A turn of phrase: interpreting the lettings market

“May you live in interesting times,” goes the well-known expression. Laced with irony, its origins are uncertain. Whatever its source, the implication is clear – periods when accepted norms are upset bring an instability that tests the resolve of those who live through them. In its oldest rendering, the saying is actually the first of a triplet, followed by the somewhat foreboding, “May the authorities pay attention to you,” and the only slightly less ominous, “May the gods grant you everything you desire”.

But are these sardonic undertones relevant to what’s happening in the prime central London lettings market?

Interesting times

Recent times have certainly been ‘interesting’ for both prime and super prime landlords and tenants. Following the surge in pent-up demand, unleashed after Covid lockdown restrictions were lifted, the market has had to acclimatise and return to more predictable seasonal patterns.

Nevertheless, gross yields remain some way above where they were at the start of the pandemic, up to 3.4% in June 2025 from 2.9% in March 2020. This is in light of continued price sensitivity in the prime central London sales market, with average prices down 5.5% on the post-pandemic peak of June 2022, compared with an increase in rents of 7.7% over the same period. While landlords who have remained in the market have seen some medium-term cashflow benefit in this regard, rents have now stayed flat on a quarterly basis since the end of last year.

Authority figures

This coincides with ‘the authorities’ fixing their gaze more firmly on the rental sector. The Labour government’s inaugural budget increased the stamp duty burden for those purchasing second homes, impacting the costs associated with starting or growing a buy-to-let portfolio. Lucian Cook explored the impact of this policy in our latest lettings market trends analysis.

Additionally, the most wide-ranging regulatory overhaul for the lettings market in over a generation is in the post, in the form of the Renters’ Rights Bill^*, which is still making its way through parliament. It is a complex piece of legislation and brings with it cost implications for some landlords. Worthy of note, however, is that properties where annual rents are at £100,000 and above are exempt from the new regulations. For prime central London, this accounts for 15% of the properties let by Savills since the start of 2024.

No place like home

The Budget also confirmed the unwinding of the non-domiciles (non-doms) tax status, first trailed by the Conservative government in 2024, which gave those impacted a year-long window to take advice and consider their position.

Anecdotal evidence suggests that a proportion of non-doms, some with long-established ties to London and the United Kingdom, have shifted their focus to the lettings market. Savills data goes some way to supporting this observation. It is generally more pertinent to the super prime space, starting at £5,000 per week, where motivators for both tenants and landlords differ even from the wider prime market. While some are looking to upsize or downsize in response to local and global tax changes, others are opting to 'try before they buy' or simply choosing to stay in their rental to avoid disrupting their children's education.

The proportion of these super prime renters aged between 40 and 60 rose to 65% in the first half of 2025, from 59% in 2024. This would be the right age and wealth bracket for those longstanding non-doms. Elsewhere, an 18% annual increase in prime central London tenancies of six months or less over the first half of the year could indicate certain households opting for a short-term solution while a longer-term plan is worked out.

Similarly, demand for lettings properties in prime central London is being driven by smaller, more manageable spaces, better suited to a globally mobile demographic. Rents for flats in these districts grew by 0.5% in the year to June, compared with a fall of -1.6% for houses. The same measure of change was strongest for one-bedroom properties, which grew by 2.3% on the year, in contrast with six-plus bedroom homes, where prices fell by -2.6%.

Flight to safe haven may also have its part to play, with those relocating to London more regularly ‘trying before they buy’ in the capital’s prime lettings market. North Americans, for example, are the most substantial super prime rental demographic, accounting for 39% in the first half of the year.

Nothing new under the sun

A period of flux is currently playing out in the prime central London lettings market, with new challenges emerging and different dynamics at play. However interesting the regulatory and market backdrop may be, this is a market that has experienced upheaval before. And, despite some inevitable volatility, it has emerged resilient – as the chart below shows.

While neither renters nor landlords may end up being granted ‘everything they desire’, perhaps there is another old proverb that better suits today’s market: ‘Fortune favours the brave’.

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Understanding the Renters’ Rights Bill

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^{Read the articles within In Focus: Prime Central London – Autumn 2025 below}