According to property experts Knight Frank, rents in prime central London only went up by 3.5% in the year to June. That’s the smallest increase since July 2021.

It’s a similar story in prime outer London where rents rose by 3.6%.

Why are rents cooling down?

Remember when rents went crazy high? That’s because there weren’t many places to rent and loads of people wanted them. Now, there are more properties available to rent, especially at the higher end of the market.

What’s going to happen to rents next?

Knight Frank reckons that rents in prime central London will go up by just 2% in 2024. In prime outer London, they think rents will rise by 2.5%. After that, they’re predicting rent increases of less than 5% in the years to come.

What about landlords?

Some landlords are worried that the Labour party might bring in new rules that make it harder to be a landlord. Now that Labour has won the election, they’ve said they want to stop tenants from outbidding each other on rent, which could make it harder for landlords to increase rents.

But, Knight Frank says that as more homes become available to rent, tenants are becoming more picky and landlords are having to lower their asking rents.

In fact, almost all the rental agreements made last month in prime central London were for less than the asking rent!

What about house prices?

It’s not just the rental market that’s cooling down. House prices in prime London are also falling. This is partly because the pound is weaker, which makes it cheaper for people buying in US dollars.

On top of that, buyers are waiting to see what happens with interest rates after the election before they buy anything.