Rental Market
Spring 2019

Annual growth in rental values across London reached 0.5% in the year to March, the strongest growth across the capital since November 2017 according to the IPHRP produced by the Office for National Statistics. This compares to average annual growth of -0.1% over the previous 12 months. Across prime central London, rental values posted growth of 1.1% in the year to March according to the latest index from Knight Frank, while across outer London values have risen by 0.6%. LonRes report average rental values during the first quarter of 2019 were up 1.0% on the 2018 average. Average asking prices for properties across the capital rose by 2.9% in the three months to March, compared to a fall across the rest of the UK of 0.2% (Rightmove).

Rental values have strengthened as demand has continued to outstrip demand. In prime central London, Knight Frank and Rightmove report the number of new listings in prime central London fell 9.2% in the year to February while the number of new tenancies agreed was up 0.2%. Unsurprisingly since the confirmation of the introduction of the Tenant Fees Bill from 1st June, demand has fallen. LonRes report a 12% drop in the number of properties let across prime central London in March compared to a year earlier.

With continued uncertainty in the sales market prime lettings activity (+£5,000 per week) continues to remain buoyant. Over the past six months LonRes report such lets accounted for 1.2% of all tenancies agreed, the total weekly value of lets agreed at this level close to £646,000 per week.

An average of independent forecasts anticipate rental values across prime central London will rise by 1.5% over 2019 after which growth is predicted to strengthen to 1.9% in 2020 and 2.5% in both 2021 and 2022. Compound growth in the region of 9.1% is anticipated over the next five years (2019-2023).