There has been a significant increase in demand for rental accommodation in prime London, underpinned by uncertainty in the sales market, according to the latest Knight Frank report.
Growing economic and political uncertainty has led to hesitation in some sales markets, which in turn has resulted in greater demand for super-prime lettings property at £5,000-plus a week.
There were a total of 40 transactions agreed in this price bracket during the second quarter of the year, which was the highest figure for the period in more than seven years.
Furthermore, there were 153 super-prime tenancies agreed in the year to June, the highest annual total over the same period.
“People are watching and waiting for the political situation to play out and some have decided to rent,” said Tom Smith, head of super-prime lettings at Knight Frank. “People tell me they want to remain flexible, not just because of Brexit but because of their concerns around global trade tensions and the state of the world economy.”
Demand has increased in areas like Notting Hill and St John’s Wood, according to Smith.
He added: “Demand in both areas is driven by the quality of the schools and they have been particularly popular among US tenants. The weakening pound means overseas tenants have been able to increase their budgets.”
The emergence of high-quality super-prime developments has also helped drive tenants into areas like Mayfair.
However, the supply of super-prime new-build properties is tightening, with the number of new super-prime letting listings declined to 209 in the second quarter of this year compared to 284 a year ago.
“The shortage of supply, particularly for the most in-demand new-build developments, means there can be a premium for the rental values paid,” said Smith. “There are several examples where this has pushed the rental yield to in excess of 4% in the best schemes, which is high by the standards of prime central London.”