London’s short-term rental market has always been a story of contrasts — from riverside penthouses in Zone 1 to suburban family homes in Zone 5. But in 2025, those contrasts are sharper than ever. While some central boroughs are seeing softened demand due to regulation and rising costs, outer London neighbourhoods are thriving as guests seek space, value, and local authenticity.

The capital’s Airbnb landscape has evolved dramatically over the past two years. Hybrid working, flexible travel habits, and a resurgence of international tourism have reshaped the way guests choose where to stay. Instead of focusing solely on famous postcodes like Kensington or Covent Garden, visitors are branching out to once-overlooked neighbourhoods in Greenwich, Ealing, and Walthamstow — areas offering quick transport links, community charm, and better nightly rates.

In this blog, we’ll explore how short-let demand in London is shifting across boroughs and travel zones in 2025, analysing the factors driving this redistribution — from regulation to guest expectations. Finally, we’ll show how Pass the Keys London helps property owners navigate this complex market and optimise performance, wherever their property is located.

1. The Post-Pandemic Pivot: Why Guest Behaviour Has Changed

For years, central London reigned supreme in the short-let world. Tourists wanted to be steps away from landmarks, business travellers needed proximity to offices, and theatre-goers flocked to Soho and Covent Garden. But by 2025, the city’s short-let demand has diversified — and that’s largely due to three key shifts.

a. The Rise of Hybrid and Remote Work

With more travellers blending business and leisure, location flexibility has become the norm. Guests are booking longer stays — often 2–4 weeks — and prioritising comfort, home-style amenities, and local neighbourhood vibes over sheer proximity to the West End.

b. The “Local London” Experience

Modern travellers increasingly seek authentic experiences — independent cafes, community markets, and green spaces — rather than polished tourist zones. This trend has elevated areas like Peckham, Hackney Wick, and Walthamstow into desirable Airbnb hotspots.

c. Price and Regulation Pressures

Rising accommodation costs and London’s 90-day short-let rule have encouraged guests to explore outer boroughs, where nightly rates are more affordable and properties larger. Many hosts have followed suit, investing in suburbs that offer better yields with fewer restrictions.

2. Zone-by-Zone Breakdown: Where the Demand Is Moving

London’s transport zones remain a useful framework for understanding Airbnb trends. Here’s how the balance of demand looks in 2025:

Zone 1 – Still Iconic, but Saturated

Boroughs: Westminster, Kensington & Chelsea, Camden, Islington
Zone 1 remains London’s most desirable tourist hub, but it’s also the most competitive and tightly regulated.

• Average Nightly Rate: £240–£300

• Occupancy: ~75%

• Guest Type: Short-stay tourists, business travellers, and luxury seekers

• Trend: Flat growth. While occupancy is stable, regulations cap expansion.

The demand for premium, high-design apartments remains strong — particularly near Covent Garden, Soho, and South Kensington — but new hosts face barriers due to supply saturation and licensing compliance.

Zone 2 – The Sweet Spot for High Returns

Boroughs: Hackney, Southwark, Hammersmith & Fulham, Tower Hamlets, Lambeth
Zone 2 has emerged as the most dynamic area for Airbnb growth in 2025.

• Average Nightly Rate: £180–£230

• Occupancy: 80–85%

• Guest Type: Digital nomads, young professionals, culture-focused travellers

• Trend: Rapid growth, particularly around transport-connected creative hubs.

Key Hotspots:

• Hackney & Dalston: Strong demand from creatives and international visitors.

• Bermondsey & Southwark: Popular with foodies and art lovers, offering proximity to central London without the price tag.

• Hammersmith & Shepherd’s Bush: Family and business bookings driven by event travel and Westfield shopping tourism.

Zone 2’s blend of culture, convenience, and cost-effectiveness makes it the sweet spot for both hosts and guests.

Zone 3 – Family Comfort and Longer Stays

Boroughs: Waltham Forest, Ealing, Lewisham, Haringey
Zone 3 has become London’s hub for extended stays.

• Average Nightly Rate: £130–£170

• Occupancy: 83–88%

• Guest Type: Families, hybrid workers, and domestic tourists

• Trend: Strong upward trajectory.

Why Guests Love It:
Properties are larger, greener, and more affordable. The Elizabeth Line has made commuting from areas like Ealing Broadway and Forest Gate faster than ever, opening new opportunities for hosts.

For property owners, this zone offers some of the highest yield potential in the city — especially for two- or three-bedroom homes with good transport connections.

Zone 4 and Beyond – The Rise of the Outer Suburbs

Boroughs: Croydon, Bromley, Harrow, Enfield
Once overlooked, these areas have seen impressive growth as travellers seek value and calm.

• Average Nightly Rate: £100–£130

• Occupancy: 78–82%

• Guest Type: Budget-conscious families, relocating professionals, long-stay visitors

• Trend: Emerging opportunity.

The expansion of remote work, coupled with family relocations and local tourism, has transformed outer London’s short-let scene. Guests staying a week or longer often choose suburban homes with parking, gardens, and easy rail access — particularly appealing for those attending events or visiting relatives in the city.

3. Factors Driving Borough-Level Performance

Tourism and Events

Boroughs near major event venues — such as Wembley (Brent), The O2 (Greenwich), and ExCeL (Newham) — consistently outperform surrounding areas during concerts, conferences, and sporting fixtures.

Transport Connectivity

Properties within 10 minutes of a Tube or Elizabeth Line station command premium occupancy rates. Crossrail has been a game changer, particularly for Ealing, Ilford, and Woolwich.

Cultural Magnetism

Creative districts like Shoreditch, Peckham, and Notting Hill remain magnets for younger guests, offering vibrant nightlife, art, and food scenes that rival central London appeal at a lower price point.

4. The Regulatory Landscape: Balancing Opportunity with Compliance

London’s 90-day rule remains one of the defining features of its short-term rental ecosystem. Hosts can legally rent their entire home for up to 90 nights per calendar year without special permissions.

However, professional management companies have helped owners adapt by:

• Switching to flexible models (short-lets, mid-term lets, and corporate stays).

• Handling local registration and compliance paperwork.

• Ensuring properties meet safety and insurance standards.

With the right strategy, hosts can stay fully compliant while maintaining strong annual income.

5. The Role of Professional Management: Thriving Across Zones

Managing a short-let in London is no longer a casual side project — it’s a sophisticated business requiring real-time pricing, 24/7 guest support, and deep local insight.

This is where Pass the Keys London plays a crucial role. As one of the UK’s leading short-let management services, Pass the Keys helps hosts in every borough — from central apartments in Kensington to family homes in Croydon — maximise occupancy and earnings.

What Pass the Keys London Offers

• Dynamic Pricing: Adjusted daily for demand, seasonality, and local events.

• Professional Photography & Listing Management: To make your property stand out in competitive boroughs.

• Guest Screening & Communication: Ensuring security, reviews, and repeat bookings.

• Cleaning, Maintenance & Compliance: A fully managed service for hands-off hosting.

Their regional network and in-depth market data give property owners the confidence to expand portfolios beyond the usual hotspots, knowing each property is optimised for its specific zone’s audience.

Conclusion: Adapting to a Multi-Zone Market

London’s 2025 short-term rental market reflects the city itself — dynamic, diverse, and constantly evolving. While Zone 1 continues to attract luxury travellers and international tourists, Zones 2 and 3 are increasingly where the smart money flows. Affordable rates, longer stays, and growing demand from hybrid workers and families are creating profitable opportunities across new boroughs.

For hosts, the challenge lies in understanding these local nuances — and the solution lies in expert management. Pass the Keys London combines local expertise with national technology, empowering property owners to capture demand shifts, stay compliant, and achieve consistent returns in any part of the capital.