Chinese Woman pays £4mn in advance for London Rental.
The lights are on in One Hyde Park, as a lone resident settles into her palatial pad for the night.
The female tenant, in her mid-20s, moved to London from China six months ago and paid five years rent upfront for the Knightsbridge apartment which costs £15,000 a week.
A surge in renting homes priced over £4,000 a week, comes as the high end sales market begins to stagnate.
Buyers are deterred by over-priced property and the new, progressive stamp duty system, which becomes punitive after the £1.5m mark, is already having a marked effect on the top end of the market.
The number of transactions around the £2m price point fell 12pc from October 2013 to October 2014, according to recent Land Registry data, and the value of homes around the £4m mark, deemed to be the threshold for luxury, fell by 4.2pc in the last quarter of 2014.
Over the past year the numbers of wealthy renters from Russia, Kazakhstan and the Ukraine have dwindled.
“The collapse of the rouble and falling oil prices has made them feel a bit poorer,” “and it is becoming increasingly difficult to get their money out.”
Russians were one of the dominant nationalities at the top end of the rentals market but the void has been more than filled by a new wave of renters from mainland China. Historically, there has been a strong Chinese presence in the West End with around 10pc of all buyers and tenants from the Far Eastern country, paying around £1,500 to £3,000 a week.
“There is a pipeline of luxurious multi-unit new build apartment schemes coming on to the Mayfair market, over 440 homes over the next few years, which will appeal strongly to Chinese buyers and renters,” said Peter Wetherell, managing director of Wetherell Estates.
There are other factors behind the luxury London lettings boom. Many prospective buyers now prefer to try out an area of the capital before they make a purchase.
Rents charged in the affluent central London boroughs rose by 3.4pc in 2014, the strongest period in the past three years, with rents having now returned to the historic peak set in 2008 before the collapse of Lehman Brothers.
“Brazilians had bought in New York or Miami, but given political instability in their own country, they now see London as the global safe haven,”
“They are looking for good schools and are less location obsessed than the Russians, who are status orientated and want to live in Knightsbridge, Belgravia or Mayfair,” he said.
But it’s not just the expensive rental market that is on the brink of a boom era. If the deregulation Bill for renting out your own home is passed, younger property owners, with homes in the £1.5m to £2m bracket, may start to rent out their spare rooms or consider short-term lets when working abroad.
Current laws prohibit home owners in London from renting out their homes, or rooms within their homes, on a short-term (three months or less) basis to visitors, but the Bill, in its final review in the House of Lords, would increase much-needed supply of rental accommodation.
A homeowner renting out their two bedroom apartment in the affluent boroughs of central London could earn anything from £2,000 per month up to over £5,000 per month.
At the very top end of the luxury housing market in locations such as Knightsbridge or Mayfair the owner of a penthouse could earn themselves £10,000 per week, or up to £120,000 over a three month period, new analysis from E J Harris found.
Rich renters committing to longer tenancies is eradicating the stigma attached to the lettings sector as families choose to rent for longer periods, having a stabilising influence on the surrounding community.
“In London 25pc of private rented homes have children living in them, which has upped massively from 2001 levels, which shows the changing profile of renters over time,” said Neal Hudson, an analyst at Savills.
The shift from buying to renting is also more lucrative for the Government as the tax haul is greater.