Rents in this property sector have been falling for a year and are now 18.2% lower that at the same time in 2008 and at levels last seen in September 2000, according to the latest index from Knight Frank.
The index also shows that although demand for rental property has increased by 20% over the last year this has been more than offset by a 67% increase in supply.
The biggest falls can be found at the top end of the property rental market. Rents for properties priced at over £1,500 per week have dropped by 11%. Falls are even worse in outer London where values have fallen by almost 20%.
'Rents in Prime Central London have fallen dramatically over the past six months. However, the drop is by no means uniform. For properties priced at less than £500 per week, rents have remained relatively resilient, falling by 6.7% over the past quarter and just 10.8% over the past year,' said Liam Bailey, head of residential research at Knight Frank.
'Demand is more intense for these cheaper properties as a result of the stress on personal and corporate budgets. More expensive properties are proving more difficult to let unless landlords are flexible on price,' he added.
He said that although demand for rental property is strong by historic standards, particularly at lower price points, supply has increased by more than half over the past year, mainly as a result of developers and other frustrated vendors opting to put their properties on the rental market. 'It is this increased choice that is pushing down rents,' he explained.
Knight Frank expects rents to stabilise over the next quarter. 'In many areas the recent declines mean that rents are beginning to offer good value. The excess of supply over demand should moderate as the year progresses,' added Bailey.
