Average rents in the prime London markets have been steady in the 12 months to March 2019, the latest lettings data analysis shows.
In the prime central London market rents increased by 1.1% year on year and in the prime outer London market they were up by 0.6%, according to the report from real estate firm Knight Frank.
On a quarterly basis, however, rents were more or less flat, unchanged in the prime outer London market and down by 0.2% in the prime central London market.
Overall, rental have strengthened in the last year as the supply of lettings property has reduced in response to tax changes, including a ban on tenant letting fees, which is due to be introduced in England in June, the report points out.
Tom Bill, head of London residential research at Knight Frank, explained that although the number of new lettings listings in prime central London fell 9.2% in the year to February, the rate of decline has moderated.
‘One explanation is that some landlords have re-listed their property to let after failing to sell for the asking price. This contributed to an 8.2% rise in the number of tenancies agreed in the year to February,’ he said.
The report also shows that the number of new tenancies agreed for homes rented out at less than £1,000 a week increased by 15% in the year to February. Meanwhile, between £1,000 and £5,000 per week, the rise was 7.3%. There was a 2.2% decline for £5,000 plus per week properties as demand begins to strengthen in the higher value sales market.
‘As sales values continue to decline and rental value growth strengthens, yields in prime central London and prime outer London have climbed,’ Bill said, adding that the spread between the gross yield in prime central London and the risk free rate of a 10 year government bond was 2.14% in the middle of March. The equivalent figure in prime outer London was 2.29%.
