Rent discounts of up to 9.2 per cent in St John’s Wood, Hampstead and Primrose Hill
- Credit: Archant
Stamp duty burden sees popularity of prime rentals rise, along with discounts off initial asking rents
Despite the increased number of prime lets agreed across north London, higher levels of rental stock have seen weekly rents fall, according to the LonRes Summer 2017 review.
In areas of prime London, including St John’s Wood, Hampstead and Primrose Hill, rental stock was up 25 per cent in January to March compared with the same period of 2016.
After this initial surge, the rate of stock increase slowed to 6 per cent between April and June.
In NW8, which covers St John’s Wood, the average rental is now £968 per week, representing a 9.2 per cent discount off of the initial asking rent.
In NW3, which includes Hampstead, Belsize Park and Swiss Cottage rents averaged £703 per week, a discount of 8.4 per cent.
Primrose Hill, Camden Town and Marylebone, covered by the NW1 postcode, say a 7.2 per cent drop, with rents averaging £731 a week.
Achieved rents for prime London are down 3.4 per cent annually.
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With rents falling and prime property prices still rising (just) yields are down from about 4.8 per cent to 3.5 per cent in prime London postcodes.
One of the biggest side effects of the stamp duty reforms since the end of 2014 has been the rise in the number renters across prime London.
LonRes confirmed this, putting the number of properties let in prime areas of London up 5 per cent compared with Q2 of 2016. The number of properties sold was down 10 per cent.
“The tax is such a burden it makes sense to either rent or not move home at all,” William Carrington, chairman of LonRes, in the report.
For example, a £25,000 a week rental would cost £1.3 million a year to live in, against the £5,150,000 of stamp duty that would be payable if the same property was bought as a second home.
This would be at the very top end of the market. To incur an effective rate of 14.8 per cent the property would have to be valued at a fraction under £35 million.
The report also blamed slower rates of residential sales on Brexit and assorted factors contributing to general political uncertainty. People who can afford to do so are renting whilst they wait it out.
Whilst there more people renting, there are more prime rentals available for the very same set of reasons. Accidental landlords who can’t sell homes that command higher rates of stamp duty are renting them out to recoup their losses.
Mr Carrington blamed the slowdown on this miscalculated “tax grab” from the Treasury.
“They forgot that the London residential market is part of the economy, not a cash cow needing to be milked,” he said.
“There are better ways to deflate the market than this.”