House for Rent in London - Phillips Harrod

Considering investing in a house for rent in London? If so, then there’s no better time to take a quick look over the performance of the property market since the start of 2025.

Different areas in the city vary in popularity and cost, of course. You’ll find though that here at Phillips Harrod it’s the prime and super-prime property market that piques our interest. The latter consists of properties which are let out from £5000 a week. That’s an incredibly niche market and one which appeals mainly to overseas investors.

Prime apartments for rent London

Looking at the market over a 12-month period to February this year, there are nine per cent more super-prime houses for rent in London than in February 2024. That’s according to a report by researchers at Knight Frank. Looking at prime London property though, the picture isn’t quite as rosy, with 10 per cent less prime property to rent in the first quarter of the year. Of course, it all depends on how you look at it. Fewer prime properties to rent, means more competition and potentially a higher rental yield.

Apartments for rent London: demand grows as supply falls

Certainly, there are slightly more tenants than properties to let over the same period (ie January to April, this year). It’s not a huge jump but at five tenants per property this year compared to 4.6 in 2024, the figure does show that demand is growing, while supply is diminishing. And for landlords that can only be a good thing.

For instance, the average prime rental property in Outer London increased by 0.6 per cent within the first three months of the year. That worked out at an annual increase of 0.8 per cent and will almost certainly mean a jump in the cost of any house for rent in London.

One property analyst blamed the falling supply of desirable houses for rent in London on a growing number of landlords leaving the sector.

“Demand is strong, so it’s obviously very positive for landlords who choose to remain in the prime London market,” he said. For tenants though, it’s a case of trying to seal in a deal before the rents go up higher over the coming months or year. For there is no doubt that will be the case.”

Apartments for rent London: Zoopla report

A report by property portal Zoopla and published in March this year, shows the company has no hesitation in predicting that rents will increase this year. Again, it’s due to a lack of supply, not just in London, but throughout the UK.

In fact, the average rental property in the prime London market is around 20 per cent higher than in January 2021 when the market picked up again after lockdown.

In terms of location, prime property in both North and East of the capital proved strongest, with the cost of a house to rent in London having increased by 2 per cent. This includes areas such as Islington and Wapping.

In Central London, ie Kensington to the City of London, rents haven’t risen quite as much. However, such is the nature of prime property investment in the Capital that many of the renters are expected to be from overseas and looking for a base here. That’s especially since the ending of the non-dom status and addition of the annual tax of enveloped dwellings (ATED) will make it more expensive to purchase apartments for rent in London than previously. Renting is therefore the next logical step.