Three weeks before the introduction of the Renters’ Rights Act, falling supply is keeping upwards pressure on rents in prime London markets.
The number of new rental listings in the first quarter of this year in prime central (PCL) and prime outer London (POL) was 8% lower than the same period in 2025, Rightmove data shows.
Meanwhile, the number of new prospective tenants increased by 7% over the same period.
Supply has fallen in recent years as it has become less attractive to be a landlord. In addition to a succession of regulatory and tax changes, the Renters’ Rights Act, which comes into effect next month, means landlords face added uncertainty around rent increases, repossession rules and selling their property.
Putting the decline into context, the number of Rightmove listings in Q1 was 15% below the five-year average. The number of new prospective tenants was flat over the same period, Knight Frank data shows.
As a result of this growing imbalance, average rents have been pushed higher.
In the year to March, rental values in PCL rose by 1.2%, which takes the total increase over the last decade to 29%.
In POL, the annual increase was 2.8%, producing a rise of 24% since 2016.
Demand increased even more notably in March, partly due to the conflict in West Asia, which is about to enter its sixth week.
The number of new prospective tenants was 16.6% higher than the same month in 2025. For properties valued at more than £1,000 per week, the increase was 16.9%.
The first reason for the increase was the spike in mortgage rates that took place last month, as higher energy costs pushed up inflation expectations, which led financial markets to conclude the Bank of England will need to keep rates higher for longer.
The best five-year fixed rate deals currently exceed 4.8%, which is more than a percentage point higher than before the military action started.
Higher borrowing costs mean more prospective buyers have decided to rent until the outcome of the conflict becomes clearer, said David Mumby, head of prime central London lettings at Knight Frank.
Demand has also increased among people looking to temporarily move to the UK from West Asia.
Although a ceasefire was announced this week, heightened geopolitical uncertainty means people are keeping their options open.
“We have seen an influx of enquiries from the Middle East for people looking at short-term rentals of six months or less,” said David. “They tend to be British, European or North American nationals with families who have moved to the Middle East recently, but who already have a network in London.”
