Prime London Rental Listings 17% Below 2019 as Tenant Competition Rises

New rental listings across prime central and prime outer London were 17% below their October 2019 level last month, while prospective tenants per new listing rose to 6.3 in the three months to October, according to Knight Frank’s latest research.

The report, published on 13 November, puts annual rental growth at 3.3% in prime outer London and 1.4% in prime central London. The outer London increase was the strongest since June 2024.

Behind those figures is a specific change of plan among some property owners. Knight Frank says weak sales conditions have encouraged more discretionary owners in prime central London to offer their homes for rent, moderating rental growth there.

For someone who intended to sell, letting can provide income while retaining the asset. It also changes how the property is used, the costs of ownership and potentially the mortgage arrangement. Those decisions need to be settled before a tenancy begins.

More owners choosing to let can coexist with constrained supply

The tenant-to-listing ratio compares with 5.3 a year earlier and 4.8 two years earlier. It indicates stronger demand relative to new supply in the agency’s data, rather than six guaranteed applicants for every individual home.

There is no contradiction between the longer-term listings shortfall and some owners bringing properties into the rental market now. The 2019 comparison measures new advertising activity against an earlier period; the observation about discretionary owners describes one source of current supply.

For an owner, a local rental appraisal remains more useful than applying the headline growth rate to an asking rent. Condition, furnishing, location and the tenant profile can produce different results within the same prime market.

The existing mortgage is the first practical check

A residential mortgage should not simply be left unchanged on the assumption that receiving rent will cover the payments. Government guidance for landlords states that owners with a mortgage must obtain their lender’s permission to rent out the property.

Consent to let may allow an existing arrangement to continue, subject to the lender’s decision and conditions. It is worth checking the permitted use, costs, any time limits and what happens when the current mortgage deal ends. Permission is not automatic.

Nationwide’s published guidance, for example, describes additional interest for some customers and restrictions on mortgage changes while a property is let, subject to stated exceptions. This illustrates why consent should be assessed for its effect on future flexibility as well as the immediate payment.

The owner should also check insurance and any relevant lease restrictions. Lender consent does not replace the separate permissions or obligations that may apply to the property.

A residential-to-buy-to-let switch can require a different assessment

If letting is intended to continue, or existing-lender consent does not meet the plan, a buy-to-let remortgage may warrant comparison. The decision should include early repayment charges, product fees, valuation and legal costs, alongside the new interest rate.

The rent that a letting agent expects and the rent accepted for underwriting are not necessarily identical. The Mortgage Works’ income criteria use rental income confirmed by the valuer and apply interest-cover and stress-rate tests according to the application.

Its published criteria also exclude residential-to-buy-to-let changes from the specified like-for-like remortgage treatment. Keeping the loan balance unchanged therefore does not automatically preserve the affordability approach available to an existing buy-to-let borrower.

Other lenders apply their own policies. The practical task is to establish what borrowing the proposed rent can support, whether additional personal income is relevant and how much cash the owner needs to retain or release.

A high monthly rent can still leave a modest margin

Prime property values can make a substantial rent look more generous than the underlying return. The owner needs to compare the income with the value tied up in the property and the full cost of keeping it.

For an apartment, service charges and anticipated major works can materially affect the result. A reserve for repairs and void periods belongs in the calculation even when demand appears strong.

Retaining the home changes the funding of the next move

A planned sale may have been expected to repay the existing mortgage, fund a new deposit or release capital for another purpose. Switching to letting leaves some or all of that capital invested in the property.

If the owner is buying another home, the review needs to consider both properties together: the borrowing remaining on the retained home, any capital that can be raised and the deposit and mortgage required for the next purchase. Additional purchase taxes and other transaction costs need separate advice and budgeting.

A letting plan that works in isolation can still leave the next purchase short of funds. Equally, releasing the maximum possible amount can increase the retained property’s borrowing costs and reduce its resilience. The target should be the amount needed for a workable overall plan.

Moving overseas adds another set of financing questions

An owner relocating internationally may have good reasons to keep a London home, including a possible return. The lender nevertheless needs an accurate picture of residence, overseas income and the intended letting arrangement. Consent to let and acceptance of a borrower living abroad are questions to resolve explicitly.

HMRC’s guidance on rental income for landlords abroad explains that UK letting income remains within the tax system. Rent may be subject to deduction by an agent or tenant unless HMRC approves payment without deduction, with the income then accounted for through the relevant tax process. Approval to receive rent gross does not make it tax-free.

Management costs, access to funds for repairs and the currency in which the owner spends the rental surplus also belong in the assessment. Tax advice may be needed in both the UK and the country of residence.

Letting also changes the route back to a sale

An owner hoping to sell later should take advice on the tenancy arrangements and the legal process and timing for recovering possession. A prospective buyer’s preferred completion date cannot be assumed to override an occupier’s rights.

The mortgage should fit that intended holding period too. A long fixed-rate deal may create early repayment costs if the owner sells sooner, while a more flexible arrangement can carry different pricing. The comparison needs to consider a delayed sale as well as the preferred timetable.

The decision is whether the retained property works for the owner

Stronger tenant competition offers a reason to investigate letting, but it does not establish that waiting will produce a better eventual sale price. The case for retaining the home should work under cautious assumptions about rent, costs and the time needed to sell.

For a review, the useful information is the current mortgage balance and deal-end date, early repayment charges, an evidenced rental appraisal, property running costs and the owner’s next move. Letting agents and relocation advisers can help identify these questions before a change of use is committed to.

Willow can assess existing-lender consent alongside suitable buy-to-let or let-to-buy options, considering the owner’s wider income, assets and timetable. The aim is to establish whether the revised property plan can be financed on terms that remain workable after the first tenant moves in.