Data from property consultancy LonRes shows that while activity across the prime London lettings market was broadly steady in November, annual rental growth slipped to its lowest rate in over four years.
Data for November indicated an annual increase of 7.9% in lets agreed and a 6.1% increase in new instructions. The stock of available rental properties very significantly year-on-year, with 33.7% more homes on the market across prime London at the end of November than 12 months earlier.
Annual rental growth in November averaged 0.7% across prime London, down from a revised 1.8% in October. This is the lowest rate since July 2021.
However, the consultancy says that at least rents remain some 35.9% above their 2017-2019 pre-pandemic average.
Broken down by price band, the levels of stock on the market have risen across all segments on an annual basis, although the longer-term trends vary significantly.
Below £1,000 per week, availability was 53% higher at the end of November than a year earlier – although that is 42% below where it was six years ago.
At £5,000+ per week annual growth is slightly slower at 48%, but stock levels are 35% higher than November 2019.
On the sales side Nick Gregori, the head of research at LonRes, notes: “After months of speculation the Budget finally delivered its bad news in late November, but it could have been worse. The key changes for prime London property are a new annual tax on properties worth over £2m and a 2% tax increase on landlord’s rental income.
“Compared to some of the changes mooted in the summer, these are likely to be much less damaging for the market, with the delay in the introduction of the annual tax until April 2028 also allowing a gradual adjustment.
“In the short term, the certainty offered now we are post-Budget is likely to see sentiment improve. Given the proximity of the end of the year, it may be that both buyers and sellers decide to wait until January, but there is likely to be some pent-up demand ready to be released. Indeed, there have already been signs that some of the deals perhaps delayed in the Budget build-up have now gone through – the week of the Budget saw the highest weekly sales of the year so far across prime London, barring the two weeks prior to the SDLT holiday ending in March.
“The negatives of this approach are likely to be the creation of ‘price bunching’ just below the thresholds – as seen in an extreme way under the previous SDLT regime – and an ongoing fear that the tax could be increased or its scope expanded.“
This article is taken from Landlord Today