The prime London lettings market sent two signals in August that look contradictory. Fewer tenancies were agreed than a year earlier, by a wide margin, and yet rents carried on rising. Both are in the same LonRes release, and both are worth understanding before you set the rent on your next letting.
What the August figures show
LonRes, which records lettings across prime London, reported on 17 September that lets agreed in August were 27.5% lower than in August 2025. New lettings instructions were 3.5% lower, and the stock of property available to rent was 6.1% higher. Over the same twelve months, average rents rose 3.8%, leaving them 41.4% above their pre-pandemic level.
The month before was stronger. In its July figures, LonRes recorded rents up 5.3% on the year and lets agreed up 1.5%, with prime central London rents up 5.7% annually, against a fall of 3.7% as recently as February.
Knight Frank measures the market differently, through a valuation-based index, and its numbers are more subdued. In the year to June it had prime central London rents up 0.9% and prime outer London up 3.3%, the latter the highest figure since June 2024. It also found that new rental listings in the first half of the year were 15% below the five-year average, while the number of new prospective tenants was only 2% below normal. Lettings above £5,000 a week in prime central London were 17% lower in the first half than a year earlier.
How both signals can be true
Rents are set by the balance between the homes available and the tenants looking. On Knight Frank's figures, supply has fallen further than demand this year, and the firm links part of that to landlords selling up since the Renters' Rights Act. That supports rents even when the number of deals is lower.
A single August is also a thin basis for conclusions. It is a quiet month in most years, and one weak reading of lets agreed does not make a trend. What it does suggest is that tenants are taking longer and choosing more carefully, which is consistent with available stock being 6.1% higher than a year ago.
The practical reading for a landlord is that rent levels have held up, but the tenant now has more to compare. A property that is priced at the top of the range and presented indifferently is the one that sits empty, and a month's void costs more than most rent increases recover in a year.
Making Tax Digital: 7 November is the next quarterly date
Since 6 April 2026, landlords and sole traders whose qualifying income was over £50,000 in the 2024 to 2025 tax year have had to use Making Tax Digital for Income Tax. That means keeping digital records, using compatible software and sending HMRC quarterly updates. The update deadlines are 7 August, 7 November, 7 February and 7 May. HMRC said on 12 August that 436,000 sole traders and landlords had sent their first quarterly update.
Three details catch prime London landlords out. First, qualifying income is gross: the total of property and self-employment income before expenses. A single flat let at £1,000 a week brings in £52,000 a year, which is over the threshold however modest the profit after costs. Second, for jointly owned property, only your share counts. Third, if you are not UK resident, your UK property income counts, but foreign property income that you do not declare on a UK return does not.
HMRC will not issue penalties for missed quarterly update deadlines in the 2026 to 2027 tax year, but the records and updates are still required before the return is filed. The threshold falls to £30,000 from 6 April 2027, based on 2025 to 2026 income, and to £20,000 from 6 April 2028.
April 2027, and the Budget on 28 October
From April 2027, income tax on property income moves to its own rates in England, Wales and Northern Ireland: 22% at basic rate, 42% at higher rate and 47% at additional rate, two points above the standard rates. Relief for finance costs will be given at 22%. The change is in the Finance Act 2026, which received Royal Assent on 18 March. Scotland sets its own rates.
The Chancellor will present the next Budget on 28 October. There is plenty of speculation about property taxation and we will not add to it; we will write about what is announced once it is published.
None of this is tax advice, and every landlord's position is different. Your accountant is the right person for Making Tax Digital and the 2027 rates. What we can tell you is what your property should let for today, and how long it is likely to take.
Dolce Vita lets property across the UK from Berkeley Square House in Mayfair. If you would like a current figure for your own property, Request a lettings valuation; we acknowledge the same working day and return a written valuation within 24 to 48 hours.
Chris Dawson, Co-Founder
Sources: LonRes lettings figures for August 2026, reported 17 September 2026 (Letting Agent Today, Property Industry Eye). LonRes Prime London Market Dashboard, 12 August 2026. Knight Frank, Rental market adjusts to reforms and future tax risks, 6 July 2026. HMRC, Making Tax Digital for Income Tax guidance (gov.uk, updated September 2026) and press release, 12 August 2026. HM Treasury, Changes to tax rates for property, savings and dividend income, 26 November 2025. Finance Act 2026, Royal Assent 18 March 2026. Office for Budget Responsibility, 2026.