The capital’s prime rental market went from strength to strength in February with values rising for the twelfth month in a row at a value of 0.2 per cent
The rise matched that noted in January and means annual growth in the prime capital market now stands at four per cent, according to Knight Frank.
That represents the highest level for more than three years, although the report does highlight some uncertainty relating to the potential of a ‘mansion tax’ and its impact on properties worth £2 million or more.
Politics impacting the market
Tom Bill, head of London residential research at Knight Frank, said the possibility of legislation changes following May’s general election is having both a positive and negative impact on the market.
“This has benefitted the lettings market to some extent as a small but growing number of buyers and vendors hedge their bets on the outcome of the election and move into the rentals market,” he explained.
“However, the dominant mood in the prime London lettings market in February was also one of caution as election campaigning gathered pace, which resulted in low stock levels in some areas.”
He added that some landlords and tenants are tackling the issue by initially renting a property before buying so as to guard against any short term political uncertainty.
Such approaches mean those looking to buy are only likely to do so after the election when the situation will be a lot clearer.
Regional variation in the capital
Regional variation in rental values were also noted in February as Mayfair and Islington saw decreases of 1.6 per cent and 1.2 per cent respectively.
It was a different story in the rest of the capital however as prices in St John’s Wood and Marylebone grew by 10.8 per cent and 12.4 per cent – the highest recorded.
Hyde Park saw growth of eight per cent while Kensington rents were up 7.8 per cent month on month.
South Kensington, Belgravia, Notting Hill, Knightsbridge and Chelsea also saw increases of between 0.2 per cent and 6.1 per cent.
The number of new tenancy registrations, viewings and agreements remained strong in the capital and confirms earlier predictions from property advisors and development consultants Hurford Salvi Carr that London’s rental market will outperform property sales over the year.