Average rents in the Prime Central London residential property market were consistent for the second straight month in August, according to the latest report from Knight Frank.
The firm’s monthly review shows that average rental values fell by 3.4% in August, the slowest decline in over 12 months.
A decline of 1% in the six months to August was also the lowest fall on this basis since December 2015.
Tom Bill, head of London residential research at Knight Frank, noted that the figures provide further evidence that a recent run of declines in the lettings market is starting to level out.
Bill said: ‘The fall in rental values in prime central London over the past two years has primarily been due to high levels of stock, which means that landlords have had to reduce rents in order to attract tenants.’
‘Higher levels of rental properties are the result of slower activity in the sales market following a succession of tax hikes, however this trend has started to reverse as asking prices adjust and demand improves,’ he continued.
PCL rents unchanged during August
In addition, Mr Bill notes that curbs on mortgage interest tax relief and the 3% stamp duty surcharge have seen the market become more favourable for landlords, due to less new rental stock appearing on the market.
45% of landlords in prime central London have reviewed their portfolio size, according to a separate report carried out by BDRC Continental in August. Across the whole of the UK, 19% of landlords with 20 or more rental properties have cut the size of their portfolio.
Knight Frank’s data indicates that there was a 6% decline in the number of new rental properties coming onto the market in prime central London between January and July 2017.
This comes as UK Finance has revised down its forecast for buy-to-let lending in 2018 by 13%, from £38bn to £33bn.