Annual rental growth in prime London reached 11.1 per cent in the first quarter of this year, following a 3.4 increase in the first three months of 2022, according to Savills.
This is the first time the prime London rental market has seen double-digit annual rental growth in over a decade.
As a result, rental prices are now above where they were pre-pandemic for both houses and flats with South West London the top-performing London location boasting rents for all property types now 10.3 per cent above the pre-pandemic base.
The supply drought remains the key issue with 64 per cent of Savills agents saying stock levels had fallen in the past three months.
As a result the agency estimates that a third of deals have resulted in competitive bidding over the last quarter.
Frances Clacy, research analyst at Savills, comments: “The return of office workers, international students and corporate relocation has seen demand for rental properties rocket over the past few months. Coupled with some landlords selling up in the face of regulatory changes and an improving sales market, the lack of stock is stark, pushing up competition and prices across the board.
“Not only does this mean prospective tenants have to look across multiple locations to secure a property, in many cases, rental properties are being let even before they are advertised. While 43 per cent of Savills offices expect stock levels to increase in the next three months, 39 per cent don’t expect to see any changes.
"‘Landlords certainly still have the upper hand, and we are unlikely to see the pendulum swing in favour of tenants in the short term.”
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