Navigating Falling New-Let Rents: Strategic Steps for London Landlords as Market Shifts Continue

Understanding the New-Let Rent Decline and Its Implications

October 2025 data from Letting Agent Today shows rents for newly let UK properties have fallen by 0.5% year-on-year, averaging £1,399 monthly. This marks the third consecutive month of rental price declines, with Inner and Outer London experiencing marked drops compared to more stable or slightly growing southern regions. Concurrently, tenant demand has dipped by 12% nationally, while rental stock availability has increased by 8% year-on-year.

For London landlords—whether managing single units, HMOs, or portfolios—this signals a changing rental landscape demanding immediate attention. The decline in new-let rents could compress income streams if asking rents are not adjusted accordingly. However, rent renewals tell a different story; they have increased by 4%, suggesting landlords still have leverage to boost existing tenancy incomes above inflation.

Why Does This Matter? Impact on Different Landlord Profiles

• Single-unit landlords in London might find it harder to attract new tenants at previous rent levels, increasing vacancy risk if rents are set too high.
• HMO operators should be vigilant as demand shifts could affect multi-tenancy turnover, potentially extending void periods.
• Portfolio landlords must balance growth in renewals with caution over new-let pricing, as too high rents could prolong vacancies and affect overall yield.
• Accidental landlords may face unexpected income volatility and should seek advice to adjust rents pragmatically.

Practical Steps to Mitigate Risks and Plan Ahead

1. Conduct a Regional and Local Market Review Now: Benchmark your properties’ rents against current local new-let and renewal data, especially focusing on London boroughs. Where no direct data exists, use nearby comparable areas or consult your letting agent for insights.

2. Adjust New-Let Rent Strategies: Consider aligning asking rents with prevailing market declines to reduce void periods and maintain occupancy. Avoid overpricing properties in low-demand areas.

3. Communicate With Your Letting Agents and Tenants: Ensure landlords understand contrasting trends between new-let and renewal rents to manage income expectations accurately. Be transparent with tenants about impending renewal increases, following statutory notice requirements.

4. Plan Renewal Conversations Carefully: Given that renewal rents are rising by 4%, landlords should prepare renewal offers with clear justification based on market data and maintenance/upgrades history to support increases.

5. Monitor Stock and Demand Dynamics: Keep an eye on the rising availability of rental stock and dipping tenant demand; these can shift quickly and require rapid pricing or operational adjustments.

6. Review Financial Forecasts and Cash Flow: Incorporate these rental trends into budgeting to anticipate potential income fluctuations, especially if some properties struggle to achieve prior rent levels on re-letting.

How Rentals & Sales Can Support London Landlords

Our team specialises in helping landlords navigate shifting rental markets with tailored portfolio reviews, compliance audits, and pricing strategy consultations. We provide up-to-date market intelligence to craft rent-setting approaches that balance occupancy and income growth effectively.

Whether you operate a single unit or an extensive portfolio, we can help you adjust workflows and tenant communication strategies to mitigate risks and capitalise on renewal rent growth opportunities.

Compliance Reminder

There are no new legal obligations arising directly from these market data changes. However, landlords must continue to comply with all tenancy renewal procedures, including providing proper notice for rent increases and adherence to tenancy agreement terms.

Acting promptly on these trends will help London landlords protect rental income and maintain tenant relationships amid ongoing market fluctuations. Contact Rentals & Sales for a strategic review tailored to your portfolio needs.