Is the London Property Market Dying? Why Landlords Are Selling Their London Properties

Decreasing Demand

As of September 2025, tenants in London were paying £2,148 less per year than in October 2024. Average rents have decreased countrywide over the past 12 months by 0.4%, whereas London rents fell by 0.6%. More availability of rental properties means that landlords have to compete harder for tenants, which could contribute to the decrease in demand for rental properties. Net migration to the UK has also declined by almost half in 2025 – according to Hamptons, 90% of people arriving in the UK seek housing in the private rental sector, so this also contributes to decreased demand. 

More people are working from home since the 2020 COVID-19 pandemic, as the lockdown requirements for working remotely proved that working from home was, in fact, possible. For many employees and employers, working from home is preferable to commuting and paying for business premises. This means that fewer people need to live in large cities and thus the demand for housing in London decreases, as workers can live elsewhere and still work for the same company.

Landlords can adjust for decreased demand by ensuring rents are competitive, enhancing their property’s appeal, especially for long-term tenants, and introducing more flexible leasing models or incentives to diversify their tenant base and reduce void periods. 

Falling Property Prices

During 2025, more homes in London sold at a lower price than anywhere else in England and Wales, with flat owners reporting losses of up to 34%. Again, this is potentially due to more available housing stock, higher costs and tax obligations. This does vary throughout London, however, with areas like Havering, Waltham Forest and Lewisham reaching all-time highs in property prices, whereas the more expensive areas like Kensington & Chelsea dropped by 16.5%.

House prices remaining stagnant or falling can lower the total returns for a landlord looking for both rental yield and appreciation on their investment, and borrowing becomes more risky, as loan-to-value ratios tighten.

Landlords and investors can take action by focusing on the fundamentals – target areas with strong transport links, employment growth, and planned infrastructure for a more stable investment. Look beyond prime central London locations and consider investing in the outer boroughs for a better risk/return balance. 

Renters’ Rights Act & Other Regulations 

The Renter’s Rights Act is now law, and the key changes will take effect from May 2026, which represents the largest overhaul in renting laws for decades. Under the new Act, Section 21 ‘no fault’ evictions are abolished, and landlords need grounds to repossess their properties, automatic periodic tenancies are replacing fixed-terms, rent increases are limited to once per year, and tenants have the right to challenge them, plus a ban on bidding wars and off-market offers above advertised rents. Other changes are also coming, such as the Decent Homes Standard and Awaab’s Law being extended into the private rental sector. These changes have shifted bargaining power towards tenants and away from landlords, who may choose to sell off rental properties rather than manage more regulated tenancies or spend money getting their properties up to standard. 

Landlords should ensure they have systems in place ready for these changes, including updated contracts, documented processes and professional property management. Focus on more reliable tenants who are likely to stay longer, avoiding void periods.