The number of new tenancies started in September in prime areas of London was the highest monthly total in the last 10 years says Knight Frank.

Average rental values rose on a quarterly basis by the largest amount in a decade in prime central (up 2.8 per cent) and prime outer London (up 2.6 per cent).

The number of new prospective tenants registering was still 56 per cent higher than September last year.

The biggest increases in rents over the three months to September included Canary Wharf (up 6.1 per cent), Wapping (5.6 per cent), Aldgate (7.0 per cent) and Islington (6.9 per cent).

Gary Hall, head of lettings at Knight Frank comments: “With a continued lack of new properties, the volume of prospective tenants looking to rent is still very high. It has got to the point that some need to look at different options if they are unable to find the right property, including short-lets and longer-term hotel stays.”

Demand remains strong although it calmed slightly in September as many tenants had already put plans in place ahead of the academic year. 

Even so, the number of new prospective tenants registering was still 56 per cent higher than September last year.

“Landlords who took heavy reductions last year are now looking to recoup their losses at the point of renewal with increases of 10 per cent or more” adds Hall.

David Mumby, head of prime lettings at Knight Frank, states: “There has never been a busier lettings market at any time over the last 20 years, it feels like we have been through a five-year cycle in 18 months. 

“We are seeing competitive bidding across Prime Central London markets, with new tenants mainly being ‘London leavers’ who now are returning to the office, and international students who are still agreeing properties purely based on virtual viewings. There is a chronic shortage of stock, especially for the most popular property types; family houses and pied-à-terres.”