The old adage of location, location, location could not be more apt, according to agents. Mark Tunstall, head of Savills Knightsbridge lettings, advises his clients to buy property in the best possible addresses, as they tend to be more resilient during downturns than secondary addresses.

“Over the past year, we have seen an influx of European investors looking to take advantage of the strong euro, in particular Italians, who have also been taking advantage of a tax amnesty at home. Addresses such as Lennox Gardens, Cadogan Place and Egerton Gardens have proved popular,” he notes.

Given the choice of two one-bedroom flats or one two-bedroom flat, Tunstall recommends the former: “There is a perennial shortage of good one-bedroom flats, and opting for two smaller properties should help smooth the investor's income stream as the likelihood of both flats being vacant at the same time is minimal.”

Lucy Morton, managing partner and head of lettings at W A Ellis and president of the Association of Residential Lettings Agents, reports stocks of rental property down by 50 per cent in central London.

“Demand is severely outstripping supply, we are seeing the return of gazumping, and relocation agents are finding it hard to find properties for their clients. There is fierce competition for the few good properties coming onto the market and tenants have to 'pay to stay' – pay increases on renewals – as there is a very sparse selection of property for them to move to. Gone are the days where tenants could move for a better deal, gaining more space for less rent,” she says.

Morton recently let a flat in Eaton Square within one working day of it coming onto the market. “Agreements were signed and funds paid within 32 hours as the tenant had another offer on the table.”