Rents in the prime property market in London fell by 0.2% in the first quarter of 2018 and were 0.8% down year on year, the latest lettings index shows.
Robust demand is boosting the market which is heading towards positive territory but at the same time the supply of homes for rent is falling, according to the latest index from Knight Frank.
The last time positive rental value growth was recorded by the index, which has been tracking rents since 1976, was January 2016. But it is a mixed market with some areas in prime outer London, for example, seeing rental value growth in recent months following a period where all areas were reporting declines.
‘While demand remains robust for rental properties, levels of new supply have declined as more certainty returns to the sales market and more landlords explore a sale due to recent tax changes, including changes to mortgage interest relief and wear and tear allowances,’ said Tom Bill, head of London research at Knight Frank.
The index report shows that the number of new listings in the year to March 2018 was 6% higher than the previous 12 months. The equivalent increase in March 2017 was 51% as more owners decided to list their property for rent in response to an uncertain sales market.
It also shows that swap rates have moved upwards over the last six months as expectations of an interest rate rise mount. However, there has been a small dip in recent weeks as economic data, including a lower than expected rate of inflation, has reduced the likelihood of a rise in May.
‘The number of rental properties coming to the market and the total stock of available rental properties has declined across Greater London as some landlords explore a sale following a series of recent tax changes,’ Bill concluded.
