London: The London luxury housing market is experiencing a lonely shutdown.
Homes in the capital’s most expensive areas have been vacant for more than two months before finding tenants, the longest waiting period since the last financial crisis, according to real estate data company LonRes. And that despite recent rents falling at the fastest annual pace in a decade.
An exodus of office workers and a scarcity of visitors from around the world have hit luxury hotspots like Mayfair and Knightsbridge, forcing landlords to cut their rents or see their properties remain vacant.
The number of luxury sanitary pads on offer for rent in Central London is 75% higher than the previous year.
For millions of pounds homeowners, the winter could be a long one. The restrictions that have been resumed or tightened in the latest national lockdown that began this month are likely to keep the rental cap for some time now.
“It’s likely a few more months of accepting rents that are lower than you’ve historically had,” said Marcus Dixon, head of research at LonRes. “It’s just about needing the owners to get over this.”
As the government races to vaccinate the population against the virus and puts the country on a path back toward something like normal life, Dickson hopes that recovery will remain on the horizon.
With rents ending last year and the pandemic dropping new residents, a flood of vacant homes has entered the market.
Landlords have also struggled to fill in the short-term rental properties that are popular with tourists as well as those aimed at international students, workers and visitors.
This does not appear to be improving anytime soon, as the government closed all travel lanes this week.
London luxury property rents are experiencing the largest annual decline since the aftermath of the financial crisis, dropping by more than 14% across the capital in December compared to the previous year.
It’s not just the city center that’s suffering; Dickson said the suburbs are seeing their steepest slopes as wealthy tenants choose to live farther than the suburbs.
It is a good time to negotiate. Renters looking to live in the most luxurious London homes are looking to triple the discount they were getting before the pandemic, with more than half of renters managing to beat prices.
“It’s clear that landlords want to try to reduce voids as much as possible,” Dickson said. “But the reality of the current situation is that there weren’t many tenants, and those tenants could be more selective.”
The woes of the wealthy
Sellers aren’t much better than landlords. Before the coronavirus hit London, the sales market briefly enjoyed two quarters of growth before prices dipped, continuing the general decline that had been occurring for years.
On the prospects for recovery, the jury is still out; LonRes points to pre-outbreak market resilience as one reason for the rally.