Prime Central London’s rent drops shallow out

PCL rents fell 0.7% on a quarterly basis in June, the lowest three-month decline since November 2015

Rents in Prime Central London dropped 0.7% in the last three months, according to the latest from Knight Frank; that’s the lowest quarterly decline since November 2015.

Q2’s behaviour – driven by “strengthening tenant demand and weakening levels of new supply” – means that rental values fell by 4.4% in the year to June, which is the smallest annual decline since August 2016.

The supply-side of the market is still adjusting to the impact of 2016’s new SDLT levy on additional homes, which caused a “notable” increase in properties available to rent as uncertainty pushed some potential vendors opted to let their properties instead of selling: Knight Frank’s data indicates that 29% more properties came up for rent between January and May 2016 compared to 2015.

But now it seems that “this trend is reversing” as buyer demand in the sales market picks up – and that 3% additional tax bill for landlords impacts buy-to-let viability; KF reports a 7% drop in the number of new lettings properties between January and May 2017.


PCL rental value changes by price bracket

£250 – £500 pw £500 – £750 pw £750 – £1,000 pw £1,000 – £1,500 pw £1,500 – £2,000 pw £2,000+ pw Flat House
1 month -0.2% -0.2% 0.2% -0.2% -0.5% -0.2% -0.2% -0.2%
3 months -0.7% -0.4% 0.0% -1.2% -1.0% -0.7% -0.6% -0.8%
6 months -1.0% -0.8% -0.3% -2.7% -2.7% -1.3% -1.3% -1.7%
1 year -1.8% -2.5% -2.5% -7.1% -7.1% -5.3% -3.8% -6.0%
YTD -1.0% -0.8% -0.3% -2.7% -2.7% -1.3% -1.3% -1.7%