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Jitters: Reform Bill failure and July Election hit lettings market

Knight Frank is suggesting that a growing degree of uncertainty is hitting the rental market, particularly the high-end sector in the capital.

The agency says that after five years of debate, the failure of the Renters Reform Bill was an anti-climax for the rental industry, and now it awaits some version of a new Bill from Labour, should it win the General Election. 

“Until then, uncertainty reigns. It seems a safe bet that any new legislation will still involve the scrapping of no-fault evictions but how practical will any proposals be given the pressures already on the courts?” asks Tom Bill, Knight Frank’s head of residential research. 

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He continues: “Meanwhile Shadow Chancellor Rachel Reeves appears to have ruled out rent controls as a blanket approach but the possibility of further tax tweaks, tougher energy requirements and other measures designed to limit the powers of landlords may cause more to leave the sector.”

He says that the basic laws of supply and demand mean that tenants have faced higher rents as a result of those landlords who have already quit.

Average rental values in prime central London were 33% higher in May than they were before the pandemic in February 2020. Meanwhile, the same increase was 28% in prime outer London.

Despite the jump, rental value growth has calmed down in recent months as supply and demand re-balance.

Average rents increased by 4.1% in the year to May in prime central London (PCL), while there was a rise of 3.7% in prime outer London (POL).

The number of new lettings listings in London was 10% below the five-year average (excluding 2020) in May, Rightmove data shows. That compares to declines that were frequently more than 20% during the two years to last July.

As a result, tenants are increasingly pushing back against the sort of large rent increases that had become more common, either by re-negotiating or leaving at the end of the tenancy.

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