London rental demand has risen above last year's level, bucking the national trend, according to new analysis from property portal Rightmove.
Enquiries from prospective tenants in the capital are 7% higher in September, while demand across Great Britain remains 2% below last year.
Rightmove's Daily Demand Tracker shows London moved above the equivalent 2025 level on 7 September and has stayed ahead since. The tracker measures demand by the number of enquiries tenants send to letting agents on the portal.
The turnaround is sharp. London rental demand had averaged 7% below 2025 levels for the year to date, right up to the end of August, before moving into growth. London is also one of only two areas currently recording annual growth. The North East is up 1%, while every other region sits below 2025 levels.
Smaller homes lead London rental demand
Smaller properties drive much of the rise. Demand for 0-1 bedroom homes in the capital is up 10% year-on-year, compared with 4% nationally. These homes also carry a premium, with an average advertised rent of £1,904 per month in London against £1,150 across the country.
Larger homes are gaining too, though at a slower pace. Two-bedroom demand in London is up 6% and three-bedroom demand is up 2.5%. Nationally, demand for two-bedroom homes has fallen 4% and for three-bedroom homes 6%.
London rental demand is rising despite a shrinking supply of homes. The capital has 10% fewer rental properties available than a year ago, while stock across Great Britain is 0.4% higher. The average advertised rent in London is £ 2,763 pcm, up 3.1% year-on-year, compared with £ 1,578 pcm nationally, up 2.4%.
"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," said Colleen Babcock, Rightmove's property expert.
"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."
"London has an established private rented sector, with a large proportion of renters living in flats and smaller homes," comments Ouali Chriqy MNAEA, estate agent at eXp UK.
"The recent increase in demand for smaller properties is a clear indication of where the strongest rental demand is coming from. These homes are particularly attractive to younger renters, single households and people moving to London for education or work, providing the flexibility they need without the long-term commitment of buying.
"At the same time, high house prices and affordability constraints mean that, for many people, renting is not simply a preference but the more viable option."
