Just as the prospect of tax rises in the Budget is causing uncertainty in the prime London sales market, so Labour’s revival of the Renters Reform Bill is doing the same thing in the lettings sector.

That’s the view of Knight Frank’s head of UK residential research, Tom Bill, who says that so far only two things appear certain.

First, the government will reintroduce its own version of the Conservative Party’s Renters Reform Bill during this Parliament. Second, it is talking tougher on landlords. 

Bill speculates that measures could include making it harder to evict tenants and tighter rules around the green credentials of lettings properties. Meanwhile, capital gains tax could rise following October’s Budget.

If enough landlords sell up because any new rules are too financially punitive, it would put upwards pressure on rents. 

Bill comments: “Ironically, the speculation comes at a time when supply and demand are re-balancing after several tumultuous years, which is putting downwards pressure on rents. 

The net balance of landlord instructions in London in July was 21, the highest it has been since October 2020, according to the Royal Institution of Chartered Surveyors.

A score above zero indicates more respondents are reporting a rise than a fall. 

The long-let market was flooded with short-let properties during 2020 due to Covid restrictions around holidays.

But as supply continues to recover, the high rental value growth of recent years has self-corrected, claims Knight Frank.

Rents rose by an average of 2.5% in the year to July in prime central London. It was the first time that annual growth has been below 3% in three years. In prime outer London, the increase was 2.9%, which was also the lowest figure since July 2021.