London property in 2026 – What investors need to know

Whether buying for self-use or as a buy-to-let (BTL) investment, London property investors are currently experiencing a strong buyer’s market. The cooling of prices in autumn, driven by decade-high supply levels, led to an increase in buying activity into the new year. However, despite properties becoming more affordable, landlords still need to be cautious as they adapt to a more reformed rental sector and prepare for higher taxes on rental income.

London property market forecast 2026

Our latest research has revealed that the affordability ratio will fall to 8.2 in 2026, easing the home-buying journey for thousands of buyers, as wage growth outpaces house price inflation in the UK. With further mortgage rate cuts expected to boost buyer confidence, many experts predict a 3% to 4% growth in property prices across the new year. Improving mortgage rates are also likely to influence the rental markets as more BTL mortgages get approved in 2026.

Here are some recent buy-to-let trends landlords should know about. You can also check out our detailed guide to help landlords navigate the complexities of the London rental market.

Best places to invest in London in 2026

Areas close to the financial, business and academic districts of the UK capital are always the most sought-after by professional tenants, families and students. While rents in Prime Central London (PCL) districts, such as Westminster, Kensington and Mayfair, continue to reign supreme, other vibrant and well-connected neighbourhoods, such as Nine Elms (Battersea), Canary Wharf, White City and Bermondsey, are also seeing high growth driven by increasing demand. Among the more affordable outer London zones, Harrow, Wembley, Southall and Woolwich are popular for delivering higher average yields of over 6%.

Check out some of the top London developments for rental investment.

Early entry in regeneration hotspots

With over £30 billion invested in the regeneration of London’s urban landscape, investors who get in early stand to benefit the most from long-term value creation. With leading developers launching brand-new master plans in London’s top regeneration hotspots, investors can benefit from consistent rental demand, while homebuyers secure modern new-build units with upscale amenities.

Focus on transport and open spaces

London is home to a significant working population, making it essential for landlords to consider the area and nearby connectivity options when investing in a property. Homes near Underground or Elizabeth Line stations often command a higher premium, as they facilitate quick commutes to offices and top London universities.

Along with ease of transport, many professional and corporate tenants also look to maintain a healthy work-life balance. Letting a property within proximity to public parks, gardens and other open spaces can improve yields. Homes near some of London’s largest parks, like Hyde Park, Hampstead Heath, Kensington Gardens, Regent’s Park and Holland Park, command higher rents than their respective areas’ average.

High demand for furnished properties

Most professional and student tenants live in London for a few years and look to rent furnished or semi-furnished properties. As a leading estate and letting agent, we also help landlords save time and money by offering a range of furnishing and renovation services through our partner, InStyle Direct. Adding attractive furniture packs and tasteful decor themes to your property can significantly increase its value by boosting rental yields and long-term returns.

Hiring a professional lettings and property management company

The rental market in London is already strict, and with the Renters’ Rights Act taking effect in May 2026, landlords from other countries will have to be even more careful when renting their properties. From ensuring compliance with the latest housing standards to adhering to various council licensing rules, Benham and Reeves offers a one-stop service to local and overseas landlords.

Our legacy of over 65 years, along with a London-wide network of 21 branches and 13 international offices, offers end-to-end support for overseas investors, landlords, and homebuyers looking to maximise their returns. Our dedicated country desks provide a range of corporate services to connect landlords with high-calibre tenants working with top MNCs in London.

For existing landlords, we can also arrange a free valuation for your London rental property.