"Tough negotiations" ahead for landlords

Landlords in the centre of London face a summer of "tough negotiations" to secure deals with new tenants, according to a report.

The latest Knight Frank Prime London Investment Index found that residential rents in the capital have dropped by 1.9 per cent in the three months to June.

However, a reduction in the volume of new lets has led Knight Frank to believe that a further drop in rental prices is unlikely.

In addition, house prices increased by 3.7 per cent in the same period, bringing new stability to the housing sector.

Liam Bailey, head of Knight Frank residential research, said: "The summer is likely to be characterised by continuing tough negotiations for landlords - but significant rental reductions from here are unlikely.

"The traditional busy September market could see the beginning of rental increases in some areas – as demand from new employees and their families comes into the market."

Knight Frank has forecast for more long-term investments in the rented sector in order to secure greater returns.

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