London super-prime property rentals boom as ultra-rich delay purchases

Labour plans for property tax changes prompted buyers to pause and rent instead

Two apartments at the five-star Corinthia Hotel in London's Whitehall are rented out at £7,500 and £9,000 per week. Photo: Beauchamp Estates

The very top end of London's rental market is booming, thanks to a delay in super-prime purchases brought on by the advent of a Labour government and looming tax changes in its October budget, according to new research.

Beauchamp Estates' Ultra-Prime Lettings Survey shows that in the first six months of 2024, uncertainty over the prospect of a Labour government in the UK, combined with concerns over what might be in store tax-wise in the October budget have led many wealthy people to rent super-prime homes in the capital, rather than buy.

According to Beauchamp Estates, between January and June, 559 homes across prime central London were let for weekly rents ranging from just over £1,000 to £25,000 for a penthouse in Knightsbridge. The numbers mean 23 prime lettings were agreed each week during the period.

“There has 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,” said Gary Hersham, founding director of Beauchamp Estates.

“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 October 30 autumn budget.”

That budget could bring significant changes in stamp duty, the sales tax charged when a property is bought. The amount of stamp duty payable depends on the value of the property. At the moment, properties in the UK sold for more than £1.5 million incur stamp duty at 15 per cent.

However, stamp duty rates are 2 per cent higher for foreign buyers who do not have residency in the UK than for UK residents.

All of this can significantly add to the cost of buying a property. For example, an overseas buyer paying £20 million for a London super-prime property could face stamp duty in excess of £3 million.

High-quality stock

The prime letting deals in central London during the first half of this year generated £19.5 million for landlords and owners, of which £14 million (73 per cent) came from apartment lets and £5.5 million (28 per cent) from houses.

The most expensive house rented in central London during the first six months of 2024, according to the Beauchamp survey, was a mansion in Cadogan Place in Belgravia, which was let for £14,000 a week.

Meanwhile, at £25,000 per week, the most expensive apartment rented out during the same period was a penthouse in the One Hyde Park development in Knightsbridge.

“The most sought-after addresses in London with wealthy tenants at present are Chelsea, Kensington, Mayfair, Belgravia, Whitehall, Bayswater and Notting Hill,” said Chris Tinkler, lettings manager at Beauchamp Estates (Mayfair).

“Over the past six months Beauchamp Estates has secured super-prime lettings deals which have generated combined annual rental income of over £12 million, with tenants from America, the Middle East, India, Nigeria and Western Europe.”

Tenants from the Middle East tend to favour Mayfair, Knightsbridge, Kensington, Regent’s Park and St. John’s Wood.

Beauchamp Estates also found that Middle Eastern, American and Indian tenants were more likely to go for either luxury serviced apartments offering five-star hotel-style amenities or large family houses, while European renters like spacious apartments in leafy addresses close to London's parks.

During the first six months of 2024, Beauchamp Estates secured numerous super-prime letting deals, including a mansion in St John’s Wood, which was rented out for two years for more than £4.5 million, and a large house in Hampstead which was let for £1 million a year.

A house in Notting Hill secured a rent of £45,000 a week for six months, a palatial home in Princes Gate was let for £25,000 per week and two apartments in the private residences wing of the famous five-star Corinthia Hotel in Whitehall were rented out at £7,500 and £9,000 per week.