Rental Market
Autumn 2016

As uncertainty persists across the prime London sales market, it is no surprise that interest in the rental market has heightened considerably. Rightmove report that there has been a 15% increase in newly-marketed properties across the capital in Q3 2016 compared to last year (UK increase of just 6%). Knight Frank stated that the number of prospective tenants, viewings and properties let rose considerably in the three months to the end of August compared to last year.

Supply rose by 43.8% in the last three months to August over the same period last year. Such an increase in supply has led to increased pressure on rental values. Homelet report that average rents across Greater London fell by 0.4% in September compared to August, with annual growth of 3%, down from 4.8% in the year to September 2015. Across prime central London, Knight Frank report that rental values have fallen 4.7% in the year to September, although this does vary by market area. Across the Kings Cross and City and Fringe areas to the east of the city, average prices are up slightly on last year, with Marylebone, Chelsea and south Riverside areas experiencing the largest falls. Such a fall in values does mean that many tenants have been able to widen their search areas to include previously unaffordable areas of prime central London.

The fall in rental values is most acute at the upper value price brackets, with properties let for less than £500 per week only down -0.6% year on year compared to those priced between £1,000-£1,500 per week where annual price growth fell by 7%. Knight Frank report that September proved a strong month for super-prime lets (£5,000+ per week), no doubt a reflection on wider economic conditions. Such tenants may either be unable to purchase a suitable property for what they consider to be a realistic price, especially considering SDLT charges, or are preferring to bide their time until the market stabilises.

Knight Frank Residential Research, Prime Central London Rental Index, September 2016