Rents Rising Again as Tenant Demand Outpaces Supply: What London Landlords Need to Know

RICS Report Signals Rising Rents Amid Strong Tenant Demand

The Royal Institution of Chartered Surveyors (RICS) has reported a notable shift in the UK rental market: tenant demand is now increasing while landlord supply remains tight. This comes after two quarters of flat or declining rental demand, marking a significant turnaround. For landlords, particularly in London where supply constraints are often more acute, this trend points to continued upward pressure on rents in the coming months.

Why This Matters: The Supply-Demand Imbalance

The fundamental driver behind rising rents is the imbalance between tenant demand and available rental properties. With fewer landlords offering properties and more tenants seeking accommodation, competition intensifies. This dynamic typically allows landlords to increase rents without significantly extending vacancy periods.

London landlords should note that while the sales market shows tentative recovery signs, regional disparities remain pronounced. London’s high demand and limited supply environment often amplify these trends compared to other UK regions.

Practical Implications for Different Landlord Profiles

• Single-Unit Landlords: Now is an opportune moment to review your current rent levels. If your rent is below market rate, consider a planned increase at tenancy renewal or when re-letting. However, ensure any rent rise complies with tenancy agreement terms and local regulations.

• HMO Landlords: HMOs often attract high tenant demand due to affordability and flexibility. With rising demand, you might optimise occupancy rates and evaluate service charges or rent levels accordingly.

• Portfolio Landlords: For those managing multiple properties, this period calls for a strategic review of rental pricing across your portfolio. Consistent benchmarking against local market rents can help maximise income without risking tenant turnover.

• Accidental Landlords: If you’ve recently inherited or purchased a property to let, the current market conditions suggest a favourable environment to achieve competitive rents. Engaging a letting agent for a professional market appraisal is advisable.

Reviewing Rental Pricing Strategies

Rents rising amid constrained supply means landlords should:

• Conduct a local market rent review using recent comparable lets in your area.
• Communicate clearly with tenants about any forthcoming rent adjustments, maintaining transparency to support good relations.
• Factor in potential increases in service charges or maintenance costs when setting rents.

Preparing for Increased Tenant Demand

With more tenants actively searching, landlords can expect shorter void periods but should be prepared for heightened tenant enquiries and viewings. Efficient tenant screening and streamlined turnaround processes will be essential to capitalise on demand.

Staying Ahead: Monitoring Market Trends and Policy

While no new legal obligations have been introduced, economic shifts can prompt regulatory changes. Landlords and agents should monitor:

• Local authority policies affecting rents or tenancy terms.
• Government statements concerning the rental market.
• RICS and other industry reports for ongoing market insights.

Recommended Immediate Actions

1. Schedule a Rental Market Review: Use recent data to benchmark your rents against comparable properties.
2. Plan Communication with Tenants: Prepare clear notices for any rent reviews or renewals.
3. Streamline Letting Processes: Ensure your tenant vetting and property turnaround workflows are efficient to handle increased demand.
4. Consult Professionals: Consider a portfolio review or compliance audit to spot opportunities and risks.

How Rentals & Sales Can Support You

Our team offers tailored portfolio reviews, compliance audits, and data-driven pricing strategies to help landlords navigate these market shifts confidently. Whether you manage a single property or a diverse portfolio, we provide actionable insights and operational support to optimise your rental income and tenant satisfaction.

Compliance Disclaimer: This article is for informational purposes only and does not constitute legal advice. Landlords should consult qualified professionals regarding specific regulatory or legal obligations.