London’s wealthy are placing their homes up for rent as they struggle to reach their ideal asking price on pads across upmarket boroughs such as Chelsea and Mayfair.
Following the Bank of England’s decision to hike interest rates by 0.5 per cent, figures from estate agent Knight Frank show affluent sellers in some of London’s poshest postcodes have become some of the latest to feel the pain of rising rates.
In June, the combined number of lettings listings in prime central London and prime outer London was the second highest level since September 2021.
“The primary cause is the recent uncertainty in the sales market, which means more owners are letting out their property after failing to achieve their asking price,” Tom Bill, head of UK residential research at Knight Frank, said.
Mortgage rates have risen steadily following two consecutive months of high inflation readings, squashing dreams for prospective buyers to snap up homes.
“The preference for many owners is still to sell,” said Gary Hall, head of lettings at Knight Frank. “But more are open to the rental option given the recent wobbles in the sales market. Tenant demand is strong and yields are very healthy, which adds to the appeal.”
While rooms and flats may be growing in availability in rich London regions, many will struggle to fork out the costs to live in one of the capital’s more pricey boroughs.
A one-bed flat in Chelsea can cost upwards of £3,000 per month, taking a hefty chunk out of a tenant’s wages, especially if they live alone.
In recent months, London’s renters have been battling scarcity in the market as many landlords looked to sell up as they could no longer afford surging energy costs and mortgage rates.
Tenants now face rents that are more than 25 per cent higher than they were at the start of the pandemic, moreover limited supply means that renters often feel obliged to offer above the asking place to secure a home.