Average weekly rents for clients of Foxtons, a leading London lettings agency, have edged upwards by 1% between the end of May and June 2025, reaching £593 per week. This rise marks a significant increase compared to the same period in 2024. The agency reports a renewed surge in renter interest alongside an uptick in new property instructions, creating a robust pipeline of lettings. June saw applicant registrations jump by 21% month-on-month, coming close to levels recorded in June 2024. Overall rental demand in London for 2025 remains closely aligned with last year’s figures, trailing only 4% year-to-date.

The rental landscape varies notably across London’s regions. Central London witnessed a 4% increase in registrations versus June 2024, while North London saw a 5% rise. Conversely, East London dipped by 6%, and South and West London experienced sharper declines of 15% and 22%, respectively. A key measure of market competitiveness, new applicant registrations per instruction, has stabilised across the year. East and South London have experienced the most significant softening in competitiveness as supply begins to meet demand.

This supply increase is emphasised by Foxtons’ data showing the strongest level of new rental listings in four years, with nearly 45,000 properties coming onto the market in June — an 18% rise from May. Listings during the first half of 2025 are 13% higher than the same period in 2024, signalling a return to a more typical market cycle and offering renters greater choice. Average applicant budgets have also grown modestly, rising 1% month-on-month to over £550 per week, 2% higher year-to-date than the previous year. More than 60% of renters secured tenancies below their stated budgets, reflecting the easing pressure from the expanding supply.

Gareth Atkins, managing director of lettings at Foxtons, said that the London lettings market showed strong signs of stability in June with increased supply easing pressure on renters. He predicted this balance would continue through the summer, providing more choice for tenants and a stable environment for landlords.

The broader UK rental market reveals a cooling trend compared with past years. Zoopla’s June 2025 Rental Market Report highlights that the national rental boom has ended, with average rents for new tenancies rising by just 2.8% over the past year—the slowest growth in four years. Despite an 18% increase in rental supply and strong competition among renters, particularly those on lower and middle incomes, growth in rental prices is moderating. Zoopla stresses the continuing need for affordable rental properties to meet ongoing demand.

Supporting this, the Office for National Statistics reports London’s annual rent inflation at 7.3% for the year to June 2025, slightly down from 7.7% in May. London’s average monthly rent stands at £2,252—the highest in England—underscoring the capital’s position as a premium rental market. Regionally, disparities are marked, with the North East experiencing the highest annual rent inflation at 9.7%, while Yorkshire and The Humber sit at the lower end with 3.5%.

This complex picture of rising supply and stable demand coincides with shifts in tenant preferences, including an increase in demand for prime and super-prime rental properties. High-end rentals priced at £5,000 or more per week are becoming more popular, driven by affluent renters seeking flexible living arrangements in prestigious areas such as Knightsbridge, Notting Hill, and Hampstead. This trend reflects broader socio-economic shifts, including changing inheritance laws and high stamp duty taxes influencing ownership decisions.

Meanwhile, rental price growth in London has generally slowed compared with previous years. Reports indicate a 1.5% increase between April 2024 and April 2025, the lowest rate since 2021. However, competition amongst renters remains high, suggesting ongoing strong demand despite slower inflation in rental costs. There is also a notable increase in demand for pied-à-terres and smaller units such as studios and one-bedroom apartments in central business districts, driven by return-to-office mandates requiring employees to maintain secondary city residences.

Overall, the London rental market in mid-2025 appears to be settling into a more balanced phase. A surge in supply, particularly in traditionally quieter months, has helped stabilise rents and increase choice for tenants, while demand persists at levels close to those of recent years. Affordability pressures remain a constraint to rapid rent growth, but the emergence of premium rental segments and continued strong applicant numbers present opportunities for landlords in a city famed for its dynamic and diverse housing market.

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Source: Noah Wire Services