30 August 2016, The Sunday Times
Contrary to popular belief, not every tenant is the victim of a cruel property market denying them the right to own a home and condemning them to a dangerous, overpriced hovel that has been left in disrepair by a modern Rachmanite.
A spring report suggested almost 80% of private renters were happy with their home and what they got for their money. Figures released last week also showed that, in July, average annual rents in London fell for the first time in six years, as landlords flooded the market with buy-to-lets. While the decrease was just 0.5% — or £7 on a typical £1,280 a month — Countrywide estate agency estimates that tenants now have 23% more homes to choose from in the UK than this time last year.
At the top end of the market, more people are opting to rent rather than buy. And they’re about as far from the image of the downtrodden tenant as you can imagine — we’re talking billionaire business types, international investors and some of the world’s top athletes. This new breed of affluent rentysomethings falls into four categories.
Sales of high-end homes have plummeted in recent months, mainly because of high levels of stamp duty. Duty payable on purchasing a property at £15m can now be as high as £2.14m — about three years’ rent for a home of comparable value.
Knight Frank estate agency says the number of homes worth £10m or more let successfully to renters in prime London increased by a third in the year to March, while sales of homes in the same price range and the same areas have dropped by about 30%.
“With enormous stamp duty, mistakes can be costly, so many more people are now renting. And with economic uncertainty, our overseas visitors are in no hurry to buy,” says Mark Tunstall, founder of the high-end letting agency Tunstall Property London.
Ironically, the glut of high-end renters is more than matched by the glut of frustrated owners who cannot sell their ultra-expensive homes and so seek to let them out. Knight Frank says rents fell 2.3% in prime central London in the year to May, with 18.1% more high-end flats and houses for renters to choose from.
The specialist agency Tennis London finds homes near the All England Club for Novak Djokovic, Roger Federer and the Williams sisters for Wimbledon fortnight, but it’s football’s new signings that make letting agents’ mouths really water. Professional soccer contracts finish on June 30, with the transfer window opening the next day, triggering up to 100 high-value player moves within the UK. “Many of these are working-class kids aged 19 and upwards who have come into money and find themselves renting homes that, outside London, could cost £10,000 to £15,000 per month,” says Stephen O’Kane, head of the sports, media and entertainment division at Savills estate agency.
Footballers such as Olivier Giroud and Hugo Lloris have opted to rent rather than buy. Chelsea players gravitate to Cobham in Surrey; Spurs players look to Hampstead; and signings for the Manchester teams head to Cheshire. “They often want new-builds with modern interiors, perhaps in gated complexes,” says O’Kane. “Most know that their professional lives can be relatively brief, and so not that many commit to buy, at least not while they’re young. Many recognise that property is a good investment, so they put some of their earnings into a buy-to-let, even if they rent themselves,” he says.
Global Brexit Opportunists
Post-Brexit, long-term uncertainty may create the occasional bargain home for Brits moving up the ladder, but the real winners are foreign buyers in central London who are benefiting from lower asking prices and a weak pound.
Some feel the sales market is on the floor and have bought, but others — along with some canny locals — are renting because they think prices have further to fall. “We may see more and more would-be buyers opting to rent in the short term to give them greater flexibility. When the buying market slows down, the rental market usually picks up,” says Jo Eccles, founder of the buying agency Sourcing Property.
Camilla Dell, managing partner at Black Brick, another buying firm, says the fear of a possible second Scottish independence referendum is also boosting demand from Scots for high-end rentals in London.
Music, Movie and TV Tenants
Matt Damon took over a pad in Paddington, London, while filming the fifth instalment of the Bourne franchise. Harrison Ford, Carrie Fisher and Mark Hamill all rented near Pinewood Studios in Buckinghamshire when they shot Star Wars: The Force Awakens last year. The accommodation costs were nothing compared to the $2bn the movie made.
“Film shoots start at about 5am so renting near the studio is important. Likewise, if a musician rents while he’s doing a tour of the UK, being near Heathrow or transport links becomes the key criterion,” O’Kane says.
There have been no reports of A-listers complaining about mould or dodgy electrics — although Margot Robbie, the poster girl for A-list flatsharers, has moaned about the boys in her shared Clapham house stealing loo roll.
Having money to spend on the rent doesn’t guarantee a perfect rental property. Some consolation, perhaps, for the more typical tenant who is saving for that elusive deposit on their first home.
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