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Prime rental values continued to grow in Q2 2025, albeit at a slower pace, according to the latest Savills prime index.
Average prime rents grew by a further +1.0% in outer prime London (up +2.5% on the year), driven by strong activity in the family house markets of Barnes, Clapham, and Teddington. Whereas across the prime regions outside of the capital, rents grew by a lesser +0.6% as demand softened.
“Rental growth has been more tempered over the last three months, after a strong start to the year. The wider commuter belt and regional towns and cities, where there is strong demand, and stock is most constrained, saw the highest increase in rental values achieved. Whereas suburban markets with weaker commuter links saw values dip as tenants gravitate back towards more urban locations,” said Jessica Tomlinson, research analyst at Savills.
| Q2 2025 | Annual growth | |
| Prime Central London | 0.0% | 0.3 |
| Outer prime London | 1.0% | 2.5% |
| All prime regional | 0.6% | 0.8% |
Source: Savills prime London and prime regional lettings indices, Q2 2025
As the market continues to rebalance back towards pre-covid norms, agents are the reporting a bigger misalignment between landlord and tenant expectations on price. Half of Savills agents (50%) across the prime regional markets agreed that landlords on their books expected to achieve higher prices over the past three months, compared to just 5% who agreed that tenants expected to pay more.
“Ahead of the Rental Reform Bill becoming law, we anticipate that some landlords, predominately in the mainstream market, will increase asking rents as they seek to create sufficient headroom to maintain healthy competition among tenants. While others will shift their focus to ensuring that they have a good quality tenant in place,” continued Tomlinson.
“It is inevitable that tighter regulation may cause some landlords to adopt a more cautious approach or adjust their portfolios, which will likely entrench an existing undersupply of rental property. But the impact could be minimised by some individuals seeing the opportunity in a weaker sales market and falling interest rates.”
In prime central London, despite some non-doms reducing their footprint in the city’s most exclusive postcodes, rental values have remained resilient (0.0% on the quarter).
Smaller or lower-value prime properties (those under £1,000 per week) preformed strongest on the quarter (+1.1% increase on the year). This reflects a shift in demand toward more domestic tenants and non-doms opting for smaller residences within the capital, while higher-value properties (+£5,000 pw) where the market is typically more discretionary have remained less resilient (-2.1% fall on the year).
“Neighbourhoods traditionally favoured by domestic tenants, such as Marylebone, have recorded the strongest performance both quarterly and annually. These tenants are typically looking for best in class or turnkey properties which are outperforming the rest,” added Tomlinson.
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