Prime Central London (PCL) rental properties experienced a modest growth of 1.72% on re-lets in Q1 2025, according to data from LCP Private Office.
This represented more moderate growth compared to the final quarter of 2024, with the rental market gradually levelling after the dramatic post-Covid spike when growth hit 19.46% in 2022.
Despite the slower growth rate, PCL rents stood 23.6% higher than in 2019, the last ‘normal’ pre-pandemic year.
The average tenancy length reached a record 36.1 months in Q1 2025 – the longest in LCP’s records – reflecting the ongoing supply-demand imbalance in the prime London market.
Limited available stock encouraged tenants to extend their leases rather than venture back into the competitive rental market.
Meanwhile, the time taken to let vacant properties increased to 21.4 days in Q1, the longest since early 2024, though still below the pre-pandemic average of approximately 28 days.
Rental renewals saw average growth of 5.67% in Q1, a slight increase on the previous quarter but lower than the 7.27% recorded in the same period last year.
The tenant demographic continued to be dominated by EU nationals at 47%, while UK tenants decreased by 13% compared to Q4 2024.
There was also a notable shift in tenant occupations, with banking and finance sector tenants down 24% from the previous quarter, while those in professional services increased from 7% to 18%, and retail services rose by 18%.
Students maintained a significant presence, accounting for 24% of new move-ins.
The report pointed to ongoing uncertainty in the rental market, particularly around the implementation timeline of the Renters Rights’ Bill.
LCP advises landlords to maintain their portfolios where possible, suggesting capital appreciation may be on the horizon.
Liam Monaghan, managing director of LCP Private Office, said: “Our report shows signs of further stabilising in the rental market with more modest growth seen in rents agreed on re-lets.
“Landlords are still seeing consistent rent increases on renewals, as more tenants are choosing to remain where they are at a higher rent, rather than risk entering the highly competitive and undersupplied market.
“Some landlords may be considering selling up due to economic and regulatory challenges, which could place further strain on the private rented sector and push rents up higher.
“My advice however to current and prospective clients is to hold out where possible, as long overdue capital appreciation could be around the corner.”
He added: “With the global economic outlook in a state of flux, demand for UK property could increase, as a safe haven asset class which currently presents more security over other, more volatile, investments.
“The lack of clarity in the rental market, whilst it remains unclear when the Renters Rights’ Bill will take effect, is causing uncertainty for both landlords and tenants.”
