Record number of rentals for the super-rich agreed in the capital
There was a record number of super-prime tenancies agreed in London in 2017, said Knight Frank, as price sensitivity in the sales market boosted rental demand.
Some 137 properties were rented out at £5,000-plus per week last year, a significant 34% boost on the figure of 102 in 2016.
In the three-month period between July and September there were 49 transactions, which is a record for a single quarter in 12 years of LonRes data.
There was also a record number of £15,000-plus per week deals last year, with 20 recorded compared to 11 in 2016.
“The momentum of recent years is still gathering pace,” said Tom Smith, Knight Frank’s head of super-prime lettings.
“Demand is resilient due to higher rates of stamp duty and the associated uncertainty over the short-term prospects for price growth in the sales market. A lack of clarity regarding Brexit has also been a factor.”
As well as more transactions, the deals agreed are now on a longer-term basis as renting becomes more accepted as a tenure model in the super-prime market, said Knight Frank. The average length of a tenancy in 2017 was 589 days, which compared to 548 in 2016 and 528 in 2015.
“There is increasingly the opportunity to rent the sort of high-quality stock that has come from the sales market that historically did not exist on the lettings market,” said Smith.
“The clear message for landlords is that super-prime tenants will not compromise on quality in the same way as buyers will not.”
The prime central London sales market is now moving towards recovery, said Knight Frank, with average prices above £10m up 0.2% in the year to January 2018, the first annual increase in almost two years.
In a sign that more tenants are anticipating this recovery, there has been an increase in the number who have requested a clause in the tenancy agreement giving them first refusal to buy at the end of the tenancy.