London: Navigating the capital's unique property market

The London property market

London remains the UK’s most valuable market for estate agents - generating nearly £3bn in annual revenues from sales and lettings. That’s almost a third of the national total, from a region with just 15% of the country’s housing stock.

While the potential is vast, operating in London is unlike anywhere else. As we heard from more than 230 agents at our recent London Property Pitch event, the capital’s challenges - from affordability to landlord retention - require a more nuanced, data-led approach to winning and converting business.

The lettings engine that powers London

Unlike other parts of the UK, lettings underpins the agency revenue landscape in London. The private rented sector has tripled in size since the mid-90s, and now accounts for nearly 1 in 3 homes. For agents, that means lettings and management now make up around 75% of total agency revenues - compared to the national average of 50:50 between sales and lettings.

Although London’s sales market is the biggest in the UK by value, the volume of transactions tells a different story. At around 85,000 sales a year, volumes are half the levels seen pre-2008, impacted by higher mortgage rates, tighter lending regulations, and hefty stamp duty costs - particularly acute in the capital, which accounts for 50% of all UK stamp duty receipts.

The sales challenge (and the opportunity)

Affordability remains the biggest hurdle. London house prices are still 11x average earnings, despite some softening in recent years. While improving earnings and mortgage conditions could ease pressure, it will take time for pricing to realign in a way that meaningfully boosts transaction volumes.

That said, demand to move is still there. The opportunity for agents is to focus on uncovering and understanding mover motivations and helping both buyers and sellers act with greater confidence. In this kind of market, seller education and expectation management are critical.

This is where Prospect Plus comes in. Our new tool helps agents connect with in-market homeowners using insights, such as estimated home value, time at the address, and recent market activity. With Prospect Plus, every lead is more than a name - it's a tailored opportunity to offer relevant, timely advice that wins instructions.

The rental market: growth to moderate to low single digits

Renters have borne the brunt of affordability pressures, especially since mortgage rates spiked in 2022. According to our latest Rental Market Report, rents in London are up 27% over the last five years, with outer boroughs like Dartford and Sutton seeing growth of 40%. This surge has significantly boosted lettings revenues.

However, the rental boom has now plateaued. Growth is now cooling as tenants hit affordability ceilings. We expect rental growth to moderate into low single digits over the next 2–3 years as rents realign with earnings, meaning agents will need to shift focus from rising rents to better servicing landlords and retaining stock.

What’s next for agents in London?

Despite the cooling market, there’s still plenty of opportunity - especially for agents who adapt quickly. With around 1 in 3 homes listed for sale on Zoopla in London being former rental properties, many landlords are testing the sales market but not always prepared to meet buyer expectations. These homes often end up staying in the rental pool.

This creates a clear opportunity: targeting self-managing landlords - many of whom aren’t aware of incoming regulation via the Renters Reform Bill or the real costs of non-compliance. Agents who can position themselves as trusted advisors in this space stand to grow their managed portfolios.

At the same time, supporting more confident decisions from buyers and sellers - through education, local insight and proactive outreach - is critical for driving sales.