"It would be wrong to conclude that PCL is no longer desirable. Demand for prime London property remains fundamentally underpinned by its status as a global city, its chronic undersupply of housing, and its long-term track record as a store of value."
- Alpa Bhakta - Butterfield Mortgages Limited
Prime Central London (PCL) is distinctive, often operating independently of the wider UK property market. Its global buyer base, acute supply constraints, and long-term resilience have historically insulated it from many of the pressures felt elsewhere, making direct comparisons between PCL trends and those across the rest of the country difficult.
Yet the wave of regulatory reform now moving through the private rented sector (PRS) and the buy-to-let (BTL) industry is an exception to this trend. The new regulation is proving impactful for landlords and investors operating at the prime end, just as it is across the BTL market as a whole.
Much has been written about the tightening of EPC (Energy Performance Certificate) requirements, the Renters’ Rights Act and leasehold reform. Less explored is how these changes intersect specifically with PCL, where property values, building types, and investor motivations differ materially from those in the wider market. For landlords, brokers, and buyers in this space, understanding the nuances will be critical.
EPC reform: a unique challenge for prime stock
Proposals to raise minimum energy-efficiency standards across the PRS have been widely discussed for many years, but their implications for PCL are especially complex. A significant proportion of prime London housing stock sits within period buildings, many of them listed or located in conservation areas. These properties were not designed with modern energy performance in mind, and retrofitting them can be costly, technically challenging, and in some cases constrained by planning rules.
For investors, this creates a dual challenge. First, there is the capital expenditure required to improve EPC ratings. Second, there is uncertainty around what will be deemed “reasonable” or exempt where improvements are impractical. While high property values can, in theory, support greater investment, yields in PCL can already prove comparatively modest, meaning additional costs can notably affect returns.
That said, prime landlords are often better placed than others to take a long-term view. With sufficient lead time, clear guidance and a pragmatic exemptions framework, EPC reform can become an opportunity to future-proof assets, enhance tenant appeal and protect long-term value. The key will be proportionality and consistency in how the rules are applied – and, of course, absolute clarity is still required around the new rules and when they will be introduced.
Renters’ Rights Act: stability versus flexibility
The Renters’ Rights Act marks one of the most significant shifts in the PRS in a generation, with the removal of Section 21 and a stronger emphasis on tenant security. In principle, greater stability is not a bad thing, and in the PCL market, many landlords already operate at the more professional end of the spectrum, with longer tenancies and higher standards of property management.
However, the loss of flexibility could be felt by some prime investors. PCL landlords are more likely to be internationally mobile, to let properties while working overseas, or to require possession for personal or family reasons. Ensuring that legitimate grounds for possession are clearly defined, workable in practice and efficiently processed by the courts will be essential to maintaining confidence.
There is also a question of tenant mix. Corporate tenants, diplomats and internationally mobile professionals are a cornerstone of the PCL rental market. A system that inadvertently discourages short-term or fixed-term rental lets risks reduce the choice for both landlords and tenants. If it is done well, reform can raise standards without undermining the diversity that makes the prime market function.
Nevertheless, with the Renters’ Rights Act coming into force on 1 May 2026, lenders and brokers will need to work closely with investors across the PCL market to ensure they are aware of and understand the new laws, allowing them to make informed decisions.
Leasehold reform: clarity needed for prime buyers
Leasehold and freehold reform has long been discussed, and while the direction of travel is broadly welcomed, its impact on PCL should not be underestimated. Flats make up a healthy portion of prime London listings, and complex lease structures, high service charges and short lease terms are already familiar pain points for buyers and lenders alike.
Greater transparency, fairer valuation mechanisms and simpler enfranchisement processes would all be positive steps. However, uncertainty during transition periods could stall transactions, particularly at the top end of the market, where buyers are highly sensitive to legal and structural risks.
For investors, leasehold reform may alter the relative attractiveness of certain buildings or tenures. For lenders and brokers, it reinforces the importance of detailed due diligence and specialist advice. As noted above, and true of any significant reform, clarity and communication will be vital to avoid unintended disruption.
Other policy pressures
Beyond these headline changes, PCL investors continue to navigate higher stamp duty, ongoing scrutiny of overseas ownership, and a tax environment that has become increasingly unforgiving for landlords and international owners and purchasers. Combined together, these factors explain why some have chosen to exit the market, and why speculation persists about the performance of PCL assets and the appeal of property investment in the UK more broadly.
Yet it would be wrong to conclude that PCL is no longer desirable. Demand for prime London property remains fundamentally underpinned by its status as a global city, its chronic undersupply of housing, and its long-term track record as a store of value.
The softening of prices and the regulatory challenges swirling overhead are undeniable, but a lot of key characteristics that draw people into living and investing in central London hold true, and we must be wary of dismissing those too quickly.
Embracing evolution in the PCL market
Regulatory reform will undoubtedly reshape the PCL market, just as it will the BTL sector as a whole. Some investors will reassess their strategies, and marginal stock may be repriced or repurposed. But evolution is not the same as decline.
For well-capitalised landlords willing to invest, brokers who understand the intricacies of prime finance, and buyers taking a long-term view, opportunities will remain. Higher standards, better-quality stock and a more professionalised rental sector can ultimately strengthen the market.
The challenge for policymakers is to recognise the distinct characteristics of Prime Central London and ensure that reforms are implemented with sufficient flexibility and foresight. With the right balance, PCL can continue to thrive as a world-class residential market, even as the rules of the game change.
