Rental growth has returned to the prime London lettings market, with activity continuing to recover from previous low levels, according to the latest LonRes data.
LonRes data for May showed an annual increase of 16.6% in lets agreed and a 28.7% rise in new instructions. The stock of available rental properties also grew on an annual basis, with 23.0% more homes on the market at the end of May than a year earlier.
Average rental values rose by 2.7% on an annual basis in May, the fastest growth since last August. More generally, however, rental growth over the past three years has been subdued compared with the rapid increases seen from 2021 through to 2023. Current values remain 34.5% above their 2017-2019 pre-pandemic average.
Data on average discounts suggests demand is a little weaker than it was in 2023. Discounts have increased across all three main catchments compared with 2023, though they remain lower than typical pre-pandemic levels. Average discounts in prime central London are consistently larger than in other areas and stood at 5.0% in May.
"Rental values across prime London bucked their recent trend by recording the highest level of growth in nine months," said Nick Gregori, head of research at LonRes.
"This is more likely to be a coincidence than a direct result of the Renters' Rights Act coming into effect, but we will be looking closely at rent movements over the rest of the year. Some agents have reported that landlord behaviour is already changing, with asking prices being increased to allow more room for price negotiations within the new rules."
