Central London Rents:
Average rental values in prime central London dipped just 0.1% in the three months to September, and average rents were down 3% year-on-year, representing the slowest declines in almost two years, that’s according to the latest Knight Frank PRIME CENTRAL LONDON RENTAL INDEX.
Higher supply in the rental market had been due to pricing uncertainty in the sales market after the stamp duty tax hikes, meaning more owners decided to let rather than sell. However, this trend, it appears, is now reversing.
“While the availability of lettings properties has become more muted, demand is rising, which is also boosting rental values. The number of new prospective tenants registering in the first eight months of this year increased 19.6% and viewing levels were 25% higher than last year.
“There is no sign that recent tax changes for landlords have exacerbated the trend for declining levels of new stock in any material way by prompting landlords to sell.
“Recent tax changes include the reduction of tax relief on mortgage interest, the loss of the wear-and-tear allowance and a 3% stamp duty levy for buy-to-let investors,” says the report.
The main points of the report:
- Average rental values fell 3% in the year to September 2017, the smallest decline since June 2016
- The number of new lettings properties on the market between January and August 2017 increased 2.2%
- The number of new prospective tenants increased 19.6% between January and August versus 2016
- There was a 9.8% increase in the number of landlords re-letting their property in the year to August 2017
- The average prime gross yield in September was 3.2%
So, despite the drop in the number of buy-to-let mortgages taken out after the 3% stamp duty was introduced in April last year, the Knight Frank data shows there was a 9.8% rise in the number of landlords who re-let their property in prime central London in the year to August 2017.
This trend clearly underlines the fact there has been no large-scale exit from the buy-to-let sector in central London.