Nearly two-thirds more homes to let in Prime London than a year ago

Rental growth across prime London slowed again in January, with average rents falling on a monthly basis for the third time in succession.  

The data comes from London property consultancy LonRes.

It says annual rental growth fell to 3.1 per cent last month, but rental values remain a huge 26.1 per cent higher than their 2017-19 pre-pandemic average.

The number of newly agreed lets in January fell by 11.5 per cent compared to a year earlier and was 60.8 per cent below the 2017 to 2019 January average.  

New instructions rose last month by 22.1 per cent on an annual basis, but the figure was 48.2 per cent below the average 2017 to 2019 January level.  

Across prime London there were 59.0 per cent more properties on the market to let on January 31 than a year earlier, but that figure is 27.5 per cent lower than the end of January 2020. 

LonRes says that in the prime London rental market, flats have typically commanded a premium versus houses, on a pound per square foot basis. 

At the start of 2020, this premium was 13 per cent but rental growth for the two property classes has followed differing paths since then.  In Q2 2020, the pandemic and associated lockdowns reduced demand for rental property across central London, so values for both types fell. Very quickly, this shifted to increased demand for houses relative to flats.  

In spring 2021, house rental values were in line with their January 2020 level, while flats were 15 per cent below. Flats subsequently recovered and closed the growth gap in late 2022, but a new gap has opened up since then. The flat premium in January 2024 has fallen to just six per cent.

Nick Gregori, LonRes’s head of research, comments: “The prime London lettings market continues to slow, although much of this can be explained by the time of year.  Rents fell on a monthly basis for the third month in a row, although annual growth remained in positive territory at 3.1 per cent.  

“It appears that rents may have peaked in late 2023, with further growth unlikely in the short term as available stock is growing, particularly at weekly rents above £1,000.”