Wealthy foreigners are prepared to shell out as much as £25,000 a week renting luxury homes in London without bothering to set foot inside before opening their wallets.
High-end estate agents report that overseas demand for super-prime London homes is so strong that the global super-rich are agreeing to rent properties after only viewing them on FaceTime or WhatsApp.
In one of the latest examples of the growing trend an unnamed person, described by the agent only as “a global superstar”, agreed to rent a seven-bedroom, Grade II-listed terraced house overlooking Regent’s Park after watching a live video tour on an iPhone.
“I was livestreaming for the best part of 45 minutes,” said Henry Pryor, a luxury buying agent who let the John Nash-designed regency property, which came complete with a mews house for staff quarters. “I had done the same exercise at three other properties, and then he picked this one.”
Another property agent gave a recent example of a South African investor agreeing to rent a seven-bedroom Hampstead mansion for £12,000 a week, after only watching a FaceTime tour of the north London home, which boasts a private cinema, spa and staff quarters.
“He [the tenant declined to provide his name due to security concerns] couldn’t come over to London, and he was going to lose it if he didn’t make a decision then and there,” said Trevor Abrahmsohn, the owner of Glentree Estates, a top-end north London agency. “So our agent showed him the property on a walk around on his phone.”
Pryor said the capabilities of smartphones had transformed agents’ approach to sales and lettings and his super-rich clients have a lot of money but are often “very time poor”, so doing video tours makes sense.
“I deploy FaceTime and do it live or record tours,” he said. “Apple and the iPhone have enabled us to have the client in one ear while showing them around, and they can ask questions: ‘Show me that cupboard’, or ‘can you run the shower for me, I want to see that it’s a power shower’.
“They can be anywhere else in the world, on their superyacht, up a mountain or wherever.”
He said the client who took the £25,000 a week, or £1.3m a year, Regent’s Park home was not able to travel to London for viewings and would not have wanted their identity known by the letting agent. “Had they been there in person it would have made everyone overexcited and distracted,” he said. “If you’re looking for a house for Tom Cruise or you pitch up with George Clooney it spoils the deal because people become greedy and otherwise sensible or practical deals get screwed up.”
After their 10th night in the Hanover Terrace property the tenant will have spent more on rent than the £32,900 which the average UK first-time buyer spends on the deposit for their home.
Pryor said that although it was an “absurd” amount of money to spend on rent, rich overseas clients are increasingly choosing to rent properties rather than buy in order to save on the government’s increased stamp duty on homes owned via by offshore companies.
Renting also lets wealthy individuals maintain their privacy, as the government prepares to force the declaration of the identity of the true owner of all properties. At the last count, 200 wealthy foreigners are choosing to pay £218,200 a year in tax rather than declare which of London’s £20m-plus mega-mansions they own.
Research by property data service LonRes found that the number of homes let for more than £5,000 a week – or £156,000 a year – in the first six months of 2017 increased 21% compared with the first half of 2016.
The increase in costly rentals comes amid a slump in sale prices of prime central London properties. The average sale price in the £2m-£5m bracket fell by 8.4% in the second quarter compared with a year earlier, according to LonRes. Prices of super-prime properties – valued at more than £5m – dropped 3.2%.
“Uncertainty over the outlook for houses prices combined with significant buying costs at the top end of the market continue to benefit the top end of the prime lettings market,” said Marcus Dixon, LonRes’s head of research. “Those who considered buying can now rent for four or more years for the equivalent cost of the stamp duty on a comparable home, leaving them in a good position to buy if and when the time is right.”
Abrahmsohn, who has sold dozens of multimillion-pound homes on and around The Bishops Avenue in Hampstead to billionaires from across the world, said his agency had secured a series of “mega deal” rentals recently and let properties worth £40,000 a week in aggregate.
“The properties these people want could be valued at £30m or more,” he said. “The stamp duty on that would be near £5m – that’s the equivalent of five years’ rent even at £20,000 a week. And you save on all the maintenance costs, as they become the owner’s responsibility.
“The number of high-end rentals has been gradually increasing for the past two years, but now they’re quite a regular event.”
Stamp duty on properties selling for more than £1.5m is 12%, rising to 15% if it is a second home. Last year, stamp duty raised £7.3bn for the government – £3.4bn of it from London.
Georgina Bartlett, a director of Savills’ prime central London lettings team, said she had let several expensive properties by giving clients from around the world guided tours live on WhatsApp.
“The trend for WhatsApp tours seems exponential,” she said. “It’s not necessarily always of properties at the top end, but it is high-net-worth individuals [who want the video tours]. It’s about their wealth and the value of their time. Their time is more precious for other things – they don’t have the time they would like to dedicate to property viewings.”
Bartlett said that in the past tenants would have sent their personal assistants or hired relocation experts to go to viewings on their behalf, but are now utilising technological advances instead.
