Rents in London’s most expensive neighborhoods rose in March as short-term demand from families relocating from the Middle East added to the impact of looming new regulations putting pressure on supply.
The number of new properties listed for rent in the first quarter in London’s luxury central and outer areas was 8% lower than a year earlier, according to Rightmove data compiled by property consultancy Knight Frank. At the same time, the number of new potential tenants increased by 7%.
Rents in the upscale central London region — an area that Knight Frank defines as including expensive postcodes such as Kensington and Westminster — rose 1.2% in the 12 months to March. In the outer luxury zones, for which the consultancy includes districts such as Battersea and Hampstead, rents increased by 2.8%.
Supply had already been falling before the Renters Rights Act was due to take effect this month, which will make it harder for landlords to evict tenants. High mortgage costs – linked to rising inflation expectations caused by the war in Iran – and a rise in inquiries from families seeking to return to London from the Middle East because of the conflict are worsening the imbalance, according to Knight Frank.
“We have seen an increase in inquiries from the Middle East from people looking for short-term rentals of six months or less,” said David Mumby, head of luxury property lettings in central London at Knight Frank. “They tend to be British, European or North American with families who have recently moved to the Middle East but already have a network of contacts in London.”
Following the announcement of a two-week ceasefire this week, some workers are preparing to return to the Gulf. Others are waiting to see if the truce will hold.
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