There has been a dramatic rise in demand for rental accommodation in prime London, underpinned by uncertainty in the sales market, the latest report from Knight Frank shows.
The number of tenancies agreed by Knight Frank In London increased by 34% in the year to August, the highest such increase in more than five years.
Growth in demand has been particularly strong in lower price brackets, reflected by the fact that average rental values between £250 and £500 per week increased by 3% in the year to September.
While demand is also strong in the super-prime £5,000-plus per week market, average annual rental values between £1,000 and £5,000 per week are declining, which reflects more subdued demand among senior corporate tenants.
There has been a marginal increase in the level of new letting listings in prime central London as more property owners respond to existing levels of political uncertainty by letting rather than selling.
The impact has put downwards pressure on rental values, with rents up 0.5% quarter-on-quarter in prime central London, while prime outer London has seen a quarterly rental value change of +0.3%.
Record-low interest rates have helped to underpin market liquidity and mean that a growing number of buy-to-let landlords are fixing for longer periods of time.
Some 96% of all mortgages issued in July were fixed rate, with the percentage of fixed-rate mortgages increasing to 47%, which compared to 27% in the corresponding month two years ago.