Fewer people are paying above the asking rental price for a home in central London with only 8% doing so in August, down from 17% in the same month last year, new research shows.
While in Greater London some 13% of rentals were let above their asking price, a fall of 4%, the data from the latest Countrywide lettings index shows.
It suggests that increased rental stock has improve tenant bargaining power when negotiating rents which now average £960 a month, up 1,5% compared to August 2015.
Nationally the proportion of homes let above asking price saw a marginal rise of 0.2%. Only Wales and the North saw similar falls in proportion to London, falling by 3% and 0.3% respectively.
The majority of rental homes are still let at asking price and the added supply of rental homes in recent months has increased this. In Greater London, 76% of homes are now let at asking price, 10% higher than last year while in Central London, 89% of homes are now let at asking price, 20% higher than last year. Nationally 78% of homes are let at their asking price, rising by 13% compared with last year.
Supply in the rental market still remains high lessening the competition between tenants to find the right home, the index report points out. It says that following both the aftermath of the stamp duty rush and changing housing market sentiment after the referendum, supply has matched or grown faster than tenant demand across the country, particularly in the South.
Both London and the South East have seen the number of homes available to rent in August grow by 26% and 22%, respectively, compared with the same period last year. This is faster than their tenant demand which has grown by 8% in London and 3% in the South East. In contrast, nationally, supply grew by 26% while demand grew by 17%.
In some parts of the country the slowdown has translated into falling rents. Rents in central London fell by 2% while in the South East they fell by 1.4%. Greater London, which saw a fall in rents last month, recorded a small increase of 0.9% in August, although this still represents the lowest annual growth rate rise since 2012.
‘In London and the South East recent increases in the number of homes available to rent, outpacing the growth in tenants looking for a home, has meant that bargaining power is shifting towards tenants from landlords. This is slowing rental growth,’ said Johnny Morris, research director at Countrywide.
‘Overall slightly more tenants are offering above asking price than last year. The majority continue to pay asking prices. Unlike the sales market rental prices adapt very quickly to changes in market conditions, meaning asking prices are finely tuned to tenant demand,’ he added.
