Luxury apartments in Knightsbridge, London.
Photographer: Hollie Adams / Bloomberg
Photographer: Hollie Adams / Bloomberg
The luxury housing market in London is enduring a lonely exclusion.
Homes in the most expensive parts of the capital sit empty for more than two months before finding tenants, the longest waiting period since the last financial crisis, according to the real estate data company. LonRes. And this despite the rent that has recently fallen at the fastest rate in a decade.
An exodus of office workers and a lack of visitors worldwide have hammered heavy hotspots such as Mayfair and Knightsbridge, forcing landlords to cut their rents or see their properties remain unoccupied. The number of luxury booklets for rent in central London has risen by 75% from a year earlier.
For owners of the multi-million-pound homes, it could be a long winter. Restrictions that were resumed or tightened during the latest national exclusion that began this month are likely to hold a ceiling on rents for some time to come.
“It’s probably going to take a few more months to accept lower rents than you might have in the past,” said Marcus Dixon, head of research at LonRes. “It’s just about the need for landlords to get rid of it.”
As the government rushes to vaccinate the population against the virus and put the country on a path back to what looks normal, Dixon is hopeful that a recovery will remain in sight. The following four graphs illustrate how much of a challenge the capital’s capital market faces.
Nobody is home
Covid forces landlords to leave their properties vacant for longer
Source: LonRes
As households expired last year and the pandemic kept new residents away, a flood of vacant homes came on the market. Landlords have also struggled to fill short-term rental properties that are popular with tourists, as well as those aimed at international students, workers and visitors. It does not look like it will improve any time soon, and the government is closing all travel routes this week.
Rich Pickings
This is a rental market in the most expensive suburbs in London
Source: LonRes
The luxury rental in London has had the biggest annual shifts since the aftermath of the financial crisis, and it fell by more than 14% in December compared to a year earlier. It’s not just the city center that is suffering; Dixon said the suburbs fall the steepest, as affluent tenants prefer to live even further than the suburbs.
Make an offer
Discounts increased last year for luxury rentals in London
Source: LonRes
This is a good time to negotiate. Tenants who want to live in London’s smartest homes are almost tripling the rebate they received before the pandemic, with more than half of the tenants getting it right. “Landlords, of course, want to try to limit gaps as much as they can,” Dixon said. “But the reality of the current situation is that there were not that many tenants, and that the tenants could be more picky.”
Rich woe
London’s high-selling market has struggled to recover for years
Source: LonRes
Sellers do not fare much better than landlords. Before the coronavirus hit London, the retail market briefly enjoyed two-quarters of growth before prices fell, continuing the overall decline that has been playing out for years. On recovery prospects, the jury is not yet available; LonRes points to the resilience of the market just before the outbreak as one reason to be clumsy.