In the wake of the Panama Leaks, it has been discovered that London’s super-rich have an increasing taste for the luxury rental market.
It has been known for some time now that the average Londoner is now more likely than ever to rent a property due to the high cost of purchasing a property in the Capital. What has only recently been discovered, however, is the growth of the London luxury rental market amongst the super-rich, which is a surprising new trend.
Experts believe that this trend has occurred for a variety of reasons. Firstly, political uncertainty in the UK, particularly related to the possibility of a Brexit, has meant that the super-rich may have less incentive to live in the Capital. In addition, the recent stamp-duty surcharge means that high-price purchases will have a massive extra cost. Secondly, the future predictions for asset price growth of the luxury market is not positive – many predict that the London luxury market may actually fall in price over the coming years. Lastly, purchasing properties can be a difficult process to achieve quietly. At a time when many of the super-rich are keen to keep the extent of their wealth quiet, they often avoid purchases unless totally necessary.
Knight Frank noted that the luxury property market has dipped recently in terms of purchases. Sales of homes worth over ten million fell from 206 to 138 – a drop of roughly 33%. Moreover, the length of rental has increased from over the past five years, from an average of 15 months to 24 months. While the volume and average lengths have changed, the location has tended to remain the same. The majority of properties are based in West London: South Kensington, Knightsbridge, Mayfair, and Holland Park.
Meanwhile, the amount of lettings on properties worth over ten million has doubled since 2011. As the luxury rental market appears to have gone past its peak moment a few years ago, it is likely that this trend will continue into the near future. In particular, the current questions surrounding the tax avoidance of the super-rich and their increasing taste for conspicuousness after Panama may also add to the current rental trend.
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