Knight Frank said that strong tenant demand and low supply, exacerbated by the pandemic, mean landlords are now in the driving seat and the switch from a tenant’s market has been swift.
New prospective tenant numbers registering with Knight Frank in August were 73% higher than the same month in 2019, and the highest figure recorded over the past five years.
The second highest was July this year, and June 2021 was the third highest month over the last five years.
Knight Frank said that strong tenant demand and low supply, exacerbated by the pandemic, mean landlords are now in the driving seat and the switch from a tenant’s market has been swift.
This demand is coming from various sources, including the return of international students ahead of the academic year, and workers as they make plans to return to the office.
Following the winding down of the stamp duty holiday in June, the number of sub-£2m exchanges in July was 30% below the same month in 2019.
By August, the equivalent decline had narrowed to 5%.
Above £2m, a section of the market where activity was less affected by the saving, exchanges were down by 5% versus July 2019 and 3% compared to August 2019.
For higher-value properties, the stamp duty holiday was an opportunity to save £15,000 but the urgency around the deadline was less acute.
The number of overall market valuation appraisals below £2m in the year to August 2021 was 27% higher than the equivalent period in 2019, as a result of an increase in market valuation appraisal activity squeezed into the months leading up to the end of the stamp duty holiday.
Knight Frank said demand remains high following the end of the incentive, with the number of prospective buyers registering in July and August in London 21% above the five-year average.
Meanwhile, the number of offers accepted in July and August was 34% above the five-year average, indicating the strength of the sales pipeline.
Tom Bill, head of UK residential research at Knight Frank, said: “The market was in somewhat of a holding pattern in August.
"We can confidently predict a strong end to the year, just less frenetic than the first six months and to some degree contingent on supply levels.
"Supply will naturally increase due to seasonality, the positive economic backdrop, the benign interest rate environment and the return of sellers put off by the frenetic pace of activity during the SDLT holiday.
“However, while the summer represented a natural pause for many, some may wait until Christmas to assess the social and economic landscape as government stimulus measures and COVID restrictions wind down.
"It means needs-based buyers and sellers may account for a higher proportion of activity over the next four months.
"The other large moving part is the return of international buyers, which is likely to drive supply and transaction numbers higher.”
Gary Hall, head of lettings at Knight Frank, added: “It’s turned into a landlord’s market in recent weeks and that has happened very quickly.
"Supply is tight in some areas and demand has gone through the roof.
“In some areas, lettings properties are coming onto and off the market on the same day.
"The competition is so fierce that some prospective tenants are taking a property based on a single virtual viewing from their desk at work.”
