"Under RRA, you cannot accept offers above your asking price, so landlords need to be confident that asking prices reflect real demand in their local market"
- Gareth Atkins - Foxtons
London rental yields remained broadly stable in March as the lettings market continued its gradual recovery, supported by rising supply and improving seasonal demand.
Activity picked up as the market moved deeper into the spring period, following a quieter winter phase. Although renter demand has not yet returned to last year’s levels, the latest data shows a consistent upward trend. At the same time, an increase in available properties has begun to ease pressure across the market, helping conditions move towards a more balanced position.
This shift comes at a key moment for the sector, with the Renters’ Rights Act due to take effect this week, introducing new rules that will influence pricing and landlord strategy.
Demand recovers as supply expands in rental yields outlook
Applicant registrations remained below the same period last year, falling 10% year on year in March. However, activity improved on a monthly basis, reflecting typical seasonal patterns as renters return to the market ahead of the summer.
The increase suggests growing confidence among tenants, even though demand has not yet reached previous peaks. This gradual recovery continues to support stable London rental yields, particularly as supply rises in parallel.
New listings increased by 4% compared with last year, extending a steady upward trend in available stock. Higher supply levels have helped reduce pressure on renters and contributed to a more measured pace of market activity.
As a result, competition among tenants has eased further. The number of new renters per instruction dropped 9.4% year on year, indicating that prospective tenants now face less intense bidding conditions than in the previous cycle. Month-on-month figures also softened slightly, reinforcing the impact of increased choice across the market.
Stable budgets underpin market performance
Tenant affordability has remained resilient despite wider economic pressures. Average renter budgets held at around £542 per week year-to-date, marking a slight increase compared with last year.
Monthly figures showed little movement, suggesting that spending power has remained consistent even as activity levels have risen. This stability has helped underpin overall market performance, supporting both transaction levels and pricing.
While rental growth has moderated, steady budgets and improving supply conditions have contributed to a more sustainable environment for both landlords and tenants.
Pricing focus sharpens ahead of regulatory change
"The Renters’ Rights Act comes into force on 1 May, landing in a busy spring market," said Gareth Atkins, managing director of lettings.
"Between February and March, supply rose 11% while rents remained steady. As competition between landlords builds, pricing matters more than ever. Under RRA, you cannot accept offers above your asking price, so landlords need to be confident that asking prices reflect real demand in their local market."
"The broader reforms have been known for some time, and we are well prepared to help our clients transition to the new regulations. For well-presented homes priced sensibly, we expect activity to remain steady, with tenants willing to commit longer-term where they see value."
His comments highlight a shift in landlord strategy as the new rules take effect. With limits on accepting higher offers, accurate pricing aligned to local demand is becoming more important.
Overall, the lettings market continues to move towards greater balance. Rising supply, steady budgets, and a gradual recovery in demand are shaping a more stable outlook for London rental yields as the sector adapts to incoming regulatory changes.
