London Landlords: How to Justify £2,265 Average Rents When Tenants Are Maxed Out

According to the Office for National Statistics, average private rents in London now sit at £2,265 per month, based on the latest Private Rental Market statistics. Annual rent inflation in the capital has slowed from its recent peak, but rent levels remain historically high and well ahead of wage growth (ONS 2025).

For build to rent landlords and estate agents, this marks a turning point. The challenge is no longer how to achieve headline rents, but how to sustain them in a market where tenants are financially stretched, more informed and increasingly protected by regulation.

At these price points, tenant expectations are shifting. Value is no longer judged solely on location or specification, but on service quality, affordability support and the overall rental experience.

Why Rent Levels Alone Are No Longer Enough

London’s rental market has been defined by scarcity for much of the past decade. That has allowed rents to rise rapidly, often justified by demand outstripping supply.

However, several structural changes mean this logic is becoming less reliable.

ONS data shows that London renters now spend over 40 percent of their income on housing, compared with around 30 percent across England. At the same time, the Resolution Foundation reports that many renting households remain worse off in real terms than before 2021, despite easing inflation.

For tenants, this creates a sense of being “maxed out”. For landlords operating at scale, it introduces a new risk. When affordability is tight, tolerance for poor service, friction or perceived unfairness drops sharply.

The Renters Reform Bill Accelerates the Shift

The Renters Reform Bill, including the abolition of Section 21, significantly raises the stakes.

While the Bill does not impose rent caps, it strengthens tenants’ rights to challenge rent increases via the First-tier Tribunal and promotes longer, more secure tenancies. This shifts the commercial emphasis from short-term pricing to long-term retention.

For build to rent operators and managing agents, this means:

• Tenants will stay longer by default, but only if the experience justifies the cost

• Poor service or weak engagement is more likely to escalate into disputes

• Churn becomes harder and more expensive to manage

• Reputation, transparency and tenant satisfaction take on regulatory significance

In a post-Section 21 environment, rent justification is no longer just a financial question. It is an operational one.

Changing Tenant Expectations at £2,265 a Month

As rents have risen, so have expectations.

Tenants paying over £2,000 a month increasingly expect a professional, consistent and responsive experience that feels proportionate to the cost. This expectation has been shaped partly by the growth of build to rent, but it now extends across the wider private rented sector.

At these rent levels, tenants expect:

• Predictable, well-communicated rent changes

• Fast and reliable maintenance

• Digital-first, low-friction processes

• Respectful, transparent communication

• Evidence that landlords recognise wider cost-of-living pressures

Where these expectations are not met, tenants are more willing to challenge value, seek alternatives or escalate complaints.

The Financial Impact of Tenant Churn at Scale

For large portfolios, tenant turnover is one of the biggest threats to income stability.

Industry bodies such as ARLA Propertymark consistently highlight the true cost of churn of approx £1,500+, which includes void periods, re-letting fees, marketing, referencing, compliance checks and operational overhead. In London, even a short void can wipe out the benefit of a rent increase.

For build to rent schemes, churn also undermines community cohesion and onsite efficiencies. For estate agents, it increases workload and client dissatisfaction.

In a regulatory environment that favours longer tenancies, retention is increasingly the safest route to sustainable returns.

Reframing Rent Justification Around Experience and Support

The most effective landlords are responding by reframing rent justification.

Rather than defending the number itself, they focus on the experience that surrounds it.

This includes:

Visible, reliable service
Clear repair timelines, proactive updates and consistent standards across portfolios build trust and reduce friction.

Reduced everyday hassle
Digital rent payments, self-service portals and simplified administration materially improve the tenant experience at relatively low cost.

Practical affordability support
This is where many operators are now innovating.

Why Tenant Rewards Are Gaining Traction in Build to Rent

Tenant rewards platforms are increasingly being adopted by build to rent landlords, estate agents and housing associations as a practical response to affordability pressure.

Instead of reducing rent, these platforms give tenants access to everyday savings on essential spending categories such as groceries, utilities, transport, insurance and household services. Over the course of a year, this can offset a meaningful proportion of rising living costs.

From a commercial perspective, rewards help landlords:

• Strengthen the perceived value of rent

• Improve tenant satisfaction and loyalty

• Support longer tenancies and lower churn

• Differentiate their offer without resetting rental income

• It also generates passive income for the agent or landlord

Rent Rewards is designed specifically for the rental sector. It enables landlords and agents to offer benefits funded through brand partnerships, creating passive income opportunities while supporting tenants.

Importantly for institutional landlords, Rent Rewards is built around privacy-conscious design and data minimisation. Tenants opt in voluntarily, and no unnecessary personal data is collected. This aligns with GDPR obligations and helps maintain trust at a time when data use is under increasing scrutiny.

Supporting ESG and Social Value Objectives

For agents, build to rent landlords and housing associations, tenant rewards also support wider ESG and social value commitments.

Helping tenants manage everyday costs improves financial resilience, reduces stress and contributes to wellbeing. It also demonstrates a tangible response to the cost-of-living crisis, which is increasingly relevant to investors, local authorities and planning stakeholders.

In a more tenant-centric regulatory environment, these signals matter.

Retention Is the Real Growth Strategy Post-Reform

As the Renters Reform Bill reshapes the sector, sustainable performance will depend less on pushing rents to their limits and more on protecting income through retention.

Evidence from large-scale residential portfolios consistently shows that small improvements in retention deliver outsized financial benefits through reduced voids and lower operating costs.

At London rent levels, keeping a tenant for even a few months longer often outweighs the upside of a marginal increase that triggers a move.