Prime rental values continued to develop in Q2 2025, albeit at a slower tempo, in line with the most recent Savills prime index.
Common prime rents grew by an additional +1.0% in outer prime London (up +2.5% on the yr), pushed by sturdy exercise within the household home markets of Barnes, Clapham, and Teddington. Whereas throughout the prime areas outdoors of the capital, rents grew by a lesser +0.6% as demand softened.
“Rental development has been extra tempered over the past three months, after a robust begin to the yr. The broader commuter belt and regional cities and cities, the place there may be sturdy demand, and inventory is most constrained, noticed the best enhance in rental values achieved. Whereas suburban markets with weaker commuter hyperlinks noticed values dip as tenants gravitate again in the direction of extra city places,” stated Jessica Tomlinson, analysis analyst at Savills.
| Q2 2025 | Annual development | |
| Prime Central London | 0.0% | 0.3 |
| Outer prime London | 1.0% | 2.5% |
| All prime regional | 0.6% | 0.8% |
Supply: Savills prime London and prime regional lettings indices, Q2 2025
Because the market continues to rebalance again in the direction of pre-covid norms, brokers are the reporting an even bigger misalignment between landlord and tenant expectations on value. Half of Savills brokers (50%) throughout the prime regional markets agreed that landlords on their books anticipated to realize greater costs over the previous three months, in comparison with simply 5% who agreed that tenants anticipated to pay extra.
“Forward of the Rental Reform Invoice turning into regulation, we anticipate that some landlords, predominately within the mainstream market, will enhance asking rents as they search to create enough headroom to keep up wholesome competitors amongst tenants. Whereas others will shift their focus to making sure that they’ve a superb high quality tenant in place,” continued Tomlinson.
“It’s inevitable that tighter regulation could trigger some landlords to undertake a extra cautious method or modify their portfolios, which is able to possible entrench an present undersupply of rental property. However the impression could possibly be minimised by some people seeing the chance in a weaker gross sales market and falling rates of interest.”
In prime central London, regardless of some non-doms lowering their footprint within the metropolis’s most unique postcodes, rental values have remained resilient (0.0% on the quarter).
Smaller or lower-value prime properties (these underneath £1,000 per week) preformed strongest on the quarter (+1.1% enhance on the yr). This displays a shift in demand towards extra home tenants and non-doms choosing smaller residences throughout the capital, whereas higher-value properties (+£5,000 pw) the place the market is usually extra discretionary have remained much less resilient (-2.1% fall on the yr).
“Neighbourhoods historically favoured by home tenants, resembling Marylebone, have recorded the strongest efficiency each quarterly and yearly. These tenants are sometimes in search of finest at school or turnkey properties that are outperforming the remaining,” added Tomlinson.
