The number of super prime tenancies has seen a significant boost, with a 10% increase in 2023. This growth marks a resurgence in the most prestigious segment of the UK rental market, according to recent findings from Knight Frank research.
Super prime tenancies are essentially the crème de la crème of rental properties. They’re classified as those fetching above £5,000 per week in central and north London, and over £15,000 per month in south-west London. It’s a market that caters to the ultra-wealthy, offering luxurious living spaces in some of the most sought-after locations.
The Numbers Tell the Story
The data is quite telling: Knight Frank conducted 108 super prime tenancies in 2023, up from 98 in 2022 and significantly higher than the 81 in 2021. This upward trend indicates a growing appetite for luxury rentals.
A key factor behind this shift is relatively flat house prices. Many owners of prime properties are opting to rent out their homes instead of selling them. This decision is a strategic move to capitalize on the current market conditions.
Tom Smith, the head of super-prime lettings at Knight Frank, points out that higher supply has been a major driver. “Property owners at higher price points are more discretionary and when they look around at what’s been happening in the sales market, many have gone down the rental route. Global ultra-high net worth individuals like the non-permanence of renting and super-prime lettings properties are often in direct competition with London’s luxury hotels for that reason. If they need to subsequently relocate, they won’t be worried about how property prices have performed or the fact they have forked out 17% in stamp duty, which can be the equivalent of four or five years’ rent. These tax changes have pushed up demand in recent years, which means landlords need to specify their property to the same high standard as they would if it was being sold.”
The number of new listings priced above £1,000 per week in London rose by 30% in 2023 compared to the previous year, as per Knight Frank’s data. This increase is in stark contrast to the properties listed below £1,000 per week, which only saw a rise of 0.5%.
Political Uncertainty Fuels Demand
The upcoming general election is expected to further stimulate demand in this sector. Should the Labour Party win, their plans to overhaul the non-dom tax regime and increase the surcharge for overseas buyers of residential property could pose risks for the prime central London sales market.
Who Are the Prime Tenants?
Most of these prime tenants hail from the UK (23%) and the US (22%), with many coming from a tech background. This demographic shift reflects a broader trend of affluent tech professionals seeking luxury accommodations in London’s most desirable areas.