The final quarter of 2015 saw rents drop in the capital for the first time in two years, according to a new report.
Cluttons estate agents has provided data suggesting that average Prime Central London rents dropped by 2% over the year to stand at £1,097 per week.
Falls
In addition, Cluttons claim rents are slipping faster than capital values, with average gross rental yields dropping to 3.16%. Despite this, the firm has reported an increase in buy-to-let activity in an attempt to beat the upcoming stamp duty surcharge.
Regions that have seen the most significant dips in rents include Notting Hill, where they slipped by 6.4%, Hollands Park (4.4%) and Marylebone (3.9%).
PCL rents slip for first time in two years
‘Landlords are growing wary of burgeoning supply levels at virtually every price point and are adjusting their rental incomes accordingly,’ said Faisal Durrani, head of research at Cluttons. ‘Furthermore, many tenants don’t realise they’re actually paying less than their predecessors in many cases. Some landlords are on the back foot and have been slow to adjust to the evolving conditions and are now undercutting one another to secure tenants,’ Durrani continued.[1]
Stamp Duty changes
James Hyman, Cluttons’ head of residential agency, noted, ‘in the lead up to any tax changes, there is always an increase in activity and the looming SDLT changes are no different, which we expect will become more evident in the coming weeks.’[2]
To this end, Cluttons has forecasted a reduction of the lettings market during 2016, but a growth of more than 16% before 2020.
[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/prime-central-london-rents-fall-for-the-first-time-since-2013