London's luxury letting sector sees sharp drop in growth

The growth in tenancies agreed in London’s super-prime sector has slowed sharply from 20 per cent earlier this year to just five per cent now.

Knight Frank says the number of super-prime tenancies - that is, £5,000-plus per week - agreed in London in the year to August was five per cent higher than the previous 12-month period. 

However, this drop from the early-year 20 per cent is down to two reasons, according to Tom Smith, the agency’s head of super-prime lettings in the capital. 

“First, political uncertainty has made some people slightly apprehensive about the next six months. Demand above £8,000 per week tends to be more discretionary, and we have seen the number of deals dip this year” he says. 

Just 17 tenancies were agreed at a rent of more than £8,000 per week in prime central London between January and August, down from 26 during the same period in 2017 and 27 in 2016. 

The second factor is the stabilisation of the super-prime sales market. 

The agency says that despite the political uncertainty, higher rates of stamp duty are now reflected in pricing and buyer interest is rising as a result. The total value of all super- prime sales between June and August was 93 per cent higher than the equivalent figure in 2017. 

As the market stabilises, some landlords of super-prime properties have begun to consider a sale more actively, says Smith. 

“The owners of around a third of super-prime properties currently on the rental market would consider a sale at the right price. This is a higher proportion than we have seen for several years,” he adds. 

“Tenants are also starting to pay more attention to the sales market so I sense we are at the start of a period where more of them could become buyers."