A new generation of transient, try-before-they-buy tenants is turning its attention to London’s hottest properties.
When a 36-year-old supercar collector recently sold his tech company, he decided to upgrade his living situation. The new place needed valet parking to ensure a speedy, high-security exit from any one of his cars to the property entrance – and he wanted to sign the rental agreement within 24 hours. Concierge service Quintessentially Estates made it happen.
Quintessentially is one of several companies that has clocked increased demand for rental properties in Mayfair over the past year. They are being sought from tenants aged under 40, paying weekly rents over £4,000, some of whom are spending only 3-6 months annually in London. Property consultancies Savills, Knight Frank and Wetherell confirm the trend, with these so-called super-prime renters routinely seeking properties with wine cellars, gyms, spas and concierge services, offerings which are now the norm in new luxury developments.
Since 2015, 46 per cent of new tenants in the £4,000-plus rental market work in the financial and insurance services sector, according to Savills. But this year, Savills has seen a surge in demand from media, information and science entrepreneurs aged 30-39, This sector now forms eight per cent of super-prime renters; 70 per cent are aged 40-60. Many new super-prime renters move from country to country, year by year, and prefer to delay or avoid the commitments of ownership.
“We fully expect this newer super-prime segment to grow in the coming years,” says Izzy Birch Reynardson, head of central London super-prime lettings at Savills. “Renters are typically people who count London as one of their four or more global bases.” Tenants at Little House Apartments in Mayfair, available for short and long-term rent via Savills, with stocked fridges as standard and weekly rental prices from £7,000, have access to a 24-hour concierge, chefs who prepare meals in apartments and Little House, a ground-floor private members club, bar and restaurant.
Expect the newer super-prime segment to grow in the coming years. Renters typically count London as one of their global bases
Mounting demand for super-prime rentals is sometimes linked to a wait-and-see approach on the part of both tenants and landlords, say experts. “Tax changes, including the 2014 introduction of stamp duty on properties over £1million, has led to uncertainty over the short-term prospects for price growth in the sales market,” says Tom Smith, head of super-prime lettings at Knight Frank, which categorises super-prime as more than £5,000 weekly. “This, combined with wider uncertainty following the snap general election and the start of Brexit talks, has made short-term rentals attractive until a greater degree of stability returns,” Smith says.
Both Knight Frank and Wetherell have noticed an upward turn in Mayfair lets in autumn 2017, the first such move since the Brexit referendum in June 2016. Wetherell recorded a 37 per cent increase in Mayfair lets between March and August 2017. Chief executive Peter Wetherell attributes this uplift to a large prestige student market and a 10 per cent increase in very high quality properties moving over from the sales market. “We just agreed a six-year tenancy at £3,800 per week, which till recently was very unusual for the area,” says Wetherell. “Some non-doms would rather pay rent for a property than bring funds on shore, making them liable for stamp duty and capital gains tax. Longer tenancy terms offer tenants stability in the medium term in an unsettled world market.”
Against this backdrop, Mayfair is becoming increasingly attractive, according to Quintessentially Estates CEO Penny Mosgrove. “Mayfair has always been left behind its neighbour Knightsbridge with 24 hour concierges and amenities on site,” she says. “But that is set to change with the delivery of Clarges Mayfair, Burlington Gate, Mayfair Park Residences and One Grosvenor Square. Of course, owners face large service charges and these are incorporated into rent, which explains the premium tenants pay to live in such buildings.”
Vendors have become far more receptive to a letting, especially when desired sale premiums are unachievable, says Savills’ Reynardson. “When we facilitate a letting, for an average of 18 months on prime central London properties, we can see our vendors through a difficult time and wait for the market to settle. “Their properties are often part of a large portfolio, making timing key when managing their assets,” she continues. “For tenants who are based in London, but are only there three to six months of the year, it is easier to know the flat is the landlord’s problem.” Knight Frank’s regional partner David Mumby believes there would be even more activity in this segment if more stock was available: “If a landlord can reconfigure an existing space and fit out the property to the right kind of specification, it can be the difference between £3,000 and £6,000 per week.”
Claire Adler is a luxury media consultant and writer whose work has appeared in the Financial Times, Vanity Fair, The New York Times, The Spectator and more.