Prime Central London rents across the capital fell for the first time in two years during the final quarter of 2015 according to Cluttons.
Average weekly rents dropped two per cent annually at £1,097 per week.
Cluttons claim rents are falling faster than capital values with average gross residential yields down to 3.16 per cent, but despite this Cluttons reports a rise in buy to let appetite in a bid to beat the imminent stamp duty surcharge.
Areas that showed the most significant falls in rents include Notting Hill (down 6.4 per cent), Holland Park (down 4.4 per cent) and Marylebone (down 3.9 per cent) making PCL a renters’ market.
“Landlords are growing wary of burgeoning supply levels at virtually every price point and are adjusting their rental income expectations accordingly. Furthermore, many tenants don’t realise they’re actually paying less than their predecessors in many cases. Some landlords are on the back foot and have been slow to adjust to the evolving conditions and are now undercutting one another to secure tenants” says Faisal Durrani, Cluttons' head of research.
“In the lead up to any tax changes, there is always an increase in activity and the looming SDLT changes are no different, which we expect will become more evident in the coming weeks” explains James Hyman, Cluttons' head of residential agency.
Cluttons forecasts a flattening of the PCL lettings market in 2016 but a cumulative growth of more than 16 per cent by 2020.