An over-supply of property was the reason average London rental values dropped for the first time in nearly six years.
Prices were 0.5 per cent lower – saving renters an average of £7 per month – compared to July 2015 according to estate agent Countrywide. The last time there was a year-on-year fall was in November 2010 when the average monthly rent in the capital was £923 – less than today's average national rent of £951 per month.
Nationally there were 23 per cent more homes available for rent and in London a third more were available compared to the same time last year.
“The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing.
"Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April. Added to that, uncertainty in the sales market in the run up to, and after the EU Referendum has caused more discretionary sellers to turn to the rental market," said Johnny Morris, of Countrywide.
However, Morris remained confident that the trend towards renting would mean that the downturn currently experienced would be temporary.
“While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants we will see the number of households renting increase in 2016," he said.
The decline in London was not as marked as the south-east, which experienced a 1.1 per cent decrease in rental values. Meanwhile across the north of England and midlands rental growth was at its highest level for two years.