We are pleased to share our Q3 lettings report, highlighting the highest level of rental growth for both re-lets and renewals seen this year, reduced void periods and the longest tenancies on record.
We are pleased to share our Q3 lettings report, highlighting the highest level of rental growth for both re-lets and renewals seen this year, reduced void periods and the longest tenancies on record.
Average agreed rents on re-lets within our rental portfolio increased by 5.1% in Q3, the strongest quarterly growth we have seen this year. Whilst rental growth has been more modest in 2025, higher growth in Q3 is reflective of this being the busiest season for the rental market, especially with the return of students to London.
Similarly, rents agreed on renewals increased by 5% in Q3, maintaining the more consistent growth seen over the year to date. This is largely due to the ongoing supply and demand imbalance in London, encouraging more tenants to renew their lease at a higher rent, rather than risk looking for somewhere new
In keeping with the trend of long-term tenancies we have seen over the last few years, the average length of tenancy reached an all-time peak of 36.9 months in Q3. The increasing numbers of happy long-term renters is reflective of many tenants choosing the flexibility and lifestyle benefits of renting in prime locations over homeownership.
The average void period between tenancies was down to 10.83 days in Q3, significantly less than the previous two quarters. Again, this is expected during the busy late Summer / early Autumn period in the lettings market, when demand from students returning to London means available properties are snapped up quickly.
Tenants from EU Member States made up the largest proportion of new tenants in Q3 at 29% as many Europeans return to warmer climates over the Summer. Tenants from the UK, US and Asia Pacific were evenly proportioned at 21%, with student numbers from all regions increasing, highlighting the cultural diversity of London’s student population.
As anticipated, a large proportion of new tenants in Q3 were students, up to 41% from 12% last quarter. Consequently, we saw fewer tenants across most other industries, with tech workers down by 12%, professional services down by 10% and financial industry tenants down by 5%. Tenants from the creative sector increased marginally by 3%.
Whilst the Prime London sales market remained subdued, Q3 was seasonally busy in the rental market, reflected in the highest rate of growth for both re-lets and renewals we have seen this year.
The stock of available rental properties is also higher, with many frustrated sellers returning their properties to the rental market to ensure some form of income over the Autumn and Winter months. Despite these increases, rental stock and lets agreed remain consistently below pre-pandemic levels, with lower supply continuing to limit activity, drive prices up and reduce availability. Rental values, however, are now 37.3% above their 2017-2019 (pre-pandemic) average, according to LonRes. With this imbalance between supply and demand, it is yet to be seen when the market will plateau.
The Renters’ Rights Bill returns to Parliament for what is believed to be its final substantial debate on October 14th, after which it is expected to win Royal Assent. Whilst there is no confirmed date for implementation, the abolition of Section 21 (no-fault evictions) and the other changes are anticipated to become effective in late 2025 or early 2026. We will of course continue to update our clients as and when we know more.
It is yet to be seen what effect the legislation will have on the rental market, as agents, Landlords and Tenants alike learn to adapt to these new norms. There is a concern that further stock will be pulled from the market, whilst those landlords able to remain will continue to increase marketing prices to account for the changes.
If you have any queries or concerns, please do not hesitate to reach out.
Get in touch to discuss your rental property and how we can help you find high-quality and reliable tenants.
