Rising Inflation & the South London Rental Market: What Landlords & Tenants Need to Know in 2025

Just two weeks ago, optimism was rising as the Bank of England cut its base rate to 4.5%, hinting at relief for mortgage holders, and not least those with Buy to Let mortgages.

Fast forward to today, and the narrative has shifted — inflation has unexpectedly climbed to 3%, when 2.8% was forecast, raising fresh concerns for landlords and tenants alike.

With more people renting for longer and landlords facing rising costs, what does this mean for the South London rental market in 2025?

Let’s explore how inflation affects the lettings market, from rent prices to tenant demand and landlord profitability, and discuss what strategies lettings agents can recommend to landlords navigating these changes.

What Rising Inflation Means for the Rental Market

Inflation is a key economic indicator that affects nearly every financial decision, from household spending to property investments. When inflation rises:

• Tenant affordability is squeezed – The cost of living increases, meaning tenants have less disposable income.
• Landlord costs increase – Mortgage repayments can increase, especially if the Bank of England base rate rises. Even if it does not, individual lenders can sometimes err on the side of caution, increasing their fixed and variable rates. As well as this, maintenance costs and compliance expenses all rise.
• Rent prices tend to rise – To cover higher operational costs, many landlords may look to increase rents, though this must be balanced with affordability concerns.

With South London already being a high-demand rental market, inflation could add further complexity for landlords assessing rental prices and tenant stability.

Impact on Tenants & Rental Prices in South London

📈 Rising Rents & Increased Demand
As house prices and mortgage rates remain high, more people are delaying homeownership and choosing to rent for longer. This trend is particularly strong in South London, where demand for rental properties has surged over the past year.

Recent data shows that the average rent in South London has risen by around 15% over the past two years alone, according to the ONS, with areas like Clapham, Brixton, and Wimbledon seeing some of the highest increases. This reflects both rising demand coupled with the increasing costs landlords face in maintaining properties.

💷 Tenant Affordability Concerns
Whilst landlords may need to increase rents to offset inflation-related costs, tenants are also dealing with higher utility bills, food prices, and travel costs.

Affordability will be a key issue in 2025, with some tenants opting for smaller properties or choosing to remain in place longer, preferring the stability of an ongoing tenancy over the uncertainty of moving or upsizing – or indeed, moving onto the property ladder.

Lettings agents will need to guide landlords on balancing rental increases with tenant retention strategies to avoid prolonged void periods.

What Landlords Need to Consider in 2025

🏠 Higher Costs for Landlords
Inflation can impact landlords in multiple ways, including:

• Mortgage Rates: While base rates have come down, landlords with buy-to-let mortgages may perversely still face higher refinancing costs in 2025.
• Maintenance & Repairs: The cost of building materials and contractor services has risen, increasing the cost of maintaining rental properties.
• Energy Efficiency Regulations: New pending energy performance requirements could require property upgrades, adding another expense for landlords.

📊 Adjusting Rental Strategies

• Setting Competitive Rent Prices – Lettings agents can assist landlords in analysing local rental market trends to set optimal pricing without discouraging tenants.
• Reducing Void Periods – With affordability pressures, landlords may need to be flexible with rent negotiations or consider offering incentives to attract or keep tenants (e.g., partial furnishing, longer fixed-term leases). However, upcoming changes under the Renters’ Rights Bill may introduce new security measures for tenants — so it’s essential to stay informed.
• Exploring Higher-Yield Opportunities – Some landlords may look at HMOs (Houses in Multiple Occupation) or short-term lets (where regulations allow) to maximise returns.

Is Buy-to-Let Still Worth It in 2025?

Despite economic challenges, property remains a solid long-term investment. In South London, rental yields have remained robust. Areas with strong transport links and amenities continue to attract renters, particularly young professionals and students.

✅ Why South London Remains a Strong Buy-to-Let Market:

• High rental demand due to London’s affordability challenges for buyers means that many people choose to rent here instead of owning, or will rent for longer.
• Long-term property value appreciation attracts long-game landlords.
• Increasing population and strong employment hubs in the region continue to drive a strong local demand.

Lettings agents can support investors by identifying high-yield areas, advising on tenant demand, and helping with regulatory compliance.

How We Can Help Landlords Navigate Inflation

With the rental market evolving, we can play a vital role in helping landlords adapt. Key services we provide include:

• Rental Market Analysis – Ensuring landlords price their properties correctly to remain competitive.
• Tenant Screening & Retention Strategies – Helping landlords find reliable tenants and structure lease agreements that promote long-term stability.
• Regulatory Compliance Support – Keeping landlords up to date with changing rental laws and energy efficiency requirements.
• Void Period Minimisation – Offering advice on marketing strategies and property presentation to attract tenants quickly.

Conclusion: South London Lettings Market Remains Resilient

While inflation presents challenges, South London remains a high-demand rental market with strong long-term investment potential. Landlords who stay informed, adapt their strategies, and work with expert lettings agents will be well-positioned to thrive in 2025.

Some South London Lettings FAQ’s…

🔹 Will rent prices in South London continue to rise in 2025?
✔ Yes, due to high demand and inflation, rent prices are expected to increase, with some areas seeing rises of 5-10%.

🔹 Is buy-to-let still profitable in South London?
✔ Despite inflation, South London remains a strong buy-to-let market due to rising rental demand and strong yields.

🔹 What changes will the Renters’ Rights Bill bring in 2025?
✔ The bill is expected to introduce longer tenancies and increased protections for renters, which landlords should be aware of.

📢 Are you a landlord looking for expert guidance? Contact Your Home Managed today to discuss how we can help you navigate the changing rental market.