The prime rental market in the capital has benefitted from the sales slowdown, with greater stock and more people needing to rent as they refurbish their primary homes, rather than buy a new property so as to avoid high stamp duty charges, according to a leading letting agency in central London.
Tunstall Property reports that the super prime letting market has benefitted from several of the issues affecting the sales market, with more people opting to refurbish their homes rather than sell up.
The company has seen a large amount of new rental housing stock come on the market for both long and short-term let from a diverse range of sources, including luxury developers keen to start accruing some income from their sales stock that had not sold. This is helped by relatively strong yields of around 4% for super prime properties, according to Mark Tunstall, managing director of Tunstall Property.
Turnstall said that that the sharp rise in super prime letting transactions witnessed in recent month was symptomatic both of “more people gutting and re-modeling their houses and thereby needing to let at a similar level in the meantime” but also of “the SDLT reforms, pushed through by former chancellor George Osborne”, that make renting in the super prime sector cheaper than buying.
A salient point that has emerged in recent months is the competition that short lets now have with top London hotels, according to Tunstall.
He said: “Within the Mandarin Oriental in Knightsbridge, a circa 480 sq ft junior suite has a typical nightly rate of £680 – meaning that it would cost £4,830 per week to stay in. Tunstall Property currently has for short let a circa 477 sq ft apartment in the much-vaunted building The Knightsbridge, which has five-star amenities including 24-hour concierge, valet parking, 21-metre swimming pool and gym as well as lounges and a business centre. It is available for £1,200 per week; less than a quarter of the hotel room.
“In the summer of 2016 particularly, short-term lets became a viable alternative to hotel rooms, for a wide array of renters spending the summer months in London.”
In terms of the buyer profile of people investing in the super prime buy-to-let sector, Tunstall says that there has been a significant increase in the number of people from China, Japan and other Asian countries who are using their strong-home currencies to effectively get a discount on investment properties in London’s best addresses.
