Downbeat City mood casts a shadow over top rents

Gloom in the Square Mile is taking the fizz out of the top end of London’s rental market, property agent Knight Frank said today.

Rents were on the back foot last year and edged down a further 0.1% during January, its latest research on “prime” rentals — lettings averaging £2000 a week — showed. Kensington was the only area of London to show rising rental values over the month.

Head of residential research Liam Bailey said the City market was “struggling to gain traction”, adding: “Kensington is a bit more popular with European or US executives relocating into London, but the market is struggling at the moment. The top of the rental market is mainly corporate lettings and they are either in the City or related to it.”

The latest decline — albeit smaller than December’s 0.5% fall — marks the seventh successive month of sliding rents at the top end of the market.

St John’s Wood was the worst performer, with a 1.2% fall in average rents in January compounding a 9.7% slide during 2012 overall.

Bailey said: “It would appear the outlook remains bleak, with the number of job vacancies in the financial sector down 24% in December compared to the previous year.”

There were also signs that firms are pruning budgets with demand strongest for rentals below £1000 a week, the agent said.