Landlords in wealthy London Addresses getting 12 months rent in advance
Although we may have seen property prices easing in certain prime London spots, some new research has revealed that tenants who are very rich are prepared to pay as much as 12 months rental in advance, plus deposits in order to secure the best addresses in London.
An example of this would be for a wealthy tenant to pay up front for say an address in the west end of London for a two bedroomed flat that rents out a t £3,500 per week, to fork out up front a massive £200,000 before moving in. It is known that in the first ten weeks of this year that over £100 million has been paid up front by affluent tenants many of these are believed to be from countries such as Russia, the Ukraine, China and Nigeria.
The research has also revealed that normally 10% of tenants in prime central London will typically pay their entire rent and deposit up front, just to ensure that they get the property that they want in the exact area, now the number has risen to 20% of tenants who are prepared to do this.
Much of this has to do with the forthcoming election and the uncertainty of the result and the possibility of a mansion tax being imposed. This has turned vendors into landlords’ wishing to avoid this as well as stamp duty on the sale. This has resulted in the sales market stalling in central London for the £2million to £20million price bracket, and the letting market becoming buoyant in these areas. The top ten places where up front rentals are being made are Mayfair, Belgravia, Knightsbridge, St James’s, Soho, Fitzrovia, Marylebone, Westminster, Chelsea and Kensington.
Taking Mayfair as an example, in Mount Street over 80% of the tenancies are secured by up-front payments, this is due to the number of tenants vastly exceeding the supply of property, a real sellers’ market in action here.
So it seems that there will be no end to this crazy situation, the demand for property in these prime spots is likely to continue into the foreseeable future and there is no possibility of development taking place to ease the demand. It is always the case when demand exceeds supply, someone will pay!