Prime rents continue to rise as landlords adjust portfolios amid higher costs and regulatory changes
Rental values across prime markets grew over the past three months, with landlords increasingly seeking to offset higher costs associated with regulation, taxation and borrowing.
Q2 2026 | Quarterly growth | Annual growth |
Prime central London | 0.4% | 1.5% |
Outer prime London | 1.2% | 2.5% |
All prime regional | 1.3% | 1.3% |
Source: Savills prime London and prime regional lettings indices, Q2 2026
According to Savills’ latest prime rental indices, values increased by 1.3% across the prime regional markets and by 1.2% in outer prime London during Q2 2026, while prime central London recorded a more modest rise of 0.4%, signalling a return to slow but steady accumulation of rental gains.
“Landlords are continuing to adapt to a changing regulatory environment following the introduction of the Renters’ Rights Act, while also contending with higher mortgage costs and an increased tax burden. As a result, many are reassessing rental values across their portfolios to help offset rising operating costs,”
“At the same time, the implementation of the RRA has further prompted some landlords to test the sales market, further reducing the amount of stock available. All this combined has supported growth in rents, despite economic headwinds. However increases are strongest in markets most impacted by the RRA,” comments Jessica Tomlinson, research analyst at Savills.
Landlord and tenants increasingly misaligned on price
When asked about the landlords on their books, almost half of Savills agents in London (48%) and seven in ten agents outside the capital (71%) identified the Renters’ Rights Act as landlords’ primary concern, with the abolition of Section 21 cited most frequently as the most significant issue.
Agents also reported that around half of landlords were considering reviewing rental values. This disruption is reflected in a growing misalignment between landlord and tenant expectations on price. The vast majority (82%) of agents in London said the landlords they represent expect rental values to increase, compared with just 30% of tenants who expect rents to rise.
South West and West London lead growth
Rental growth was strongest across more domestic South West (1.6%) and West London (1.4%) markets, with neighbourhoods including Fulham, Chiswick and Wandsworth seeing the greatest upward pressure on rents.
Prime central London was the more muted by comparison, as rents increased by 0.4% in the quarter, according to Savills.
However, across the Capital, rental growth has been strongest among properties falling within the scope of the Renters’ Rights Act. In prime central London, rents for homes below the £100,000 per annum threshold rose by 0.7% in Q2, compared with 0.1% for higher-value properties.
A similar pattern was seen across outer prime London. Over the past year, rents for properties affected by the RRA increased by 2.7%, compared with 1.7% for those above the threshold.
“Tenants in prime central London are becoming increasingly discerning, with demand focused firmly on best-in-class properties that offer strong value for money. With less urgency in the market, right pricing is becoming increasingly important, with tenants more price-sensitive and willing to shop around,” continues Jessica Tomlinson.
“Landlords who ensure properties are accurately priced from the outset will attract and retain the best quality tenants.”
Regional cities and towns see strongest growth
Across the prime regional markets rents rose 1.3% in the quarter, adding to the 1.0% growth in Q1 that offset the pressure on rents seen in the second half of 2025.
Growth was led by the South West and Cotswolds and regional towns and cities. These areas reported quarterly growth of between 1.7% and 1.9%, as seasonal demand put additional pressure on rents.
What’s next for landlords?
For landlords who remain committed to the sector, the corresponding rental growth should provide some upside to offset the increased regulation, says Savills.
Since March 2020, net growth has averaged 26.0% across outer prime London and 28.0% across the regional markets.
Over the next five years, Savills has forecast additional growth between 6-13% across prime markets as the availability of stock remains constrained.