Ten years of prime London: capital values down 9.2%, rents up 42.2%

Published 4 November 2026 · By LonRes Research

Set achieved sale prices beside achieved rents for the same prime London stock and the decade tells a clear story. In prime central London the split is minus 10.6% against plus 44.8%.

Source: LonRes Prime London Sales Index and LonRes Prime London Rental Index. Data to Q3 2026.

What do the two indices show side by side?

Set the cumulative paths side by side and the shape is unmistakable. Both figures start at Q3 2016 and run to Q3 2026.

Source: LonRes Prime London Sales Index and LonRes Prime London Rental Index, all prime London, compounded Q3 to Q3. Points plotted at the years shown in the table below.

Source: LonRes Prime London Sales Index and LonRes Prime London Rental Index, all prime London, compounded Q3 to Q3. The small difference from the headline figures of −9.2% and +42.2% is rounding in the compounding.

For the first five years the two tracked each other closely, and through 2020 they fell together. The divergence is a recent event, not a slow decade-long drift.

To follow the two indices as each new quarter lands, sign up to the LonRes newsletter.

When did the gap open?

In a single year, and then it kept going.

Source: LonRes Prime London Rental Index. Year to Q3 2022.

The four years since have added the rest at a steadier pace, because capital values have fallen in every year except one while rents have risen in every year except one.

This matters for how the figure is used. It is not evidence of a decade-long structural shift in favour of income. It is evidence of a post-pandemic rental repricing that has not reversed, running alongside a capital market that has been weak since 2016 and weaker since 2024.

What has it done to yields?

The average gross yield across prime London reached 5.19% in Q3 2026, up from 4.82% in Q2. Against a 2013 to 2020 average of around 3.5%, that is a different asset class from the one most prime London landlords bought into.

Source: LonRes, Q3 2026, published in the Autumn 2026 Prime London Market Update. All prime London. Yields are gross.

The mechanism is arithmetic rather than mysterious. Yield is rent over capital value. Rents up two fifths, values down a tenth, and the ratio does the rest.

The rental market underneath those yields looks tight on every measure LonRes tracks.

Source: LonRes Prime London Rental Index and LonRes lettings data, Q3 2026, published in the Autumn 2026 Prime London Market Update.

Why is the divergence sharpest in the centre?

Prime central London is the extreme version of the same story, and it is the extreme version in both directions at once. The centre did worse on capital and better on rents.

Source: LonRes Prime London Sales Index and LonRes Prime London Rental Index. Data to Q3 2026.

The current quarter is more mixed. In Q3 2026 PCL rents rose 5.8% on the year against 4.0% for prime London overall, the strongest rental growth in more than a year. On the sales side PCL values fell 2.3% against 4.0% for the wider market, which for once is the centre outperforming, though it follows a Q2 in which PCL fell 9.2% and the wider market 7.7%.

Anyone advising in SW1, SW3, SW7, W1 or W8 is therefore working in the part of the market where the income case is strongest and the capital case is weakest. That is an uncomfortable combination to present to a long-standing owner, and it is the conversation the data says is coming.

Does the £5m+ market follow the pattern?

Not neatly, and it should not be made to. Sales above £5m fell 9.3% on the year in Q3, in line with the wider market, but stood 10.9% above their own 2017 to 2019 benchmark, which the rest of the market does not. Fall-throughs above £5m dropped 22.2%, and withdrawals fell 11.9% while the wider market saw withdrawals rise 15.8%.

In other words, the deals at the very top are fewer but they are sticking. That is a different market from the one the decade figures describe, and it is worth saying so rather than averaging it away.

So why is nobody buying?

Because yield is not the only thing an investor is pricing, and here the survey rather than the index gives the answer.

In the LonRes Agent Survey for Autumn 2026, agents were asked what had happened to demand from each buyer type compared with a year earlier. Investors buying to hold returned a net balance of −67, the weakest of any group measured. Developers and second home buyers were both at −60. Owner-occupiers, at +8, were the only positive reading.

Change in demand by buyer type, compared with a year earlier (net balance)

Source: LonRes Agent Survey, Autumn 2026.

That is agents' perception of demand rather than a count of transactions, and it should be read that way. But it is consistent with the transactional record: sales volumes fell 10.0% in Q3 against a year earlier, and new instructions fell 9.3%.

The reasons agents gave, in the survey's open questions, were overwhelmingly about tax rather than about returns. Stamp duty came first by a clear margin, with the forthcoming high value council tax surcharge and the cost of being a landlord close behind. A yield of 5.19% does not help much against a stamp duty bill that one respondent described as the equivalent of three to five years of rent.

So the honest reading is not that prime London has become a good investment. It is that it has become a different one, and that the thing now stopping buyers is on the cost side rather than the income side.

What does it change for agents?

Three things, in order of how often they will come up.

Where is the evidence for both sides of the question?

LonRes carries achieved sale prices and achieved rents for the same prime London stock, which is what makes the comparison above possible in the first place. Rental Checker turns a postcode into an achieved-rent report: what comparable property actually let for, when, and in what condition. The Sales Archive does the same job on the capital side.

Frequently asked questions