tenancy offers and renewals accordingly to remain competitive.
Engage with Your Letting Agent: Discuss local demand trends and marketing strategies. Agents can provide timely insights and suggest incentives or flexible terms to reduce voids.
Audit Property Condition: Ensure your properties are well-maintained and appealing, as tenant choice increases. This can justify rent levels and minimise void periods.
Update Financial Forecasts: Incorporate the latest rent and occupancy trends into your budgets. Consider stress-testing for further rent reductions.
Plan for Tenant Retention: Open communication with existing tenants about lease renewals can pre-empt longer vacancy periods.

How Rentals & Sales Can Support Your Strategy

Our team offers tailored portfolio reviews, compliance audits, and pricing strategy consultations to help landlords adapt to evolving market conditions. We combine market data with operational insights to maximise rental income and minimise risks.

Compliance Disclaimer: This article is for informational purposes only and does not constitute legal advice. Landlords should consult relevant professionals or authorities regarding specific compliance obligations.