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Prime Central London Sees Boost in Demand and Supply post-Brexit

In the aftermath of the EU referendum, rental demand and supply in prime central London areas have seen a positive uptick, a trend that is expected to continue over the short-term.

In the aftermath of the EU referendum, rental demand and supply in prime central London areas have seen a positive uptick, a trend that is expected to continue over the short-term.

Knight Frank’s latest index, covering the prime central London residential marketplace, has found that despite a slight decline of 3% in rental growth, uncertainty post-referendum is likely to “boost London’s rental demand in the short-term”.


According to the firm, a surge in London’s prime rental market is likely to be caused by uncertainty in the financial markets, as those working in the sector are likely to stay in the rental market for longer and as more vendors delay their sales and opt for letting instead.


Despite a decline in rental growth in the months ahead of the referendum, likely caused by uncertainty in the financial markets and a raise in stock levels, the underlying demand for rental property has actually strengthened in the six months to June 2016 compared to the same period in 2015.


In June 2016, the number of new prospective tenants registered was the highest since September 2015 and the number of viewings the third highest on record.


Looking at the wider picture, in the year to June 2016, Knight Frank found a 24.3% increase in properties coming to the market for rental and a 6.3% increase in the number of tenancies agreed. Whilst the number of new applicants over the same period declined by 2.4%, an 8.5% increase in viewings was also reported.


The firm suggests that as more clarity emerges regarding the new relationship between the UK and the EU, demand in prime central London market will strengthen further.


Stronger demand in the months ahead is anticipated to be fuelled by a cut to corporation tax announced by Chancellor George Osborne, which would allow London to maintain its role as Europe’s leading financial sector and retain its competitiveness compared to other European cities.


With suggestions that the Bank of England are likely to reduce base interest rates to 0.25% in the coming weeks, which is already having a positive impact on the mortgage market, Knight Frank also suggest that the move will also stimulate market activity in London as chronic undersupply and strong population growth continue to define the market.