Wealthier London tenants are increasingly paying many months’ rent before they even move in, according to a letting agent specialising in London’s most upmarket neighbourhoods, with some paying more than £1m upfront to secure a home for the year.
Concerns over the election and what that may mean for property taxes has also deterred some buyers, leading to stiff competition for rental homes.
In a normal year a home to let in the capital’s richest addresses will attract two or three bids, currently six or seven tenants are bidding for each one and the increased competition is driving up prices often demanding people to pay in advance to seal a contract.
One in five tenants in areas including Belgravia, Chelsea and Westminster are now paying the entire rent in advance, compared with one in 10 in a normal year.
Figures from research firm Dataloft shows that tenants are typically paying £3,500 to let a two-bedroom flat in the West End, which would mean handing over more than £200,000 for a deposit and 12 months’ rent.
While the top end of the lettings market was traditionally dominated by business people working in the City or Canary Wharf we are now seeing demand from socialites and students from countries including Russia and China.
Some were willing to pay up to £10,000 a week in rent, and already this year one tenant has paid more than £1m for a years’ tenancy in a flat in Mayfair.
“Stamp duty and mansion tax concerns have turned purchasers into tenants, and so competition has risen for the best homes which has led to a rise in upfront bids. Alongside this the London lettings market has become increasingly international with a new wave of wealthy tenants from Russia, Ukraine, Nigeria and China who are happy to pay their rents entirely up front.”
Tracy Kellett, a buying agent for clients looking for homes in London and the south-east, said her clients regularly paid for tenancies upfront. “The main reason is to make yourself more attractive to the landlord when there is a lot of interest in a particular property. Also, we have had to do it because credit checks can rule people out if they have an abnormal form of income. And of course when renters have dogs – and even children – they are less attractive so it is a necessary way to ‘buy’ your way in.”
Article provided from Guardian.com