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PROPERTY NEWS Zoe Dare Hall on
THE SCRAMBLE for super-prime lets
With a shortage of properties available, expect a battle in the ‘crazy’ rental market this spring, writes Zoe Dare Hall
If you have £10,000 or more a week to spend on renting a London property, you might expect to see the red carpet rolled out and be invited to take your pick. But as 2022 heads into spring, it turns out that’s not so.
Due to the chronic shortage of lettings stock on the market, renters – some of whom are wielding budgets of up to £50,000 a week – are having to learn to be less picky. James Somers, director of lettings at UK Sotheby’s International Realty, has several clients for whom £2m a year seems a reasonable amount to pay a landlord, “but they are struggling to find something that meets their requirements. They started their searches in Mayfair but have had to extend their search area to find something suitable.”
Those with slightly lower budgets are hitting similar brick walls. After a glut of stock and little demand in 2020, “the imbalance between tenants and property supply has completely tipped upside down,” comments Matthew Huybrechts, director of Dexters Mayfair. As a result, expect “a scramble for stock this spring”, says Tom Bill, Knight Frank’s head of UK residential research, as London’s rival rental factions battle it out for the paltry number of new releases on the market.
Students dominate the £500-£1,000 a week band, says Chris Morris, Cluttons head of lettings – particularly international students, whose fondness for Kensington & Chelsea has helped bump up rental prices by 10-15 per cent from pre-pandemic levels. “The lettings market is ridiculously crazy right now,” says Morris.
Landlords love an international student too. “To pass referencing, they have to pay rent in advance,” explains Somers, who is trying to find a two/three-bed flat in Belgravia for up to £20,000 a month for an American couple’s daughter, but they keep losing out on properties going to best and final bids. “The most recent apartment she liked received five offers on the day it launched and went for 15 per cent over the asking price, with rent paid a full year in advance,” says Somers.
Others are returning from a pandemic move to the country and seeking to rent a pied-à-terre in town. Corporate relocators are back too. “In the last week, we’ve had an unprecedented number of transfers, particularly from Australia, Canada, the US and India,” comments Marcus Ward, director of corporate services at Dexters. His agency has quite the trophy rental: a mock Tudor 1890s, seven-bedroom mansion on Knightsbridge’s Herbert Crescent, available for £16,500 a week.
Then there are families who can’t find anything to buy so they are renting in the meantime. Good family houses between
10-15%
INCREASE IN RENTAL PRICES IN CHELSEA AND KENSINGTON
£2-4K
PER WEEK RENTAL ON FAMILY HOUSES ‘HARD TO FIND’
THE LET SET Above: Essex Villas in Kensington went to best bids, Knight Frank. Bottom near left: Herbert Crescent in Knightsbridge is available for £16,500 a week through Dexters. Bottom far left: A family house in Redcliffe Road, Chelsea was let within a week of coming to the market, through Knight Frank
£2,000-£4,000 a week “are incredibly hard to find,” says David Mumby, Knight Frank’s head of lettings. “It’s highly unlikely we will bring these to the open market and all are heading towards competitive best offers,” he says. Houses priced £5,000-£20,000-a-week, especially in St John’s Wood, are similarly hotly fought over, he says, while Mollie Swallow, Lurot Brand’s head of lettings, “cannot have enough two-bed houses from £750£1,000 a week, especially in Notting Hill”.
Even last summer’s floods in West London play a part in the lack of goodquality homes to rent. “In Brook Green especially, a lot of owners had to turn to the lettings market while they conducted remedial work on their flooded homes. Some rental properties have flooded too and still not come back to the market,” comments Jonathan Bird, head of lettings at Finlay Brewer.
Reducing supply further, “accidental landlords are disposing of assets,” comments Rupert Simmonds, area director for London lettings at John D Wood & Co, whose London offices report 62 per cent fewer available properties in December 2021 compared with December 2020. Part of that is also down to existing tenants who struck a bargain during the pandemic and are in no hurry to move on.
“They’re fixed in for long-term tenancies at reduced rent level, in prime London property where they might have previously been priced out. Now prices are going up again, those tenants paying discounted rents are staying put,” comments Somers.
Such fierce competition is resulting in desperate measures. Some are paying over the odds to renew; Simmons reports a house in South Kensington that has renewed with a 44 per cent price increase. Until more properties come to the market, rents will continue to rise, thinks Niki Sturgis at Malverns estate agents. “There may also be a knock-on effect of tenants being prepared to relocate outside of prime central London,” she adds. New tenants, meanwhile are securing three-year fixed deals and paying a year’s rent – “That’s well over £500,000,” says Mumby – up front. Or they are committing to properties before they’re even built. “One house in Kensington was secured while it was very much a building site,” adds Mumby. “We agreed the house six months before it was completed for three years and the rent paid up front. The moving in funds were just short of £2.5m.”
If money talks, there are loud voices in London’s rentals market right now. L
