Buy-to-let yields drop

Until recently, changes in rents and employment in the capital's financial district broadly tracked each other. However, FPD Savill's head of residential property research, Richard Donnell said: "The fall in rents since 2001 has greatly surpassed the relative slowdown in employment growth over the same period."

He believes this is due to the sharp increase in the supply of property available for rent, which has pushed up vacancy rates in the last quarter of 2001 to 13%, compared with 7.7% for the year as a whole. However, Donnell doesn't expect the problems for London landlords to ripple out to the rest of the country. Rents have actually been rising in the North, Wales, Midlands and South West.