Rents increased by 2.6% in prime London and prime central London during the first quarter of year compared to Q1 2018, while rents are up by an average of 2% in prime fringe areas of the capital, which includes postcodes such as SE1, SE11, SW4, SW5, SW6, SW11, W4, W6, W9, W10, fresh industry analysis shows.
Across the three LonRes prime areas, the average rental value over Q1 2019 stood at £44 sq ft, according to the latest LonRes Agent Survey.
However, the research found that many landlords were increasing rents on new lets, rather than renewals.
Some 69% of respondents to the LonRes Agent Survey said that landlords were not increasing rents on renewals.
Rises in achieved rents, together with falls in achieved sales prices meant that rental yields increased over Q1 2019.
Yields across the three LonRes areas averaged 3.7%, the highest since Q3 2013.
The increase in rents is owed in part to a widening supply-demand imbalance in the market, with new instructions falling by 5.7% on Q1 2018, partly because more buy-to-let landlords are selling up.
Some 30% of respondents to the LonRes Agent Survey reported an increase in landlords selling investment properties.
However, prime central London did see an increase in supply, up 2.4%, although it is worth noting that this is the only area to see growth in listings.
Almost half - 46% - of respondents to the LonRes Agent Survey reported having less rental stock on the market compared to the same period last year. One in five - 20% - reported an increase.
Marcus Dixon, head of research at LonRes, said: “The wait and see approach was evident in the lettings market this quarter.
“Renewal rates increased again with tenants choosing to stay put instead of moving across to the sales market or renting elsewhere. This resulted in fewer new lets in Q1 2019. But lack of available stock meant rents rose again this quarter, recording their sixth consecutive annual increase.”