Demand for London’s most expensive rental properties jumped 8 percent over the past year as wealthy individuals chose to rent rather than buy following tax changes, according to Knight Frank data. While overall lettings activity in London fell 2 percent year-on-year, tenancies starting above £5,000 per week rose sharply. New prospective tenants registering at this level increased 5 percent, compared to a 4 percent decline in the broader market.
Tax changes shift behaviour
The surge follows the scrapping of non-dom rules and other tax measures that have prompted some high-net-worth buyers to look elsewhere – or rent instead of purchasing. Tom Smith, head of super-prime lettings at Knight Frank, said tax changes have “clearly shifted behaviour at the top end of the market.” “Many internationally mobile clients are choosing to rent in order to preserve flexibility,” he said. “In periods of uncertainty, that optionality becomes more valuable.” Some buyers have chosen locations like Switzerland, Dubai and Italy over London as taxes rose. Those who still want a London base increasingly opt to rent rather than commit to ownership.
Supply remains tight across wider market
Beyond the super-prime segment, London’s rental market continues to struggle with constrained supply. New listings in prime central and outer London in February were 8 percent below the five-year average, Knight Frank data shows. The Renters Rights Act, due to come into force in May, adds to landlord concerns around setting rents, selling properties and regaining possession. These regulatory pressures have prompted more landlords to exit the market. Average rents in prime outer London rose 2.9 percent over the year – the largest increase since July 2024. Prime central London saw more modest growth of 1 percent, down from 1.3 percent in January. The higher-value end of the market has seen stronger supply, as owners with flexibility have listed properties rather than sell into a falling market. Prime central London prices are currently declining at 4.9 percent annually. Above £1,000 per week, the number of lettings properties listed in London in February was 7 percent above the five-year average – a contrast to the supply squeeze at lower price points.
Geopolitical uncertainty clouds outlook
Knight Frank noted that Middle East volatility could weigh on sentiment, though it is “too early to tell” how events will affect decision-making. A prolonged conflict could push inflation higher through increased energy prices, potentially tempering expectations for interest rate cuts. For now, central banks are expected to look through near-term commodity price volatility. For buy-to-let investors in prime London, the data suggests rental demand remains solid at the top end while the broader market faces ongoing supply constraints and regulatory headwinds.
Editor’s view
The super-prime rental surge tells a clear story: wealthy individuals have decided that owning London property is no longer worth the tax hassle. For ordinary buy-to-let landlords, the more relevant data point is the 8 percent supply drop. The RRA keeps pushing landlords toward the exit – and tenants will ultimately pay the price through higher rents and fewer options.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 6 March 2026
Sources: Knight Frank
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