Prime Central London rent falls now less severe than earlier in year

Rents in prime central London have dropped 4.4 per cent in the past year - although that annual drop is not as large as it has been for several months.

The figures, from agency Knight Frank, suggests that annual declines have diminished over the last seven months as a result of strengthening tenant demand and weakening levels of new supply. 

The agency’s latest quarterly figure showed rents falling 0.7 per cent in the three months to the end of June, which was the lowest three-month decline recorded since November 2015. Meanwhile, Knight Frank says rental values fell 1.4 per cent in the first half of 2017, which was the lowest six-month fall registered since January 2015. 

The supply of new properties to rent grew notably in 2016 as a result of uncertainty surrounding the impact of higher rates of stamp duty on price growth in the sales market, meaning some potential vendors opted to let their properties. 

The number of new available rental properties in prime central London grew 29 per cent between January and May 2016 compared to 2015, an analysis of Knight Frank data shows. 

Knight Frank says this trend is reversing for several reasons including the fact that demand is strengthening in the sales market as higher rates of stamp duty are factored into asking prices. 

It adds that anecdotally other reasons behind the fall in new lettings properties include higher levels of taxation faced by landlords, which have conspired with the recent fall in rental values to reduce the viability of some more highly- geared investments.