The super-rich are paying 13.5% more to rent luxurious central London properties than last summer, research has found, in the latest sign that overseas millionaires and billionaires are flocking back to the capital.
The estate agent Savills calculated that over the year to June 2022 the average price of “prime central London” rentals rose by that figure, the highest annual increase in more than 20 years.
Jessica Tomlinson, a research analyst at Savills, said the price rise had been driven by an “acute lack of stock” and jump in demand from tenants “in response to the capital bouncing back to life”.
A one-bed flat close to Piccadilly Circus is on the market for £80,000 a month, or £18,000 a week.
Savills said the number of properties available in prime central London – loosely defined as stretching from Notting Hill in the west to Covent Garden in the east and from Regent’s Park in the north to Chelsea Embankment in the south – is 35% below the number available in June 2019 before the Covid-19 crisis hit.
“Prime rental values in London have been steadily recovering from Covid-19 related falls since the beginning of the year,” Tomlinson said. “In the three months to June, rental values increased by a further 3.3%, bringing annual growth to 13.5% – the highest annual increase recorded in over 20 years – which has more than compensated for the losses seen during the pandemic.
“The ongoing acute lack of stock, continued strong demand from tenants in response to the capital bouncing back to life, and employees returning to offices, means that we can expect pressure on prime rents across both London and the commuter belt, at least in the short term.”
It is the latest sign of a revival in the capital’s appeal to the super-rich following the easing of pandemic restrictions. Last month, an analysis of Land Registry filings by property service LonRes revealed that 61 luxury London properties each worth more than £10m had been snapped up in the first six months of 2022 – the highest number in a decade.
The increase in rents at the very top end is likely to filter down and make it even harder for people on modest incomes to find affordable places to live in the capital.
Sadiq Khan, the mayor of London, has called on the government to introduce legislation to freeze rents following research showing average amounts tenants are paying in London have jumped 15% in a year.
He wrote: “Rents are soaring while landlords profit … With the cost of living crisis raging, this is more urgent than ever. The government must act.”