Tax fears trigger boom in luxury lettings market

Uncertainty triggered by the new Labour Government and taxation concerns that await the 30th October Autumn Budget, have made many wealthy people choose to rent super-prime homes in London, rather than purchase, during the first half of 2024 says a new Survey by Beauchamp Estates.

To produce their latest lettings survey, Beauchamp Estates analysed data from LONRES combined with in-house lettings data and market intelligence from Beauchamp Estates London offices, reviewing short and long term lettings agreed for over £1,000 per week for houses and apartments across all the Prime Central London postcodes.

Between January and June 2024 a total of 559 homes across Prime Central London were let at values ranging from just over £1,000 per week, up to £25,000 per week for a penthouse in One Hyde Park in Knightsbridge. This equates to 93 lettings deals per month (23 per week) agreed across Prime Central London, an indication of how buoyant and busy the PCL lettings market has been during the first half of the year.

The 2024 figures are slightly down on the first six months of 2023 when a total of 595 homes across Prime Central London were let at values ranging from just over £1,000 per week, up to £20,000 per week for a super luxury apartment Chelsea.

Large trophy houses

The PCL lettings deals for the first half of 2024 generated the landlords/property owners a combined rental income of £19.5 million of which £14 million (73%) was generated by apartment lets and £5.5 million (27%) by houses. During the same period in 2023 lettings deals across PCL generated rental income of £23.7 million of which £14.2 million (60%) was generated by apartments and £9.5 million (40%) from houses.

Large trophy houses and luxury penthouses generated the highest lettings income during the first half of both 2024 and 2023. In 2024 the average lettings values achieved for houses were for long lets £2,737 per week for a 2,130 sqft house and for short lets £6,538 per week for a 2,906 sqft house, with the most expensive house let in London being a mansion in Cadogan Place let for £14,000 per week.

The average lettings values achieved for apartments were for long lets £2,146 per week for a 1,384 sqft apartment and for short lets £1,915 per week for a 1,164 sqft apartment with the most expensive apartment let in London being a penthouse in One Hyde Park in Knightsbridge let for £25,000 per week.

Prominent overseas tenants

The top locations in Prime Central London for lettings deals during the first half of 2024 were Chelsea (SW3 postcode addresses) where 100 deals (18% of the PCL total) were agreed and Kensington (W8 postcode addresses) also with 100 deals. This was followed by South Kensington (SW7 addresses) with 95 deals (17% of all PCL deals) and Mayfair (W1 addresses) with 88 deals (16%).

The other key locations for lettings deals during 2024 were Belgravia, Westminster, Whitehall and Knightsbridge addresses where a total of 149 lettings deals were agreed, representing 27% of all deals agreed across Prime Central London.

Beauchamp Estates highlight that in rank order the top-5 most prominent overseas tenants by country/region of origin originate from the United States, the Middle East, Nigeria, India and Western Europe.

Beauchamp Estates observe that couples and families from the United States tend to let homes in St John’s Wood, Notting Hill, Chelsea, Westminster and Whitehall, Indian tenants tend to favour St John’s Wood, Mayfair and Westminster; tenants from the Middle East like Mayfair, Knightsbridge, Kensington, Regent’s Park and St John’s Wood; tenants from Nigeria favour St John’s Wood and Regent’s Park whilst Western European tenants like Notting Hill, Bayswater and Islington.

High quality stock

Beauchamp Estates say that American, Indian and Middle East tenants tend to like either luxury serviced apartments offering 5-star hotel style amenities or large family houses. Nigerian tenants like large houses set in generous gardens and tenants from Western Europe like spacious apartments in leafy addresses which are close to parks.

The lettings department of Beauchamp Estates has had an extremely busy start to 2024. The department has agreed £12.2 million worth of super-prime lettings deals for landlord clients over the first six months of 2024 including a mansion in St John’s Wood let for 2 years for over £4.5 million, a large house in Hampstead let for £1 million per year an apartment in a new apartment building in Bayswater let for almost £0.5 million on a 12 month tenancy. A Notting Hill house let for £45,000 per week for 6 months, a palatial home in Princes Gate let for £25,000 per week and two apartments let in the private residences wing of the famous 5-star Corinthia Hotel in Whitehall, at values of £7,500 to £9,000 per week. This buoyant trend continues to bloom with over a £1,000,000 worth of rent already agreed in July 2024 (correct as of 20th July 2024).

The super-prime lettings market in Prime Central London has been extremely buoyant during the first six months of 2024. There have been some extremely high quality stock available on the lettings market and this has attracted serious tenants willing to pay premium rents to secure the properties. There has been a rise in wealthy American, Western European and Nigerian tenants coming to London on business secondments. The market has also been boosted by the uncertainty generated by the UK General Election which has led some people looking to buy to decide to pause and rent instead until they have certainty about the new Labour Government’s taxation policies, awaiting the 30th October Autumn Budget.