Estate agency Knight Frank recently reported a significant rise in the number of people choosing to rent London properties valued at over £10 million. The trend has continued since 2011, more than doubling in those five years. In the year leading up to March 2016 the number rose by a third, showing that it is currently a growing market.

There are a number of possible reasons why the super-rich are turning to rented properties rather than purchasing them. Firstly, there is the added cost of buying such valuable properties. Stamp duty and the surcharge on purchases of second homes can add a great deal of money to the initial outlay, potentially adding up to years of rent.

A second potential reason is that renting gives people the option to test the property out before they decide to buy. When a home comes with a major price tag, many people like to get a feeling for the place before jumping in and committing to a purchase. A short term rental deal can provide this opportunity and lets buyers learn more about a property than they ever could with viewings alone.

At the same time the number of people choosing to rent these valuable properties is rising, the average length of the tenancies is increasing. The average had fluctuated between 12 and seven months since 2011, but in the last year it has risen to an average of 24 months, meaning that people are choosing to stay in their rented homes for longer than ever before.

The increase in the average length of tenancy comes because there are limited properties available in the top price bracket. This lack of supply means that people are more likely to stay where they are for longer. An extended tenancy also gives them more time to observe the market and ensure they make the right choice when they eventually find a property to purchase.

Owners of properties worth over £10 million who struggle to sell can potentially earn a high yield by letting them instead, but it is important to be prepared for managing and maintaining the property, as large luxury properties generally require higher levels of care. Fortunately they can hire dedicated property managers to reduce their workload. We specialise in property management, lettings and council leasing throughout Bromley, Kensington and Chelsea, Islington and all other London boroughs, and can advise you on all issues to do with letting luxury properties. Please contact us if you would like further information.