Average rental values fell three per cent in the year to September 2017 according to Knight Frank.
This decline is the smallest since June 2016.
The number of new lettings properties on the market between January and August this year increased 2.2 per cent, while the agency claims the number of new prospective tenants increased 19.6 per cent between January and August over the same period of 2016.
There was a 9.8 per cent increase in the number of landlords re-letting their property in the year to August while the average prime gross yield in September was 3.2 per cent.
Ther agency’s head of London residential research, Tom Bill, says the imbalance between new levels of supply and demand suggests the market balance is likely to tip back in the favour of landlords after a period when tenants have benefitted from higher supply levels and falling rental values.
“There is no sign that recent tax changes for landlords have exacerbated the trend for declining levels of new stock in any material way by prompting landlords to sell” says Bill.
“While there are fewer buy to let mortgages issued in the UK than before a three per cent stamp duty was introduced in April 2016, Knight Frank data shows there was a 9.8 per cent rise in the number of landlords who re-let their property in prime central London in the year to August, underlining the fact there has been no large-scale exit from the buy to let sector.”