Luxury Rents in London Up Nearly 9% as Wealthy Choose Leasing Over Buying

Ultra-high-net-worth individuals in London are choosing to rent property rather than buy luxury homes in the city, according to a Monday report from Beauchamp Estates.

Rising interest rates and concerns over stamp duty—or transfer tax—are keeping would-be buyers out of the market. Ultra-high-net-worth individuals (UHNWIs) spent almost £15 million (US$18.9 million) to rent homes in London’s best addresses during the first half of 2023, the report said. 

The average rent in these postcodes has surged 8.8% year over year, and rental values in Prime Central London are now nearly 30% above pre-pandemic (2017-19) figures, the data showed. Rents for prime property range from £5,000 to £30,000 a week 

“The super-prime lettings market in London has boomed in 2023 with UHNWI tenants moving beyond their traditional focus on Mayfair, Belgravia and Kensington to look at letting super-

prime homes in locations including Marylebone, St. John’s Wood and Hampstead,” Erik Holmgren, lettings manager at Beauchamp Estates, said in the report. 

In the first half of the year, the agency “secured super-prime lettings deals which have generated combined annual rental income of over £5.5 million,” he added. 

Wealthy individuals from the U.S., China and the Middle East have been “particularly prominent” in Prime Central London, according to Holmgren.  

“In Mayfair, we have let apartments to tenants from the U.S. and Western Europe and our lettings portfolio of houses in Mayfair and Chelsea have found favor with tenants from the Middle East and Asia,” he said. “Marylebone has become a sought-after luxury lettings destination, with apartments securing tenants from the USA and China. In Hampstead, houses and apartments have attracted families and students from China and Western Europe.”

Competition is keeping some buyers from splurging on a London flat, the report said. 

London’s prime housing market is “facing rising competition from rival billionaire destinations,” including Dubai, the French Riviera, Los Angeles and Miami.

“Luxury property in wealth hubs such as London, Manhattan and the French Riviera remains a safe asset class and as a result these ultra-prime markets have shown remarkable resilience,” Gary Hersham, founding director of Beauchamp Estates, said in the report. “In the super-prime lettings market strong demand and soaring rents and a lack of supply have been the key features of the market this year.”