Winkworth’s Autumn Report on Prime Central London found landlords adjusting to the Renters’ Rights Act during its first full quarter in force.
The estate agency’s Notting Hill team reports that many landlords now request a sales valuation whenever a tenant serves notice, because a new tenancy cannot be ended for the purposes of a sale within its first 12 months.
The report, which covers the third quarter of 2026, also analyses how the incoming High Value Council Tax Surcharge, known as the Mansion Tax, is affecting pricing around the £2m threshold. It examines how the market responded this summer to speculation about a lower £1.5m threshold, which the Chancellor has since ruled out, and why some prospective buyers are ‘renting for now’.
Demand for rented homes stayed strong. For every buyer registering at Winkworth’s prime offices, more than three prospective tenants registered, up from two in the previous quarter. Many of them are buyers in all but name, renting while they monitor the sales market, and many say they intend to buy next year.
Families based outside London who are renting a city base for children at university rather than buying one have joined them. Lets above £3,000 per week reached a record high across prime central London over the past year.
Owners who cannot sell, or prefer not to for now, are increasingly turning to the lettings market, with requests for lettings valuations up by around a quarter on a year earlier. Landlords are not leaving either. New rental instructions across spring and summer combined matched last year’s level.
Under the Renters’ Rights Act, short lets below the £100,000 annual rent threshold have lost much of their premium, because tenants can now give two months’ notice. Above that threshold, where the new rules do not apply, the proportion of new lets agreed through Winkworth has nearly doubled since May. Rents continued to rise where high-quality stock stayed scarce, with Pimlico in particular recording record rental values.
From April 2028, homes valued at £2m or more will face an annual surcharge of at least £2,500, based on a 2026 valuation. The tax is around 18 months away, but Winkworth’s analysis shows pricing is already responding.
The proportion of price reductions taking an asking price below £2m nearly doubled after the surcharge was announced, with most occurring in spring, which suggests much of the recalibration around this level has already happened. Sales agreed just above £2m have also proved more fragile, with some falling through before being agreed again at prices below the threshold.
Summer speculation that the threshold could fall to £1.5m more than doubled price reductions around that level. Winkworth says discussion of the Mansion Tax had one of the most significant impacts on the market this quarter.
“The Mansion Tax does not come into force until 2028, but our data shows the market began adjusting to it within months of the announcement,” said Mohammad Copley, insights manager at Winkworth. “Since then, asking prices across the £2 million threshold have been affected in our Prime Central London offices.”
“Furthermore, this summer, while a £1.5 million threshold was only under discussion, price reductions around that level also accelerated,” he added. “The Chancellor has since ruled out that proposal, but the lesson remains the same: the market responds to change quickly, long before anyone has to pay it, and sometimes before it even exists.”
Winkworth’s agents report that for most buyers the surcharge is an additional cost to consider rather than a deal-breaker, although it is clearly influencing decisions around the £2m mark.
Sales activity softened. Deal activity across Winkworth’s prime offices fell to its lowest level in 18 months, in line with wider market trends. LonRes data showed agreed sales across London’s prime market in early October running almost a third below the same period last year. Buyers who did commit negotiated strongly, with the average property achieving 94% of its final asking price and only one in eight homes selling at or above asking price, half the proportion recorded a year earlier.
Viewings were down just 7% year on year, but it took an average of seven and a half viewings to secure a sale, compared with five a year earlier. Much of the backlog of long-listed stock has cleared, with 71% of homes sold exchanging within a year of coming to market.
Larger properties took a greater share of activity, with nearly one in four sales involving homes of three or more bedrooms, up from fewer than one in ten a year ago. Winkworth says investor interest is also beginning to return in some areas, as buyers see value after recent price adjustments.
With the Chancellor reportedly ruling out a lower Mansion Tax threshold of £1.5m, the £2m threshold appears set to remain when he delivers his first Budget on 28 October. Attention is also focused on other potential changes, particularly around Capital Gains Tax and National Insurance on rental income.
Winkworth expects borrowing costs to be just as influential as tax policy, with markets anticipating that the Bank of England’s next move could be a rate rise. For buyers in a position to act, conditions remain favourable, the agency says, with scope for negotiation and values still well below previous peaks. The rate of price declines across prime central London is now beginning to moderate.
“Autumn, once a hive of activity after the summer holidays, is quieter than usual as thoughts remain focused on the impending October Budget,” said Dominic Agace, chief executive of Winkworth.
“A successful Budget would be ‘property light’, focusing little on property taxes and reassuring the markets that the UK economy is on a sustainable path to growth, so that swap rates, and consequently mortgage rates, rise no higher,” he said.
“Ruling out a lower £1.5m threshold for the Mansion Tax was definitely the right decision: it would have caught many families with significant mortgages living in terraced Victorian houses in the South East, and knocked buyers’ confidence in these homes going forward.”
