Rental values in prime central London were down 0.1% in the year to May, despite a dearth of rental inventory in the city, according to a report from Knight Frank.
There was a 15% decline in the number of rentals listed in the year to April as more landlords explore selling their rental properties due to their much larger tax burden. Tax changes that are being phased in—to come into full effect in 2020—have impacted issues like mortgage interest relief and wear-and-tear allowances, Friday’s report from the London-based real estate firm said.
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Top-tier properties saw the biggest increase in tenancies agreed in the year to April. Properties asking more than £5,000 (US$6,656) per week, saw rental deals rise 24%, the report said.
Meanwhile, rental properties asking below £1,000 (US$1,331) per week saw tenancies increase 12%.
A 1% rise agreed tenancies in the middle price bracket—between £1,000 and £5,000—"shows political and economic uncertainty are still impacting demand," according to the report.
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Looking forward, Knight Frank forecasts rental values to grow a total of 0.5% in 2018.
Central London’s luxury residential sales market logged declines in May, too. Knight Frank’s Prime London Sale Index—which checks the health of the luxury market through a combination of sales volume, average price, new listings and other metrics—fell 1.4% year-over-year to 5,879.4.