Authored by the expert who managed and guided the team behind the United Kingdom Property Pack
Yes, the analysis of London's property market is included in our pack
Whether you are a foreign investor eyeing London property or simply curious about the UK rental market, this guide breaks down everything you need to know about renting out in the capital in 2026.
We constantly update this blog post to reflect the latest regulations, market data, and rental trends in London.
London remains one of the world's most sought-after rental markets, but the rules and numbers can be confusing for non-residents.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in London.
Insights
- London gross rental yields typically range from 3.5% to 5% in 2026, but outer boroughs like Barking and Walthamstow can push above 6% when purchased at the right price point.
- The 90-night rule for whole-home short-term lets is unique to Greater London and catches many foreign investors off guard when they discover their Airbnb income is legally capped.
- Non-resident landlords in London face a 2% stamp duty surcharge on purchase, plus mandatory tax withholding under the NRLS unless HMRC approves gross payment.
- London's rental vacancy rate sits at roughly 2% in early 2026, meaning well-priced properties typically find tenants within 25 to 30 days.
- The Renters' Rights Act takes effect on 1 May 2026, eliminating Section 21 "no-fault" evictions and limiting rent increases to once per year for all assured tenancies.
- Furnished rentals in London command a 10% to 15% premium in expat-heavy areas like Kensington and South Kensington, where corporate tenants want move-in-ready homes.
- Service charges in London flats can consume 20% to 40% of gross rent in concierge buildings, making net yield calculations essential before buying.
- Elizabeth Line completion has boosted rental demand in previously overlooked areas like Woolwich and Abbey Wood, where yields now exceed 5%.
Can I legally rent out a property in London as a foreigner right now?
Can a foreigner own-and-rent a residential property in London in 2026?
As of early 2026, the UK has no restrictions preventing foreigners from buying and renting out residential property in London, which means you can own and earn rental income without holding residency or citizenship.
Most foreign investors in London hold property directly in their own name, though some use UK limited companies for tax planning or privacy reasons.
The main practical hurdle is not ownership itself but the extra 2% stamp duty surcharge that non-UK residents pay when purchasing property in England, which raises your upfront acquisition costs compared to local buyers.
If you're not a local, you might want to read our guide to foreign property ownership in London.
Do I need residency to rent out in London right now?
No, you do not need UK residency to rent out property in London, and thousands of foreign landlords manage their investments entirely from abroad.
However, you will need to interact with HMRC because rental income from UK property is taxable in the UK regardless of where you live, and most non-resident landlords register under the Non-Resident Landlords Scheme to manage tax withholding.
A UK bank account is not legally required, but it is highly practical because most letting agents and tenants prefer to pay rent via UK bank transfer, and it simplifies deposit handling and utility bills.
Remote management is entirely feasible in London because the city has a mature letting agent market, and most foreign landlords appoint a full-management agent who handles tenant-finding, rent collection, maintenance, and compliance on their behalf.
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What rental strategy makes the most money in London in 2026?
Is long-term renting more profitable than short-term in London in 2026?
As of early 2026, long-term renting is typically the safer and more consistent choice for foreign investors in London because whole-home short-term lets are legally capped at 90 nights per year without planning permission.
A well-managed long-term rental in London might generate around £30,000 to £35,000 per year (approximately $38,000 to $44,500 USD or €35,000 to €41,000 EUR) for a typical 1-bedroom, while a short-term let could theoretically earn more per night but is constrained by the 90-night limit and higher operating costs.
Short-term renting tends to outperform financially only in prime tourist zones like Westminster, Kensington, or near major attractions where nightly rates exceed £200 and you can legally operate beyond the 90-night cap through planning permission or a "rent a room" strategy.
What's the average gross rental yield in London in 2026?
As of early 2026, the average gross rental yield for residential property in London sits between 3.5% and 4.5%, which is lower than most other UK cities due to the capital's high property prices.
Realistic gross yields range from around 3% in prime central areas like Kensington and Chelsea to 5% or even 6% in outer boroughs like Barking, Walthamstow, and Woolwich where purchase prices are more accessible.
Studios and small 1-bedroom apartments in well-connected outer zones typically achieve the highest gross yields in London because they combine lower purchase prices with steady demand from young professionals and commuters.
By the way, we have much more granular data about rental yields in our property pack about London.
What's the realistic net rental yield after costs in London in 2026?
As of early 2026, the realistic net rental yield for most London properties falls between 2% and 3.5% after accounting for management fees, service charges, insurance, maintenance, and compliance costs.
Most landlords in London experience net yields ranging from around 1.5% in high-service-charge central buildings to 4% in freehold houses or low-service-charge flats in outer boroughs.
The three biggest cost drains specific to London are service charges (which can exceed £400 per month in concierge buildings), full-management letting fees (typically 10% to 15% of rent plus VAT), and the Section 24 mortgage interest restriction that limits tax relief to a 20% credit rather than full deduction.
You might want to check our latest analysis about gross and net rental yields in London.
What monthly rent can I get in London in 2026?
As of early 2026, typical monthly rents in London are approximately £1,650 (around $2,100 USD or €1,930 EUR) for a studio, £2,150 ($2,730 USD or €2,520 EUR) for a 1-bedroom, and £2,750 ($3,490 USD or €3,220 EUR) for a 2-bedroom apartment.
A realistic entry-level studio in London rents for between £1,400 and £1,800 per month ($1,780 to $2,290 USD or €1,640 to €2,110 EUR), with the cheapest options found in outer boroughs like Bexley, Barking, and Croydon.
A typical mid-range 1-bedroom apartment in London commands between £1,900 and £2,500 per month ($2,410 to $3,180 USD or €2,220 to €2,930 EUR), depending on zone and proximity to Tube stations.
A standard 2-bedroom apartment in London rents for between £2,400 and £3,500 per month ($3,050 to $4,450 USD or €2,810 to €4,100 EUR), with prime central locations like Kensington and Marylebone often exceeding £4,000.
If you want to know more about this topic, you can read our guide about rents and rental incomes in London.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in the UK versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
What are the real numbers I should budget for renting out in London in 2026?
What's the total "all-in" monthly cost to hold a rental in London in 2026?
As of early 2026, the total monthly holding cost for a typical London rental property (excluding mortgage) ranges from £550 to £900 (approximately $700 to $1,140 USD or €645 to €1,050 EUR), depending on property type and service charge level.
Realistic monthly costs range from around £400 for a freehold house with no service charge to over £1,200 for a new-build flat in a concierge building with high service charges and ground rent.
The single largest cost category for most London landlords is the service charge, which can consume 20% to 40% of gross rent in buildings with lifts, concierges, gyms, or extensive communal areas.
You want to go into more details? Check our list of property taxes and fees you have to pay when buying a property in London.
What's the typical vacancy rate in London in 2026?
As of early 2026, London's rental vacancy rate sits at approximately 2%, which indicates a tight market with strong tenant demand across most boroughs.
Landlords in London should realistically budget for 3 to 5 weeks of vacancy per year, which accounts for the gap between tenancies and any time needed for cleaning, repairs, or relisting.
The main factor driving vacancy differences across London neighborhoods is pricing accuracy: overpriced properties in outer zones can sit empty for 40 or more days, while correctly-priced central 1-bedrooms often let within 15 days.
The highest tenant turnover and vacancy in London typically occurs in November and December when fewer people move during the holiday season, while peak demand runs from May through September driven by job relocations, graduations, and pre-academic moves.
We have a whole part covering the best rental strategies in our pack about buying a property in London.
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Where do rentals perform best in London in 2026?
Which neighborhoods have the highest long-term demand in London in 2026?
As of early 2026, the three London neighborhoods with the highest overall long-term rental demand are Canary Wharf (driven by finance professionals), Shoreditch/Hackney (popular with tech and creative workers), and Clapham/Battersea (favored by young professionals seeking lifestyle amenities).
For families seeking long-term rentals, the strongest demand concentrates in Richmond, Wimbledon, and Finchley, where good schools, green spaces, and commuter-friendly transport create consistent tenant interest year-round.
Student rental demand in London is highest in Bloomsbury (near UCL and University of London colleges), Stratford (accessible to Queen Mary and other east London campuses), and South Kensington (close to Imperial College).
Expats and international professionals gravitate toward Kensington, Marylebone, and Canary Wharf, where corporate relocation budgets support premium rents and furnished lettings.
By the way, we've written a blog article detailing what are the current best areas to invest in property in London.
Which neighborhoods have the best yield in London in 2026?
As of early 2026, the three London neighborhoods with the best rental yields are Barking (gross yields around 6% to 7%), Walthamstow (around 5% to 6%), and Woolwich (around 5% to 6%), all benefiting from lower purchase prices combined with solid transport links.
The estimated gross rental yield range for these top-yielding London neighborhoods is 5% to 7%, compared to just 2.5% to 3.5% in prime central areas like Kensington or Mayfair.
The main characteristic enabling higher yields in these neighborhoods is affordability-driven demand: tenants priced out of central London seek well-connected outer boroughs where Elizabeth Line and DLR stations provide quick commutes to major employment hubs.
We cover a lot of neighborhoods and provide a lot of updated data in our pack about real estate in London.
Where do tenants pay the highest rents in London in 2026?
As of early 2026, the three London neighborhoods where tenants pay the highest rents are Kensington and Chelsea (averaging over £3,500 per month or $4,450 USD / €4,100 EUR), Westminster/Mayfair (similar levels), and Knightsbridge (often exceeding £4,000 per month).
A typical monthly rent for a standard apartment in these premium London neighborhoods ranges from £3,000 to £5,000 ($3,810 to $6,350 USD or €3,510 to €5,850 EUR) for a 1-bedroom, with larger properties and penthouses far exceeding these figures.
The key characteristic driving these high rents is a unique combination of prestige address, proximity to Hyde Park and Knightsbridge shopping, international school access, and the concentration of embassies and diplomatic residences that create corporate-backed tenant demand.
The tenant profile in these highest-rent London neighborhoods typically includes senior executives on corporate relocation packages, wealthy international families, diplomats, and high-net-worth individuals seeking central London bases with 24-hour concierge and security.
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of the UK. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
What do tenants actually want in London in 2026?
What features increase rent the most in London in 2026?
As of early 2026, the three property features that increase monthly rent the most in London are walkable proximity to a Tube or Elizabeth Line station (this is the single biggest rent driver), a private outdoor space like a balcony or garden, and a second bathroom in 2-bedroom or larger properties.
Proximity to a Tube station can add a 10% to 20% rent premium in London, with properties within a 5-minute walk commanding significantly higher rents than those requiring a bus connection.
One commonly overrated feature that London landlords invest in is high-end appliances like wine fridges or built-in coffee machines, which rarely translate into measurable rent premiums because most tenants prioritize location and space over kitchen gadgets.
An affordable upgrade that provides strong return on investment in London is improving the property's EPC rating through better insulation, double glazing, or efficient heating, because tenants increasingly factor energy bills into their affordability calculations.
Do furnished rentals rent faster in London in 2026?
As of early 2026, furnished apartments in London typically rent 5 to 10 days faster than unfurnished equivalents, particularly in central and prime areas where corporate tenants and expats want immediate move-in capability.
Furnished rentals in London command a rent premium of approximately 10% to 15% over unfurnished equivalents, with the strongest premiums found in expat-heavy areas like Kensington, Marylebone, and Canary Wharf where tenants value turnkey convenience.
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How regulated is long-term renting in London right now?
Can I freely set rent prices in London right now?
At the start of a new tenancy, landlords in London can freely set rent at market rates with no government-imposed caps, though affordability constraints and competition naturally limit what tenants will pay.
During a tenancy, rent increases in London are regulated through a formal notice process (typically Section 13), and under the Renters' Rights Act taking effect from 1 May 2026, increases will be limited to once per year and can be challenged by tenants at a tribunal if deemed excessive.
What's the standard lease length in London right now?
The most common lease structure in London is an Assured Shorthold Tenancy (AST) with an initial fixed term of 6 or 12 months, after which it typically rolls into a periodic tenancy, though the Renters' Rights Act will shift all tenancies to periodic from May 2026.
The maximum security deposit a landlord can legally require in London is capped at 5 weeks' rent (approximately £2,500 to £3,500 or $3,175 to $4,450 USD / €2,925 to €4,100 EUR for a typical 1-bedroom), or 6 weeks' rent if annual rent exceeds £50,000.
At the end of a tenancy in London, the deposit must be returned within 10 days of both parties agreeing on any deductions, and if there is a dispute, it is resolved through the government-backed deposit protection scheme where the deposit was registered.
We made this infographic to show you how property prices in the UK compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
How does short-term renting really work in London in 2026?
Is Airbnb legal in London right now?
Yes, Airbnb-style short-term rentals are legal in London, but whole-home lets are subject to a unique Greater London rule that limits them to 90 nights per calendar year without planning permission for a change of use.
There is no single London-wide Airbnb licence, but you must comply with planning rules (the 90-night threshold), any lease or freeholder restrictions, and standard landlord safety obligations for gas, electrical, and fire safety.
The 90-night annual limit applies specifically to whole-home short-term lets in Greater London, meaning you can rent out your entire property for up to 90 nights per year without needing planning permission, but exceeding this requires council approval.
The most common consequence for operating an unlicensed or non-compliant short-term rental in London is enforcement action from your local council, which can include fines of up to £20,000 per breach, plus potential planning enforcement notices requiring you to cease the activity.
By the way, we also have a blog article detailing whether owning an Airbnb rental is profitable in London.
What's the average short-term occupancy in London in 2026?
As of early 2026, the average annual occupancy rate for short-term rentals in London is approximately 55% to 65%, with well-managed properties in prime locations achieving higher rates.
The realistic occupancy range that most London short-term rentals experience is 40% to 75%, depending on location, listing quality, pricing strategy, and host responsiveness.
The highest occupancy months for short-term rentals in London are typically June, July, and August during the summer tourism peak, as well as December around the Christmas shopping and New Year period.
The lowest occupancy months are usually January (post-holiday slump), February, and November, when tourism drops and business travel is lighter.
Finally, please note that you can find much more granular data about this topic in our property pack about London.
What's the average nightly rate in London in 2026?
As of early 2026, the average nightly rate for short-term rentals in London is approximately £150 to £190 (around $190 to $240 USD or €175 to €220 EUR) for a typical entire-home listing.
Realistic nightly rates range from around £90 to £130 ($115 to $165 USD or €105 to €150 EUR) for budget listings in outer zones to £300 or more ($380+ USD or €350+ EUR) for premium properties in Westminster, Kensington, or near major attractions.
The typical nightly rate difference between peak season (summer and December) and off-season (January-February) in London is around £40 to £70 per night ($50 to $90 USD or €45 to €80 EUR), with some hosts adjusting rates by 30% or more to capture demand fluctuations.
Is short-term rental supply saturated in London in 2026?
As of early 2026, the London short-term rental market is competitive but not fully saturated, with approximately 50,000 to 55,000 active listings and steady demand from tourism and business travel supporting occupancy rates around 60%.
The current trend shows moderate growth in active listings, with supply increasing by roughly 20% to 30% over the past year as more hosts enter the market, though the 90-night rule naturally limits whole-home inventory.
The most oversaturated areas for short-term rentals in London include Westminster (particularly around Victoria and Paddington), Tower Hamlets (Shoreditch and Brick Lane), and Camden (Camden Town and King's Cross), where competition is fierce and mediocre listings struggle.
Areas with room for new short-term rental supply include well-connected outer zones like Greenwich (near the O2 and Cutty Sark), Stratford (Olympic Park and Westfield), and Wimbledon (during tennis season), where tourist infrastructure exists but STR density remains lower.
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What sources have we used to write this blog article?
Whether it's in our blog articles or the market analyses included in our property pack about London, we always rely on the strongest methodology we can … and we don't throw out numbers at random.
We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.
| Source | Why it's authoritative | How we used it |
|---|---|---|
| GOV.UK - Renting out a property | It's the UK government's official landlord rulebook. | We used it to define baseline compliance obligations for London landlords. We relied on it for safety requirements and tenancy paperwork rules. |
| HMRC - Non-Resident Landlords Scheme | It's HMRC's official tax guidance for overseas landlords. | We used it to explain how rent is paid to foreign landlords and tax withholding rules. We outlined the agent versus self-collection pathways. |
| ONS - Private rent and house prices UK | It's the official UK statistics office for rent and price data. | We used it to anchor London rent inflation and price context for early 2026. We avoided relying solely on portal asking prices. |
| London City Hall - London Rents Map | It's the official London tool built from ONS/VOA rent medians. | We used it to ground neighborhood rent claims in consistent data. We supported borough-level comparisons with this granular dataset. |
| GOV.UK - Guide to the Renters' Rights Act | It's the government's plain-language guide to the new rental law. | We used it to explain how rent increases and tenancy structures are changing in 2026. We highlighted what landlords must plan for going forward. |
| Rightmove - Rental Market Update | It's the UK's largest property portal with transparent data. | We used it to anchor "what rent could I get" headline numbers for London. We triangulated official medians with live asking-rent conditions. |
| Zoopla - Rental Market Report | It's a major portal with recurring research and methodology notes. | We used it to cross-check supply, demand, and time-to-rent trends for 2026. We treated it as an independent benchmark alongside Rightmove. |
| AirDNA - London short-term rental overview | It's a widely-used STR analytics provider with tracked methodology. | We used it to estimate occupancy and nightly-rate ranges for London Airbnbs. We discussed saturation and revenue versus regulation tradeoffs. |
| Inside Airbnb - London data portal | It's a transparent public dataset used by researchers and journalists. | We used it to sanity-check supply saturation with a listings-based lens. We cross-referenced it with AirDNA's performance view. |
| Legislation.gov.uk - Deregulation Act 2015 | It's the official legislation site explaining London's short-let rule. | We used it to anchor the 90-night rule in primary law rather than hearsay. We framed short-term renting as a planning issue unique to Greater London. |
We have made this infographic to give you a quick and clear snapshot of the property market in the UK. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
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