The high-end rental market, typically defined at £4,000 a week or above, has always been seen as a bit of a non-sensical concept; why rent a home when you clearly have the money to buy? To some, it may seem like a waste of money, but there has been a boom in this type of tenure over the last five years, and the reasons for this have evolved during that time.
Five years ago, it was really only companies that took on rental leases as part of international relocation packages for employees. However, over the last two to three years, we have seen a rise in personal enquiries for larger luxury properties, due to the rise in stamp duty and particularly on the duty now due on second homes which has seen a 3% increase on any second property, no matter the value.
High-end renters are usually unsure about a new area or property type for their next, or second home. They don’t want to buy a property in an unfamiliar location and pay stamp duty or circa £300,000, only to find that six months later they’ve made a mistake. The preferred option is to rent a similar ‘test’ property within their assumed new town or village, to give themselves time to decide if the move is for them or not. It also puts them in an excellent buying position, being chain free, which can be a primary motivator in itself. This is especially true for people moving to Surrey from London.
A client of ours did just that. He was required to be in the city by 8am every day, but liked a property nine miles from the nearest train station. Instead of taking the risk, he chose to rent a similar property the same distance away. Soon after, he decided that the commute was too much, and has just bought a home much closer to the train station.
The ‘try before you buy’ culture is definitely something of which we are seeing much more, and it’s a wise decision, given the financial implications of buying a home somewhere you are not 100% sure about. I can only see this trend continuing, especially with the unpredictable and changing costs associated with buying a home.
Mark Blakeway, Head of Lettings