The cost of renting an upmarket property in London has dropped by the biggest amount since the depths of recession as renters regain control.
According to global real estate consultancy Knight Frank, annual rental growth in August was -4.1%, the lowest since December 2009, as supply jumped almost 40% over the past three months, compared to a year ago.
Supply has increased steadily over the last year due to uncertainty over price growth in the sales market following a series of tax rises and, to a lesser extent, the potential impact of the U.K.’s decision to leave the European Union, according to the Knight Frank report.
While demand has grown among tenants who are opting to rent rather than pay increased levels of stamp duty until more certainty returns to the sales market, it is not keeping up pace with supply.
As a result landlords are having to negotiate more with tenants. In addition to lowering asking rents, this includes flexibility around lease breaks, works to the property, levels of furnishing and payment arrangements.
Tom Bill, head of London residential research at Knight Frank, said: “The last time the balance of power was so firmly with the tenant in prime central London was in the immediate aftermath of the financial crisis, although demand is stronger now than it was in 2008 and 2009.”
Knight Frank found that August was a strong month in the super-prime £5,000-plus per week market, with deal volumes up on the same month last year. No detailed breakdown was provided.
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