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London Lettings Market Update

July 19, 2022

Figures for the second quarter of 2022 are in, and the results are as expected: the London lettings market is red hot, quite possibly the most competitive market on record. At the same time, mortgage rates continue to track at low rates, property supply remains tight, and a revolutionary rental reform is on the horizon.

So, just how are the current market conditions affecting landlords, and renters, and where to from here?

Average asking rents breaking records

Nationally, average asking rents (outside London) are rising significantly, up 11.8% from last year, to a record £1,126 per calendar month (pcm).

London's letting market is also experiencing soaring growth and record average asking rents; the annual growth of the capital's rental market now exceeds 15%, representing the highest ever annual growth rate of any region. London's average rental price is currently £2,257 pcm.

Historically low interest rates have also created a divide in affordability between mortgaged and rented properties. According to Rightmove's affordability analysis, average mortgage repayments on two (or fewer) bedroom properties have increased by 13% in the past decade. In contrast, rental payments on comparable properties have risen by a colossal 40%.

Supply shortage continues to drive the market

The pandemic-driven mass exodus that saw many London residents fleeing the capital is nothing but a distant memory in today's market conditions. Instead, office workers, corporate tenants, international students, and more have returned in their droves, snapping up what was available and leaving London with a rental property shortage in their wake.

According to the latest figures, the availability of rental properties is down 47%, while demand is up by 8%.

Despite these figures, there are some positive signs that the pool of property choices is increasing, with the number of new rental properties joining the market rising by 5% from January to March (and 16% up from the shorter month of February).

It's a great time to be a London landlord

According to a recent survey, there is no loss of confidence in the market from landlords' perspectives. Despite any challenges in navigating EPC requirement updates or other legislative changes, a greater number of landlords intend to expand their property portfolios than reduce them. Of the landlords surveyed, 34% reported their intention to expand their portfolios within the coming year, while only 11% stated their intention to reduce the number of properties they rent out.

The recently released Fairer Private Rental Sector White Paper is set to create unprecedented reform in the private rental market. The paper's 12 recommendations include plans to significantly tighten rules around evictions, rent rises, and more. While some landlords are reportedly jumping ship in response to stricter regulations and ever-increasing taxes, most remain undeterred.

Thanks to historically low interest rates and considerable growth in rental asking prices, average landlord rental yields for Q2 of 2022 are a healthy 4.8% - up 0.7% year-on-year.

To find the most optimal buy-to-let neighbourhoods across London, landlords can use our rental yield map. This tool allows you to drill down to the areas achieving the highest ROIs, from postcode comparisons to the accuracy of street-based figures. You can find out how rental yield is calculated here.

Landlords should also consider prime investment opportunities in areas close to Crossrail stops on the outer fringes. As the trend towards remote working persists and the opening of the Crossrail transforms connectivity to outer-borough neighbourhoods, many stops along the Elizabeth Line are investment hotspots.

Related: London Rental Market Boom: What Your Property Could Earn & Legislative Changes

Top rental yields in London Q2

With the capital experiencing record-breaking asking rents, it’s no surprise that the top ten rental yield figures from the North, South, East and West of London are solid - none below 4.5%, many breaking the 5% threshold, and Creekmouth and Thamesmead South (particularly Yarnton Way) near Abbey Road enjoying yields of 6% and 6.7% respectively.

East London still leads the charge for the highest average rental yields.

Here are the top rental yields in London Q2 as of 28 July 2022:

North London

Ponders End


Brimsdown (near Freezy Water


Lower Edmonton (Claverings Industrial Estate)


Enfield Wash






Waltham Cross


White Hart Lane


Turkey St Station, Southbury


South London

New Addington


South Beddington




Thornton Heath


Biggin Hill










East London

Yarnton Way near Abbey Wood




East Ham








Little Heath




Ilford/Erith/Seven Kings/Canning Town


West London







South Greenford








Harrow and Wealdstone




What to do if you're a renter

With so much growth and competition in the London letting market, renters are inevitably facing difficulties. There's no escaping the fact that it's currently a tight and highly competitive market, but there are some things you can do to improve your chances of securing a good rental at an affordable price. These include:


Finding property to rent in London can be tricky at the best of times, and many of London's renters secured their deal through personal networking; all it takes is one 'friend of a friend' to be moving on and recommend you to their landlord. It may currently be a landlord's market, but most will still prefer to have a verified tenant ready to move straight in and avoid the marketing process.


According to a recent survey, 77% of renters are currently considering more than one neighbourhood when searching for their next rental; over half of those also said they were exploring three or more areas simultaneously. If possible, remain as flexible as possible to widen the pool of potential properties.


In such a competitive market, it's imperative to remain open-minded when viewing a property. If you come across a rental that has seen better days but can be improved with a lick of paint or other relatively affordable improvements, make those improvements a condition of your offer. This can give you the edge over other renters who immediately dismiss the property based on first impressions.


Wherever possible, try to plan your move during the off-peak months. Many moves are planned around the academic calendar, particularly between June and September. If you can, hold off until the winter months - it may not feel like the most attractive time to move, but you'll be up against considerably less competition. Additionally, try to make a beeline for rentals that are already vacant - landlords don't want their properties sitting empty, and you may even be able to strike a good deal to get in fast.

Related: The Cheapest Places To Rent In London

Related: Renting Costs And Knowing What To Expect

Where to from here?

The remaining summer months will inevitably continue to track much the same; renters must have their wits about them and act fast on solid opportunities, and landlords will continue buying up and renting out more properties as supply allows. Rental prices will likely continue to creep up as the supply shortage persists, but the rate of growth is expected to slow as the end of the year creeps closer. In the longer term, there are a good number of mammoth regeneration projects in the works across London, with thousands of new homes currently being developed.

Thinking of buying, selling, or renting in London?

If you’re searching for a rental property, take a look at our available properties here.

Or, if you’re a landlord or homeowner considering putting your property up for rent, click here to find out how we can help, or give us a ring on 0204 5793 011.

You can also find out how much your property would rent out for, or sell for, through a free online property valuation.

We already know how much your rental property is worth. Type your postcode to find out and get an online valuation within 60 seconds.

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