Rents in prime central London up 1.1% in year to March 2019
Average rental values in prime central London continued to rise on an annual basis in early 2019 as a result of declining levels of supply, according to the latest residential real estate analysis.
The increase was 1.1% in the year to March while in prime outer London average rents were flat following two years of declines, the latest review report from real estate firm Knight Frank shows.
It also shows that the number of letting listings in prime central London declined by 6.3%, however, this was the most modest decline experienced in over 18 months and is a reflection of a growing number of landlords re-listing their properties on the market after attempting a sale.
Although there is evidence of decline, the analysis reveals that overall tenant demand remains strong. The number of new prospective tenants per listing was 5.6 in March, the highest figure since January 2018.
Average annual rental values increased by 4.3% between £250 and £500 per week in the year to March 2019 while the number of lettings listings fell by 6.3% and the number of total available listings fell by 14.3%.
According to Tom Bill, head of London residential research at Knight Frank, tax changes for landlords have prompted some to leave the rental sector. The latest proposed change could lead to the end of so-called ‘Section 21’ notices, which has created uncertainty over how some tenancies will be legally brought to an end.
Meanwhile, the number of buy to let mortgages issued in the UK is about 40% lower than it was before an additional 3% stamp duty surcharge was introduced in April 2016. However, while the number of new lettings listings declined 6.3% in the year to March, it was the most modest decline in over 18 months.
‘This is due to a growing number of landlords who have re-listed their properties on the lettings market after attempting a sale. Political uncertainty has curbed activity and pricing in the sales market, which means some vendors have not been able to achieve their asking price,’ said Bill.
‘An analysis of lettings supply shows that supply reductions been more marked in lower price brackets, which suggests there is a greater financial imperative to sell for landlords of comparatively lower value properties,’ he pointed out.
While total available listings across London declined 14.3% in the year to March, there was a 3.5% increase for properties rented for more than £1,000 per week. Above £3,000 per week there was a 15% increase, Rightmove data shows.
Bill explained that this discrepancy in supply levels between price bands explains why rental value growth was stronger in lower price brackets in the year to March.
Rental values between £250 and £500 per week grew 4.3% whereas there was a 0.7% decline between £1,500 and £2,000.
‘Overall, tenant demand remains strong. The number of new prospective tenants per listing was 5.6 in March, the highest figure since January 2018, which is likely to keep upwards pressure on rental values across all price brackets,’ Bill added.