Average rental values in prime central London fell 2.1 per cent in the year to February according to Knight Frank - and the letting agency says rents in that area have been dropping now for two full years.
“The prolonged nature of the adjustment in prime London rents is due to the high levels of supply introduced to the market in recent years, including during the period following the introduction of an additional three per cent rate of stamp duty for landlords in April 2016” admits a statement from the agency.
There was a 6.4 per cent fall in the number of new lettings properties placed on the market in the year to January 2018 compared to the previous 12 month period, as the glut of new rental properties created by the surcharge deadline ‘fell out’ of annual calculations.
KF says demand for property is now rising, with a 17.6 per cent increase in the number of new prospective tenants looking for properties to rent.
“As new supply moderates and demand strengthens, we expect to see continued upwards pressure on rental values” claims the agency.
The number of viewings in the year to January 2018 was 14 per cent higher than the previous 12 months, while the number of new prospective tenants registering was 18 per cent up over the same period.
However, the agency admits there was weaker growth in demand for properties priced at between £1,000 and £5,000 per week.
While there was a 20 per cent increase in new tenant registrations for properties at below £1,000 and a 19 per cent rise above £5,000 in the year to January, the increase was a more modest eight per cent in this middle price band.