Rental demand in Prime Central London is growing. Lettings experts are in agreement that the rising cost of stamp duty is convincing wealthy people in their 40’s to 50’s to rent a top end property for several years and invest their cash elsewhere.
The need for those seeking to rise to the top in a competitive work place necessitates a life work balance, so people who are self-employed or entrepreneurs and who need to be in central London are committed renters, as much for flexibility as financial reasons. A large percentage of high end renters come from corporate overseas tenants relocating to PCL for work in banking etc. Over the last 10 years, it would appear that increasing numbers of wealthy divorced men are choosing to embrace bachelor status and rent a property that is a complete change from the family home they have previously owned.
Lynsey Schipper, Lurot Brand
Reasons to rent vary between the displaced home owner renting during an extensive refurbishment of their own home that could take years, the cash flow conscious whose money will work harder and faster elsewhere, and those that have been priced out of the market to buy but demand the lifestyle that only living in PCL can offer….
Motivated to rent a ‘live work space’
As primarily a ‘mews’ agent, we see a steady demand for ‘live work space’ as mews properties are compact flexibly arranged, usually in a quiet central location with parking. This demand is perhaps unsurprising given the recent, typical post- recession, boom in start-up businesses; dvalue for money offered by live work space and flexibility offered by mews accommodation, paying once on rent rather than twice (rent and travel) is another common view amongst long term renters. It is simply a better choice for many to live on top of their lifestyle work choice, when their career is the sole focus; allowing them to work outside normal hours to achieve success in such a competitive job market.
Empty nesters selling up to rent in London
Of circa 200 tenancies, we currently have only two who fall into the category of having sold the family home to rent in town, that’s a mere 1%. What we are seeing is the majority of this demographic renting because their business commitments require them to spend a lot of time in London. These renters believe a long let is better value than the cost of staying in an hotel for an average of one week per month, plus the cost of eating out. Other motivations to have a rental property are grandparents helping out with childcare for grandchildren, regular access to Heathrow for business.
Rent because it’s more affordable and buy outside of London
Renting in PCL is far cheaper! Savvy renters appreciate that money can be better invested elsewhere and will work harder and potentially faster as growth within the rest of the UK begins to outstrip PCL. We see a common theme among tenants paying mid- tier rents is to have multiple investments often in property based in the north east with incomes attached, but negotiate a great deal in Zone 1 by locking in for as long as possible.
Rootless renters – freedom of living where your life takes you
I think this may be more common outside of London, given the expense of being here, I think generally people are thinking further ahead in Zone 1, six month break clauses are easier to get rid of as the cost of moving increases and people make longer term financial commitments. Most of our tenants fall into the following categories: European long term tenants, professional couples, sometimes with kids, often with a weekend parenting lifestyle that occasional accommodation typical of mews houses works well for. Age range of mid 30’s to mid 50’s and a wide range of professions from entrepreneurs to bankers and everything in between. Our tenants tend to have relatively high levels of disposable incomes and are image conscious and committed to their chosen ‘lifestyle’.
Richard Bryce, Aston Chase
Faster slicker technology is opening up the rental market to young entrepreneurs and corporate relocation
Over the past four to five years we’ve seen the number of overseas families needing to relocate slow down. Mainly this seems due to the ramp up in technology in terms of superfast broadband and wifi available in the workplace as opposed to residentially. Corporate relocation enquiries for the younger demographic have increased significantly in recent years and this tenant demographic typically demand superfast broadband wifi.
Silver surfer renters
The trend for ‘Silver surfer’ renters is becoming increasingly common. Recently we agreed tenancies for tenants in their ‘senior years’ that have sold their family homes and have decided to rent large apartments or more lateral houses as opposed to traditionally vertical period London houses. In some cases they are seeking to purchase again and will rent until finding their next home, but some intend to make renting a permanent lifestyle choice.
Cost of buying boosts wealthy swapping over to the PCL rentals market
The change in stamp duty thresholds has meant purchasing a top end London home has become increasingly challenging. In fact, buying a top end property in London such as a house on Clifton Hill, St Johns Wood (details attached) will cost significantly in excess of £500,000 in stamp duty, and for the same sum this property could be rented for a period of two to three years.
The majority of our applicants are in the late 40’s early 50’s being European or American professionals with most working in banking and financial services. Generally, they are relocating to the UK from overseas, but increasingly the domestic market has seen an uplift, partly due to the challenging sales market.
Peter Hermon-Taylor, Maskells
The overriding reason for the tenants like those I refer to below is convenience when money is no object; over the past 8-10 years, there has been a trend for these individuals to be wealthier than the landlords. Recently we have let to:
An aristocratic Italian family:
The gentleman is a very wealthy business owner in his mid 50’s who has properties all over the world, in particular New York, Miami and London. He owns an apartment in South Kensington’s finest address. He rented a lateral apartment in Onslow Square to house his partner (a much younger Italian lady) who is heavily pregnant, as he didn’t want her to live in the same apartment as him.
A Hedge Fund owner:
This gentleman, late 40’s, owns a large UK based Hedge Fund. He is in the process of going through a divorce and moving BACK INTO LONDON – to find a “pad” to impress. He is paying several years up front but does not want to be tied down to ownership, money is not a concern for him, he wants convenience.
A Scandinavian partner in a law firm, late 50’s:
Based in the UK but OWNS a Swiss chalet where he spends a significant amount of time. He currently rents on one of Knightsbridge’s finest garden squares but wants to move because he “thinks his Landlord is an arse”. He finds renting convenient and believes the sales market is ripe for a fall.