Rent prices are rising in central London, as tenants have to bid against each other, due to a sharp decline in housing supply, according to Knight Frank.
The property firm claims that supply in the private rental sector is on a sharp decline, owed to a jump in the number of buy-to-let landlords exiting the market, in response to the Government’s tax changes for investors.
Knight Frank’s latest Prime Lettings Index indicates that many prospective tenants are being squeezed from the centre of London and pushed into the suburbs, as landlords offload their expensive property investments in the capital.
Using data from Rightmove, the firm’s research arm found that the number of rental property listings in prime central London has fallen by 18% in the year to September, placing upward pressure on rent prices.
Knight Frank reveals that the average rent price rose by 1.2% in September, in response to declining levels of supply, which has been prompted by landlords seeking to sell their properties due to tax changes. The Chancellor announced further reforms in his recent Budget.
However, as supply continues to drop, the number of new prospective tenants registering in prime central London has been on an upward trajectory since the start of this year, suggesting that the pressure on rent prices will continue to hit.
With fewer rental properties available in prime central London, the amount of tenancies agreed per Knight Frank office in prime outer London increased by 16.7% in the 12 months to September.
But it’s not all bad news, as residential property outperformed other asset classes in 2018, despite total annual rental returns dropping in prime London markets.
Gold fell by 4.4% in the year to October, while the FTSE 100 dropped by 5.0% over the same period. Global stock markets have also decreased in recent weeks, over concerns about trade tensions.