The State of the Lettings Market in South London: What Renters and Landlords Need to Know in 2025

South London’s vibrant neighbourhoods have long been desirable areas for renters (and therefore of course ideal for landlords as investment opportunities). As we step into 2025, amidst a deluge of noise about what is going on in the lettings market, the reality is that lettings activity in South London remains dynamic, with unique challenges and opportunities shaping the landscape.

Whether you’re a landlord looking to maximize your investment or a tenant seeking the perfect rental, understanding the state and health of the current market is key.

 

Why Rents Are Rising in South London

2025 is likely to see rental prices continue their upward trajectory. Let us paint a picture by analysing what just two of the areas we cover at Your Home Managed are currently experiencing – Balham and Tooting… close enough in proximity, but two quite different market places; both however affected by changes (perceived and otherwise) taking place in the Lettings market in 2025.

The average monthly rent for a one-bedroom flat in Balham now sits around £1,700, whilst a similar property in Tooting averages closer to £1,450. For families seeking larger homes, rents for three-bedroom properties can average at around £3,200 in Balham and around the £2,800 mark in Tooting.

Rents have certainly been on the increase in recent years, and indeed significantly so in recent months, months, to hit these sorts of levels.

This increase in rents is driven by several factors:

• High Demand: Young professionals and families are drawn to the excellent transport links, green spaces, and thriving local amenities.
• Limited Supply: The lack of new rental properties entering the market has intensified competition among tenants.
• Cost of Living Increases: Rising mortgage rates and inflation have pushed many would-be buyers into the rental market, further boosting demand.

 

Tenant Demographics: Who’s Renting in 2025?

The tenant demographic in both Balham and Tooting has become increasingly diverse, although perhaps manifests slightly differently in each respective area. Young professionals remain a dominant group in both, attracted by the Northern Line’s quick access to Central London and the buzzing social scenes that both areas offer.

Families are also drawn to the highly rated schools on offer locally, such as Rutherford House in Balham, rated ‘Good’ and always a firm favourite; and now Fircroft Primary – this school having improved hugely since its ‘Requires Improvement’ rating given in 2022. They listened, they took action, and in October 2024 their most recent inspection (has rated that school ‘Good’ in three areas out of the five considered, and ‘Outstanding’ in the other two, under the new ratings system – something which has already piqued the interest of prospective tenants moving to Tooting. Great for the local area of course, but it brings a natural knock-on effect when it comes to rents being achieved.

Additionally, Tooting’s multicultural community continues to appeal to those renters seeking a more vibrant and inclusive neighbourhood.

 

Vibrant cityscape typical of South London featuring a mix of modern apartments and classic Victorian homes. A lively rental market exists in places like this where atmosphere encourages people walking, bustling cafes, and a warm urban vibe.

Landlord Challenges and Opportunities

Challenges:

1. Regulatory Changes: The ongoing impact of the Renters Reform Bill, including the abolition of Section 21 ‘no-fault’ evictions, has prompted landlords to adapt their strategies. Meeting legal requirements, like updated EPC ratings, is crucial. However, retrofitting or upgrading properties—especially when tenants are in place—can cause financial and logistical strain for landlords
2. Increased Costs: Rising maintenance expenses and higher interest rates on buy-to-let mortgages are squeezing landlord profits – at times putting landlords into a negative-profit situation… or as we really call it, ‘a loss’. This of course can lead to some landlords selling – but as we mentioned in a previous article it most often leads to landlords increasing rents, which can only impact tenants, in the cost of living crisis that we have been experiencing for the past several months and even years, now.

Opportunities:

1. Strong Rental Yields: Despite challenges, rental yields in Balham and Tooting remain attractive, averaging 3.5 to 4% depending on property type.
2. High Tenant Demand: Landlords can not just benefit from the competitive rental market, they can capitalise on it, by ensuring their properties are well-maintained and priced correctly to attract high-quality tenants quickly.

Key Trends Shaping the Lettings Market

1. Tenants’ Preferences are Evolving

Post-pandemic, tenants increasingly prioritize properties with outdoor space, home offices, and high-speed internet. In Tooting, larger Victorian homes with gardens are particularly sought after, while Balham’s modern flats – some with shared rooftop terraces or balconies – appeal to younger renters.

2. Sustainability is a Growing Focus

Energy-efficient properties are in high demand, with tenants increasingly favouring homes with improved insulation and lower energy bills. A 2022 joint YouGov/Legal & General Capital survey found that renters would pay up to 13% more to live in an energy-efficient property, with 65% citing environmental concerns as their reason for that, and 37% citing the money saving element.

Landlords investing in energy upgrades not only attract eco-conscious renters but also future-proof their investments against evolving EPC regulations; but importantly from an investment point of view, they can expect to command a higher rental price per square foot.

3. Flexible Tenancy Agreements

With more professionals adopting hybrid working models, flexibility in lease terms is becoming a key selling point for landlords. Offering six-month break clauses or shorter fixed terms can make properties more appealing.

Tips for Renters in South London

1. Act Fast: Properties in these high-demand areas often go off the market within days. Be ready with references and deposits to secure your ideal rental.
2. Understand Your Budget: Factor in not just rent but also rising utility costs, especially in older properties.
3. Look Beyond the Obvious: While Balham High Street and Tooting Broadway are hotspots, quieter streets like Heaver Estate or areas near Tooting Bec Common may offer hidden gems.

Tips for Landlords in Balham & Tooting

1. Keep Up with Market Rates: Regularly review rents to ensure your property remains competitive while maximizing returns. Note that once the Renters Rights Bill is passed, rent reviews will be limited in scope and frequency – but therefore will nevertheless still be possible.
2. Prioritize Presentation: Small upgrades, such as fresh paint or modern appliances, can make your property stand out.
3. Stay Compliant: Aside from being the right thing to do morally and ethically, ensure your property meets all legal and safety standards, including gas safety checks, EICR and updated EPC ratings.

The Outlook for 2025

The South London lettings market, especially in Balham and Tooting, shows no signs of slowing in 2025. While landlords have valid concerns, they should feel encouraged by strong tenant demand and rental yields. While rising costs and regulatory changes pose challenges, the high demand for rental properties ensures strong opportunities for landlords. South London rental trends look good for landlords so far in 2025.

As for tenants, acting quickly and staying flexible will be key to securing the perfect rental in these sought-after neighbourhoods.

Whether you’re a landlord, tenant, or a prospective tenant, staying informed about the latest trends and adapting to market conditions will help you make the most of the opportunities in Balham and Tooting.

Looking to rent or let in Balham or Tooting? Contact Your Home Managed today for tailored lettings advice and expert support in South London.”