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Key Takeaways:
- The best rental strategy offers flexibility and requires properties to be fully compliant with new rules and regulations.
- Three realistic rental strategies for London landlords include: selling, holding efficiently, and adapting.
- When choosing the strategy to guide your property operations this year, gain deep insight into market conditions and ensure your plans align with your portfolio goals first.
- Partnering with a property management company gives you local market insight and efficient systems to improve your rental operations.
What Is Your Rental Strategy For 2026?
Having a rental strategy for your London property will help you survive the looming changes in the Private Rented Sector (PRS). Don’t forget: you have the phased implementation of the Renters’ Rights Act, the new tax obligations set out in the Autumn Budget by 2027, and rising operating costs. All these will make 2026 a challenging year for London landlords.
It’s not surprising that landlords have started selling their properties, particularly the smaller, independent ones.
What about you? How do you plan to improve your portfolio as you go through this year?
Don’t forget, the demand for accommodations in London is still high. The city is still a top destination, not just for tourists but also for business travelers. The earning potential is still high, and you need a strategy to make sure you’re taking advantage of it. You can use the increase in rental income to offset all costs incurred as a result of changes in the PRS.
Did you know:
The average monthly private rent increased by 3.5% from January 2025 to January 2026, with London rental inflation rising by 1.1%. – Gov.uk
Fortunately, there are many strategies available to London landlords. There’s no wrong option. But what’s challenging is choosing the right strategy that’s aligned with your goals. You need to choose one that can ease the pressure from all the changes happening in the PRS.
Remember, the changes will happen gradually. The earlier you prepare, the better your rental property business can adjust.
3 Realistic Rental Strategies for London Landlords
Given the current situation in the London PRS, it’s important to avoid rushing your strategy decision. You’re also not bound to just one. It’s vital to understand your options so you can see which one best suits your portfolio’s situation.
The best rental strategy in London goes beyond choosing between selling and renting. It’s about improving your property, so you achieve maximum profit, no matter which strategy you use.
Here are 3 possible strategies that London landlords can pursue.
Sell your property
Selling seems to be the initial strategy for landlords. Instead of analysing the additional compliance and cost implications, some property owners are just choosing to exit the PRS.
There’s nothing wrong with this. However, you need to consider the current property market. Right now, values are 24% lower than the 2014 peak in Central London. Experts believe this figure will drop further this year. This alone doesn’t make it an ideal time to sell.
If you don’t want to sell at a discount, you need to hold off selling the property, especially if you still owe a mortgage on it. But if you own the full equity in the property, you can consider selling, but don’t rush it, so you can get the best possible price.
While you wait for the right offer, you can transform your property into a short-term rental. This ensures you keep earning from the property and that it stays in good condition through regular housekeeping and maintenance between bookings. The short-term rental also ensures the property stays open for buyer viewings.
Hold efficiently
When we say hold the property, this means doing it efficiently. You don’t exit the rental property market, but instead, you shift your focus to yield resilience.
Your focus is not on getting a higher occupancy rate. Your focus is to improve your property and daily operations to reduce void periods, control operating costs, avoid compliance penalties, and improve income potential.
You may need to rethink your letting strategy to make this happen. Check out dynamic pricing strategies as well, and partner with a reputable property management company to help boost your property’s performance and build resilience in your yield.
Adapt to the changes
Finally, adapting to the changes allows you to stay in the market while protecting your bottom line. This requires you to focus on flexibility so your property can switch letting strategies to maximise rental yield.
Since the Renters’ Rights Act and the 90-day limit in London affect both long-term and short-term rentals, you need mid-term letting as an option to stay compliant. This ensures you have the right letting strategy throughout the year.
Using a flexible letting strategy also makes plans to sell still viable. You can control your property’s availability to schedule viewings alongside bookings. This also allows you to adjust rates to maximise yields based on seasons and local events.
What to Consider When Choosing A Rental Strategy
Regardless of the strategy you want to use for your rental property, there are a couple of things to consider before making a decision.
- Be 100% compliant. Make sure you meet current and future regulations. You don’t have to have everything done immediately. But you can make plans to ensure you’re compliant by the time the new regulations take effect. This will help you protect your property and avoid penalties.
- Calculate different income scenarios. Know how much your property will earn if you use short-term, mid-term, or long-term letting. You should also know how your income changes seasonally. This will help you plan operating costs and set the right rental income targets.
- Set up the right operational strategy. This should support the type of letting model you plan to use. For instance, if you want to focus on short-term letting, you may need to apply for planning permission and secure reliable housekeeping and maintenance services to improve turnaround times. Use a system that does not require constant involvement, like partnering with a property management company.
Working with a professional property management make planning easier because you benefit from their expertise and the operational systems they’ve tried and tested over the years. They don’t have to dictate what you should do. However, they can provide insight into the market, helping you decide the best course of action for your rental business.
Prepare to Implement Your Rental Strategy in London
2026 may seem daunting, but it doesn’t have to be, as long as you prepare your rental property for future changes. What happens to your property in the next 12 months or so will depend on what you plan to do now.
Whether you choose to sell, hold, or adapt, it’s important to stay compliant while maximising your rental yields. If you’re uncertain about your options, it helps to get in touch with a professional to shed light on the best strategy that fits your portfolio.
With City Relay, we can help you plan and execute the best rental strategy that will make your portfolio flexible, compliant, and, more importantly, resilient.
Would you like to know your property’s earning potential this year?
FAQs
What is the best rental strategy in London for 2026?
There’s no single option that would fit all types of rental properties in London. However, given the current state of the rental property market, the best strategy should provide flexibility. This ensures London landlords can adapt if something changes again.
Using more than one letting strategy is also a good option, as it allows your property to generate income year-round.
Should you sell before the Renters’ Rights Act is implemented?
Selling is not always the best solution to avoid the implications of the Renters’ Rights Act. While some landlords may find it not worth the trouble to comply with new regulations, the high demand for accommodation in London still makes the PRS a lucrative market.
It’s important to remember that the RRA will mostly affect long-term rentals. If you want to keep letting your property, be open to switching to short-term or mid-term letting. Give it a try before deciding to sell your property.
What’s the best way to prepare my rental property to boost income this year?
Your focus right now should be compliance, cost management, and operational efficiency. It’s about strengthening your yield resilience.
You need to understand the earning potential of your property and balance it with the market demand. Make sure your property meets the current standards, not just legally but also in terms of guest expectations.
