WHO ARE THE LANDLORDS?

Supply across the rental market has undoubtedly been affected in the run-up to the Renters’ Rights Act (RRA) coming into force in May 2026. Although prime central London has not been immune, the area’s varied landlord profile, alongside the fact that many high-value tenancies sit outside the scope of the Act, has limited the impact compared to other parts of the market.

A higher proportion of stock is traditionally held by larger institutions, the “Great Estates” and long-term international and domestic investors. Over the past year, only half of Savills landlords in prime central London were private individuals, and nine in ten had purchased the property specifically for investment purposes. This paints a different picture from other parts of the market, where employment location – and, to a lesser extent, an inability to sell – play a larger role in the decision to let a property.

This means central London markets tend to have fewer accidental landlords or former owner-occupiers who may be less committed to a long-term rental strategy. Larger landlords are also often better equipped to withstand market changes.

As a result, landlords in central London face greater competition to attract demand, making it more important than ever to understand who tenants are and what they want.

WHO ARE THE TENANTS AND WHAT DO THEY WANT?

Prime central London has long been an international destination, with its business, cultural and educational offerings appealing to a broad range of tenants. While tax changes over the past decade have weighed on demand from international buyers, tenant interest remains strong.

Over the past year, 35% of Savills tenants in central London were UK nationals. By contrast, in the more domestic markets of outer prime London, UK nationals accounted for around half of tenants.

Western Europeans and North Americans make up the largest sources of international demand, while Eastern Europeans feature more strongly in certain submarkets and local areas, such as Knightsbridge and Mayfair.

The capital also attracts tenants of all ages. Under-30s feature prominently, often drawn by lifestyle or educational factors.

However, traditional central locations such as Knightsbridge, Belgravia, Kensington and Marylebone attract a higher proportion of tenants aged 50 and above, as does the super-prime market, where rents exceed £5,000 per week.

This diverse pool of affluent, multinational tenants has become increasingly discerning in recent years, particularly given the strength of rental growth.

Therefore, best-in-class homes continue to attract the strongest demand and secure premium rents. Properties in ‘immaculate’ condition commanded a 31% premium compared with those considered to be in ‘moderate’ condition. This underlines the importance for landlords to understand how condition can influence performance, and the potential uplifts associated with the most desirable homes.

WHAT DOES THIS MEAN FOR THE RENTAL MARKET?

Despite continued rental growth, the pace of increases has slowed across prime central London as supply and demand have normalised. However, growth remains strongest for smaller, lower-value properties and those affected by the RRA. By contrast, rental increases at the top end of the market have eased as these discretionary tenants have more choice and values move closer to the limits of their budgets.

Despite the recent slowdown, prime gross yields have still risen significantly over the past five years.

A flat in prime central London now achieves an average gross yield of 4.0%, compared to 2.8% five years ago. While houses sit at 3.3%, up from 2.6%.

Looking ahead, prime central London’s diverse demand base should continue to support further rental growth over the next five years, particularly while sentiment in the sales market remains fragile. Ultimately, given the competition to attract the best tenants, future rental growth is likely to vary not only by property type and location but also by condition.

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Understanding the Renters’ Rights Act

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