Less impacted by geopolitical events than the sales market, the prime rental sector remains characterised by strong demand and constricted stock levels. After a quiet winter, a busy summer market has confirmed the return of traditional seasonality. The market has been heading this way for 18 months, but this year it has been firmly apparent.

There are clear differences in behaviour amongst different types of tenants, too. The core domestic market – sub £1,500 per week – has been performing particularly strongly with an increase in transactions since last year, while there’s been nominal uplift in rental rates, too. Characterised by young professionals and students, the market for studio and one-bedroom flats – between £550 and £1,250 per week – has been especially active. With no let-up in demand throughout the year, stock is constrained. This is the level of the market where landlords are more likely to sell up – and we are seeing strong competition for properties.

This competition has translated into annual rental growth of 3.7% across the sub £1,000 per week bracket, considerably outstripping the £1,000–£2,000 per week tranche, at 1.9%. In the second quarter of 2026 alone, the lower-value segment saw 0.7% growth – and we are expecting to see an even stronger third quarter.

The market for family houses in traditional areas such as Kensington, Chelsea and Notting Hill remains similarly robust, with a notable uptick in Belgravia: families are attracted by the strong choice of independent schools, an improved retail offering, and proximity to the West End. Last year saw a swing towards flats as tenants absorbed changes to inheritance tax and non-dom rules – but now demand is balanced between the two.

It’s a different picture at the higher end of the market where there are more discretionary and international tenants, and we have seen a greater impact from the Middle East conflict. An expectation of strong demand from people retreating to their familiar bases in Knightsbridge, Marylebone and Mayfair was not realised. Relocations from the Gulf are slightly down, and at the top end of the market there’s a modest softening of prices.

Amongst this group there are certainly perceptions – whether they are correct or not – around safety, as well as uncertainty surrounding the government’s tax position. These factors are translating into hesitancy from this group, and questions are being asked about how tied to London people wish to be.

That being said, we are seeing indications that September will once again be the busiest time of year for lettings as the core family market settles into new homes and young professionals sign new contracts – a gear shift from last year, when the nervousness in the run-up to the Autumn Budget caused many to hang back. A new trend has been the uptick in empty nesters. They are not all would-be buyers; many are actively choosing to rent as a lifestyle choice.

That said, there’s definite crossover between the sales and rental markets in something of a ‘seesaw’: for every client we give over to our sales colleagues, we are getting one back. In the wake of the new Renters’ Rights Act rules, when tenants are terminating their contracts, landlords are considering their options – do they keep or sell? Some landlords who initially decided to sell have since returned to us and are faring well, with few new investors to compete with.

Those who stick in the lettings market will have to contend with the differing mindsets of tenants. Faced with a scarcity of stock at the sub-£1,250 a week level, domestic tenants continue to be less area-specific than a few years ago. However, at the discretionary, prime level of the market, an expectancy that there will be an imminent deluge of unsold flats has led to more targeted requests. They may well be disappointed. In such a climate, what most tenants really value, however, is security of tenure. If vacillating landlords insist on a six- or 12-month break clause, there will be a smaller pool of prospective tenants for them to access.

We do expect to see the mainstream and prime markets collide this autumn. Despite the only unknown of the Burnham Budget, it should be a strong end to the year.

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Understanding the Renters’ Rights Act

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