The NLA said the central London rental market is beginning to show signs that is has passed its peak, with tenant demand sliding and landlords looking to higher-yielding options elsewhere. It cited recent figures from estate agent Countrywide, which showed rents in the Capital have fallen 2.9% in the last year.
The number of landlords reporting a rise in tenant demand over the past quarter has slipped dramatically to 17% from 45% last year.
However, 40% of landlords in the South East reported a rise in tenant demand over the past quarter – the highest reported across the UK – suggesting tenants are increasingly looking to move out of central London to more affordable suburbs.
This coincides with a more conservative approach from landlords to purchasing property in the capital in the coming months.
Only 5% of London landlords say they plan to purchase more properties in the next quarter, the lowest across all regions and down from 15% this time last year.
In contrast, the proportion of landlords operating in the North East who plan to buy in the next three months is 19%, almost double this time last year, when 10% said they intended to buy. The proportion of landlords in Yorkshire looking to buy has also jumped from the same level to 16% this quarter.
Carolyn Uphill, chairman of the NLA, said: “It looks like central London is simply becoming too expensive for most people, regardless of whether you want to buy, invest or rent.
“For many tenants the practical solution of moving out of the city to more affordable suburbs with good transport links is becoming increasingly appealing.”
It has been a tough 18 months for landlords, who remain optimistic despite being hit with tax, underwriting and affordability changes.
“Landlords have been quick to respond, turning their backs on the capital and looking to other areas where the upfront cost of acquiring property is lower, and the potential yields to be had are higher,” said Uphill.