Supply of super-prime London lettings – those in excess of £5,000 per week – is at its lowest level for five years.
New data from Knight Frank shows that while August was one of the highest months on record for the number of deals agreed, new rentals are lower than at any time since 2016.
As a result, London has become a landlord’s market, according to the agent. Average rental values in prime central London rose by 2.8% in the three months to September – the largest quarterly increase in a decade.
Knight Frank says super-prime supply remains low for several reasons:
- A number of owners sold in order to capitalise on a resurgent sales market over the past 18 months, producing fewer so-called accidental landlords
- Demand for high-value lettings property has been driven by the desire for more space following successive lockdowns
- Many sectors of the global economy, including finance, have flourished, over the pandemic, further driving tenant demand.
Spike in tenants
These trends combined with other factors this summer to increase activity, according to Tom Smith, head of super-prime lettings at Knight Frank.
“A number of people in London were affected by flooding, which produced a spike in tenants needing a rental property for six to nine months,” he said.
“On top of that, people came back from holiday, there was a seasonal rush ahead of the schools re-opening and all that was happening just as international travel was kicking back in.”
Smith added: “I’m not sure clients and investors have woken up to the size of the opportunity in the short-let super-prime market in London.
“Irrespective of budget, these searches are often really tricky given the lack of high-calibre turnkey options in the market geared towards stays of 30-90 nights.
Penthouse with short-term lets
“We’ve had a £20 million penthouse on our sales register that has sought to take advantage of this market whilst they look to attract a buyer. When it was made available for short lets there have been very limited periods when they have struggled to find tenants.”
Other key highlights of the Knight Frank data includes:
- There were 45 super-prime tenancies agreed in Q3 2021, up from 34 in Q2. The overall number of super-prime lettings deals in the year to September 2021 was 147, compared with 123 over the previous 12-month period
- A maximum rental value of £40,000 per week was recorded for Q3
- Knightsbridge, Kensington and Mayfair were the most popular neighbourhoods for super-prime tenancies agreed in the year to September 2021.