There has been a ‘noticeable shift’ in the number of properties coming onto the rental market in London as owners struggle to sell for the asking price.

According to research by Knight Frank, the number of lettings instructions in July in London was 18% higher than the same month last year and the highest for any single month since October 2020.

The company says this is down to the current uncertainty facing the sales market as rising mortgage rates put downward pressure on prices and sales volumes.

Rates have been rocketing as the Bank of England attempts to tackle high inflation, with the latest 0.25% increase coming last week.

Knight Frank head of prime central London lettings, David Mumby, says: “We are starting to see a noticeable shift in stock from the sales markets to the lettings market as owners are not able to sell for the asking price.

“A strong sales market in Notting Hill and Kensington meant they were the last two areas holding out, but we are now seeing it happening there too.”

Knight Frank head of north and east London lettings Jon Reynolds says some of the stock that has gone across from lettings has sold, but they are ‘unquestionably seeing more stock come back to lettings.

Average rents have grown by 13.7% in prime central London over the past year, down from almost 30% at the height of the stock shortage in April last year.

However, to put that in perspective, average rents grew by just 15.6% in the ten years before the Covid-19 pandemic.

In prime outer London, rents grew 12% in the year to July, which exceeded the growth of 11% seen over the decade before the pandemic.

Mumby says that demand is currently so strong that higher supply hasn’t notably affected rents yet but adds he ‘expects it to feed through to a greater extent over the next six months’.

Rents grew by 1% in prime central London in the month to July – the highest figure since January.

Meanwhile, rents grew by 0.9% in prime outer London over the same period.