Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property Industry Eye. Read the original article for full details.

London Letting Agents See Five-Year High in Tenant Competition

London’s rental market has seen tenant competition reach a five-year high, with supply shortages and strong demand continuing through the summer, according to data reported by Property Industry Eye.

The number of new rental listings across prime central London (PCL) and prime outer London (POL) was 10% below the five-year average in the three months to August, based on Rightmove figures. Knight Frank reported that new listings have not exceeded their five-year average since April 2021.

The consultancy attributed the ongoing decline in rental supply to a series of tax and regulatory changes affecting landlords, including the Renters’ Rights Act, which came into force in May. This legislation introduced new rules on rent increases, possession, and the re-letting of properties recovered for sale.

Fewer properties coming to market has coincided with a fall in completed lettings. The number of tenancies agreed across London in the three months to August was 8% lower than a year earlier, and new rental supply also fell by 8% over the same period.

However, the upper end of the market showed more resilience. New London listings priced above £1,000 per week were 13% higher than their five-year average during the same three-month period. Knight Frank noted that discretionary owners in this segment have more flexibility to rent rather than sell in a weaker sales market.

Rental growth varied by location, with average rents rising by 3% in POL in the year to August, compared to 1.2% in PCL. Competition among tenants was particularly intense in outer London, where there were 8.7 new prospective tenants for every new listing in August—the highest level in five years. In PCL, there were 5.2 prospective tenants per listing.

The super-prime market, with rents above £5,000 per week, also remained active. The number of super-prime tenancies beginning in the three months to August was 13% above the five-year average. Knight Frank linked this demand to weakness in the high-value sales market, as some prospective buyers opted to rent instead.