The super-prime rental market in London is thriving, with tenants paying upwards of £1 million a year for the most lavish properties. Lettings agents report extraordinary requests, from converting kitchens into shoe closets to paparazzi-proofing homes, as ultra-wealthy individuals choose to rent rather than buy.
Neil Short, a lettings agent, once found himself googling exorcists because a wealthy tenant feared his rental home was haunted. James Nightingall recalls having to paparazzi-proof a home for a world-famous actress. Matthew Huybrechts had to inform the owner of a luxury property that their new tenant had requested the designer kitchen be gutted and converted into a walk-in shoe closet. “The tenant didn’t need a kitchen as they’d only order in or eat out,” he explained.
Soaring demand for high-end rentals
Prime London’s sales market is flagging, with prices down eight per cent in the past year according to property analyst LonRes, but demand for high-end rentals is booming. According to estate agent Knight Frank, the number of new super-prime tenancies — costing £5,000 per month or more — agreed in the three months to August was 13 per cent higher than the five-year average.
This demand is pushing prices up, with prime rental costs up more than five per cent in the past year, and 41 per cent since before the pandemic. An average super-prime flat would cost £949 per week, while a super-prime house would set you back an average £2,546 per week or more than £130,000 per year.
The most expensive deal Nightingall, boss of Suites & Villas, has ever inked was for £150,000 per week with an American billionaire visiting London for work. For that, the tenant got a 4,779 sq ft penthouse at the Mandarin Oriental in Knightsbridge, with three bedrooms decorated with fine silk wallpapers and a library curated by Mayfair antiquarian bookshop Heywood Hill.
Who rents super-prime properties?
London’s super-prime tenants are a glamorous bunch. Many work in film or TV, and are in town to work at one of London’s theatres or at Pinewood Studios. Others are touring pop stars seeking a retreat from screaming fans. Ryan Gosling and Eva Mendes initially rented a home in Notting Hill while working in London, before moving to a base in Hampstead. Nicole Kidman rented Boy George’s gothic mansion by Hampstead Heath when she was in town filming the sequel to Practical Magic. Gordon Ramsay rented a £12,000-a-month flat at Battersea Power Station to avoid the dust while his family home in Wandsworth was being renovated.
“Footballers are another group, particularly around transfers,” said Nightingall. “I once helped a Chelsea player and his family with their accommodation. We’re also seeing more founders and people from technology, venture capital and finance. For them, renting often makes perfect sense because London may only be one of several cities they spend time in.”
Most of Huybrechts’ tenants are visiting from overseas, and want to stay for a few months to make the most of London’s summer season — “cooler than the Middle East” — and enjoy its restaurants and private members’ clubs. Others are studying in London and their parents will pay between £10,000 and £20,000 per week to put their children up in Mayfair digs for the duration.
Location is very much a matter of personal choice. Some of Short’s tenants have their hearts firmly set on Mayfair. “We have applicants who simply won’t consider anywhere else — even neighbouring Fitzrovia or Marylebone,” he said. “Footballers tend to head close to their club, while diplomats prefer to be close to Belgravia.”
Tax perks and ‘lily-padding’ lifestyle
Given the costs of renting — and in some cases redecorating — an obvious question is why these super-prime tenants don’t just buy a place. Huybrechts said the issue is value for money. Most super-prime renters would be liable for the very highest stamp duty rates, which would work out at up to £190,000 for every £1m they spend.
“These tenants can secure the property they want, without paying any stamp duty, or future capital gains and inheritance taxes in the UK, and they can keep their lives flexible, fluid and transitional moving across the globe while staying at different trophy rentals,” he said, describing an itinerant lifestyle hopping from one hotspot to the next known in the industry as lily padding.
This is a highly secretive and privacy-conscious corner of the property market, where agents must often sign non-disclosure agreements before being permitted to even know who they are acting for. Around half of super-prime rentals never make the property portals, said Sara Ransom at Stacks Property Search, and are instead discreetly let off market. “Its been a massive increase in the last few years, due to the increasingly low levels of stock,” said Ransom. “There’s really no need for agents to list property at this level. And owners of properties in this bracket are reluctant to go public with the detail of their homes, especially interiors.”
Extreme renovations
At this end of the market agents must be prepared to expect unexpected requests from some very uncompromising tenants. “For a very famous actress, we had to make a house as paparazzi-proof as possible,” said Nightingall, who oversaw changes such as installing sheer blinds on every window to prevent photographers from peeping in. “For a professional athlete, we had to have the kitchen and fridge stocked with a very specific selection of food and drinks from Wholefoods before arrival.”
On occasion super-prime tenants will make significant alterations to a property. “One client wanted a private gym installed in one of the bedrooms,” said Nightingall. “He bought thousands of pounds’ worth of gym equipment, had the bedroom room converted for the duration of the stay and then donated the equipment afterwards.”
And there was Huybrechts’s client who was travelling with an extensive collection of footwear and had no need for a kitchen. “We’ve experienced tenants requesting kitchens be converted into walk-in shoe cabinets, with the kitchen cabinetry converted into bespoke shoe storage,” said Huybrechts. “We’ve also experienced a tenant requesting the internal swimming pool be converted into a sunken cinema lounge with bespoke sofa suites installed into the pool area to look up at the cinema projector screen.”
On the subject of home improvements, one of Short’s clients requested the installation of Japanese toilets with heated seats, built-in bidets, and warm air dryers. A footballer wanted a central London rental with 15 parking spaces. “One set of tenants even installed a full exotic animal menagerie in the basement, and we’ve had a tenant report paranormal activity that they wanted rectified,” said Short. “At this level, no two days are quite the same.”
