Increased activity levels in the prime rental property in central London have served to put downwards pressure on rental values. In turn, this has improved affordability for tenants, according to the latest analysis from Knight Frank.
This has strengthened the negotiation position of tenants during the course of the year, with the number of tenancies agreed in the three months to November 23.2% higher than in the same period in 2015.
Increasing yields, falling rents
The prime central London rental index report indicates that the average gross rental yield achieved was 3.18% during November. What’s more, average rents fell by 5.2% in the year. This was the lowest it has been since December 2009.
Despite this, the firm predicts that this will ease to a fall of just 2% in prime central London West during 2017.
There is however strong variation in the market. In City and Fringe, annual rental growth was fairly stagnant, but in Kings Cross, it rose by 0.3%. In Tower Bridge, there was a slight increase of 0.1%. In all other regions of prime central London, rents decreased year-on-year.
Rents for prime property in central London slow during November
Decline
Riverside led the way in terms of decline, with rents down by 9.3%. This was followed by Hyde Park (-9%), Marylebone (-8.8%), Notting Hill (-8.6%), Knightsbridge (-7.3%) and Belgravia (-7.1%).
At the same time, the number of viewings rose by 18.4%, with would-be tenants also rising by 7.8% over the same period.
Tom Bill, head of London residential research at Knight Frank, feels that the figures represent the increased regulatory uncertainty in the sales market. This has led to a number of vendors opting to let their property as opposed to selling, until more security around future pricing arises.
‘While broader uncertainty persists over issues including the UK’s decision to leaves the European Union and the election of Donald Trump, the extent of the cost pressures faced by banks was underlined in November when several banks failed to meet certain Bank of England stress tests,’ Bill explained.[1]
[1] http://www.propertywire.com/news/europe/prime-property-rents-central-london-affordable-latest-report-shows/