Average rents in prime central London increased by 1% in the year to October, which was the lowest rate of growth since July 2021. The equivalent rise in prime outer London was 2%, down from 8.3% in the same month last year.

The figures come from Knight Frank, which says lower rental value growth has been caused by rising supply since the pandemic, where an active sales market, driven by a 14-month stamp duty holiday, meant more owners capitalised on buoyant conditions by selling.

The number of rental listings in prime central and outer London in the year to October was 21% higher than the previous 12-month period, Rightmove data shows.

Just as rents are calming down, the Renter’s Rights Bill is going through Parliament, which could unintentionally push them higher by decreasing supply. The Bill includes proposals designed to tip the balance of power from landlords to tenants, which means it may become harder to evict tenants and risks could increase around rental income. That is in addition to a series of tougher green regulations.

So, how could last month’s Budget further change the calculations for landlords?

The agency says there were mixed messages from a tax perspective.

First, stamp duty for second homes was raised to 5% from 3%, which represents a greater entry cost for landlords. Combined with the impact of the Renter’s Rights Bill, it further increases the risk of higher rents. On the other hand, capital gains tax (CGT) was unchanged for residential property, which keeps exit costs in check. Overall, the positive impact from an unchanged rate of CGT is likely to outweigh the drawbacks of higher stamp duty.

President Trump’s victory last week may increase upwards pressure on borrowing costs in the short-term despite the rate cut by the Bank of England to 4.75%. With inflationary plans that include the imposition of tariffs, reduced reliance on cheaper imported labour and lower taxes, it will do nothing to calm nerves about the prospect for higher yields and mortgage rates in the UK.

And the agency believes tenant demand could increase as a result of other measures announced in the Budget.

First, tighter rules around non doms, combined with a top marginal rate of stamp duty that is now 19%, may mean that renting becomes a more attractive option for some high-net-worth individuals. Secondly, at the other end of the market, more first-time buyers could explore the rental option due to the fact their stamp duty bills will rise by up to £6,250 as a result of the nil rate bands reverting to previous levels from next April.