Figures from investment company London Central Portfolio suggest that re-lets of older properties to new tenants showed a fall in rents of 1.6 per cent last year.
But it says this slowdown in the re-let market in prime central London has been compensated by renewal increases for tenants remaining in their own properties.
Average rental growth for this sector was 1.3 per cent in the last quarter of 2016 “with landlords often able to achieve contractual rental increases in excess of that which can be achieved in the open market” says a market report from LCP.
But it warns that larger units - three bedrooms and above - have been impacted by an increased level of stock and by tenant budget cuts as corporate clients tighten their belts in the face of global instability.
LCP cites Knight Frank saying that rent in the price bracket from £1,000 to £1,500 per week has fallen by 8.1 per cent, and over £1,500 per week by 6.5 per cent in 2016.
“It is possible, however, that the rental market in 2017 will see some upward pressure in rents as landlords seek to recoup the increased entry and running costs due to the Additional Stamp Duty and the forthcoming reduction in mortgage interest relief” suggests LCP.