Why London’s Wealthy Are Renting Instead of Buying
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Why London’s Wealthy Are Renting Instead of Buying

By RUTH BLOOMFIELD
Wed, Feb 7, 2024 8:58amGrey Clock 5 min

With London luxury real-estate prices on the slide and a collapse in high-end deal volume, it has been a tough year for prime central London real estate.  But the prime rental market is thriving.   People in need of a London base are increasingly opting to take the flexible, minimal-commitment housing option rather than buying, and paying Britain’s high taxes, in a stalled market. As a result, prime rents are escalating. House price analyst LonRes found that average prime rents in London increased 3.5% between December 2022 and December 2023. Average prime rents are now 29% above pre pandemic levels notched during the period of 2017 to 2019.

Separate research from estate agent Beauchamp Estates found that 63 London homes were rented out for $6,370 or more per week—about $330,000 per year—between January and June 2023.  Buying agent Liam Monaghan, managing director of London Central Portfolio, said many of his prime tenants live a global, itinerant lifestyle. They include soccer players, actors and film producers and tech entrepreneurs.

“They can obviously afford to buy these properties, but perhaps they are on a short-term contract or are growing a business and have got a lot of wealth quite quickly and are jumping between lots of different countries and are still working out where they want to live,” said Monaghan. Nina McDowall, head of lettings at estate agent Strutt & Parker’s office in Knightsbridge, one of London’s most expensive neighbourhoods, said many of her renters are considering buying a London property but only when they find the perfect home at a great price. “There are a lot of people who are weighing up their options,” she said. “They might also be sitting tight to see if prices slide further.”

Others, such as Antonio Volpin, simply don’t see London property as a great investment opportunity. Volpin, who is Italian, moved to London for work in 2011, initially living out of hotels. When his wife and two sons joined him in London in 2012, the family started renting.

The Georgian exterior of a rental property in Mayfair that is renting for $37,900 per week. PHOTO: CHESTERTONS

“We mulled the idea of buying a property, because the market was very strong, but I thought it could not grow forever, and with my work I am not sure where I will be next year,” said Volpin, 61, a consultant for asset and fund management firms.

The family’s decision to continue renting proved prescient, because prime central London’s house prices have stagnated for almost a decade. According to LonRes, average sale prices in prime central London increased by just 2.3% between 2013 and 2023 (from $2,130 per square foot to $2,180 per square foot). In 2016, Volpin’s job took him to Singapore, and now he and his university professor wife are based in Rome. Their two sons, aged 26 and 22, opted to remain in London so their parents, who visit regularly, have continued to rent a three-bedroom, three-level, apartment in the affluent, historic neighbourhood of South Kensington, 2 miles west of the city centre.

Antonio Volpin has been renting in central London since 2012 and considers it a more flexible option than buying. PHOTO: OLGA PODPORINA FOR THE WALL STREET JOURNAL

Volpin has signed a nondisclosure agreement prohibiting him from revealing his monthly rental costs, but a spokeswoman for his estate agent, Winkworth, said that a similar property would cost up to $191,000 per year.

“Certainly with that money I could buy, but the point is that at the moment it is more of a kind of holiday home,” Volpin said. “When I come, I want to be close to downtown and to the friends I made while living in London.”

McDowell believes that the reason top-end rental prices have accelerated while home sale prices are falling is simple: Demand for these types of rentals is high and there is a serious undersupply of high-specification, turnkey properties.

“They are as rare as hen’s teeth,” she said. “Super-prime tenants will not sacrifice or compromise on many things. The condition and functionality of the property has to be slick and beautiful, and they will pay big prices, or pay one or two years in advance, to secure the right property.”

But while rents are rising, prime-central London landlords still have to work hard to attract high-paying tenants who expect five-star standards. “I have had people who want walls to be ripped out or massive extension work,” said Sinead Conlon, head of corporate and relocation services at John D Wood & Co. estate agents. “Some of them want interior-design furniture packages costing about $32,000 to $127,000 per month. They are all looking for an add-on.”

In one memorable case, Conlon was able to rent a substantial house in the north London suburb of Primrose Hill to a tenant who wanted the toilets in the bathrooms, 17 of them, to be replaced with Japanese models with built-in bidets. The tenant, who paid around $70,000 per month to rent the house for a year starting in 2021, eventually settled for just 10 new toilets to be fitted.

“But they are around £25,000 [$32,000] a pop, so it was not exactly cheap,” said Conlon.

Another problem facing landlords is dwindling profit margins. Interest rates have jumped and, since 2020, landlords cannot deduct mortgage interest from their tax bills, said Becky Fatemi, executive partner of Sotheby’s Realty UK. The administration of renting a property is also not cheap. Fatemi said landlords should expect to pay their estate agent between 8% and 15% of the annual rent to find and install a tenant. Management fees, if required, add another 5% to the cost.

Vickram Mirchandani currently owns and rents out two prime London properties. He is painfully aware how hard it is to turn a decent profit even in a hot rental market. Mirchandani, 46, who is British, bought a five-bedroom family home in the upscale neighbourhood of Belgravia, about 10 years ago. They lived in the home full time, but he and his wife became increasingly disillusioned with life in Britain and left London in October, then moved to Dubai with their young family in January—they have one child and are expecting a second.

Vickram Mirchandani and his wife
CREDIT:Vickram Mirchandani

Mirchandani has decided against trying to sell the property until London’s property market has revived. In October 2023, tenants moved into the 4,200-square-foot townhouse, paying just under $8,900 per month in rent.

“It was gone within a week, on the second viewing, for the asking price,” said Mirchandani, a renewable-energy developer. “In hindsight, I could probably have got a little bit more.”

Mirchandani also owns a second property, a three-bedroom penthouse in Belgravia, which he had originally hoped to flip. “The plan was to purchase it, develop it, and sell it at a handsome margin,” he said. “But after Brexit that handsome margin never materialized.” The apartment is also rented out, fetching $11,500 per month. “I actually got over asking price for that one because the tenant has a dog and I said, ‘Fine, but that will be an extra 10%,’ ” said Mirchandani. “I am very happy with the prices achieved.”

He is less happy with the yields his capital is earning. He estimates that after costs, including income tax, he is earning around 1.5% to 2%. England’s major banks are currently offering interest rates of around 4% to 5%. Longer term, Mirchandani is still weighing his options. “I could keep them in the hope that someday some miracle will happen and they will go up, but if we like it in Dubai we will probably sell the properties,” he said.



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Before You Build: the 8 Architectural Design Trends You Should Know

Futureproof your home and maximise your return with design directions that focus on contemporary ways of living

By Josh Bozin
Mon, Apr 29, 2024 6 min

Looking to build, or renovate, a home in 2024? You’re not alone. According to a recent study from Resolve Finance, over a third of Australian homeowners are planning to renovate their current properties in the next 12 months. And if the Federal Government achieves its ambitious goal of delivering 1.2 million new dwellings over the next five years, there will be many new home owners looking to build their dream home in 2024 and beyond.

But before tackling such a behemoth task, considering all the latest—and future—architectural trends is pivotal in your new build’s success. Award-winning architect and interior designer, Georgina Wilson said sustainability will be at the forefront for many interested in energy efficiency and saving money on power bills.

“Elements of passive design are moving into the mainstream. Improvements in the technology with double glazing, building wrapping and insulation are meaning that more people have access to these materials,” Ms Wilson said. “Solar has proven itself and homeowners are now looking for other ways to make their home more efficient.”

The following eight trends reflect a growing emphasis on sustainability, flexibility, and wellbeing in residential architecture, catering to the evolving needs and preferences of homeowners in 2024.

1). Consider your colour palette  

The colours you use say everything about the type of spaces you want to foster, whether they be bright and warm, dark and moody, neutral — the list goes on. If we’re looking to trends, earthy, calming neutrals are in — think brown, beige and eucalyptus green. Colours that feel natural and soft, but welcoming provide an inviting environment that’s easy to live with.

However, interior designer and stylist, Jono Fleming said contrast is important to create interest and one of the most powerful ways to do this is through colour.

“It doesn’t have to be a big splash of colour, it could be introduced through smaller decorative objects, a statement furniture piece or an artwork, but the colour should add balance to the space,” he said.

Unsplash
Unsplash


2). Modern, outdoor living areas

Ever since the COVID pandemic and subsequent lockdowns, expanding living spaces to the outdoors has gained in popularity. Features like plant-filled front porches, outdoor kitchens, fire pits, and cosy seating areas create inviting spaces for relaxation and entertainment for all family members.

“There has definitely been a greater appreciation for outdoor living spaces since COVID,” said Ms Wilson. “Outdoor fabrics and mechanisms for shading have greatly improved in recent years allowing people to fully embrace seamless indoor/outdoor living.”

Georgina Wilson
Georgina Wilson


3). The integration of smart technology 

Integrating smart home technology throughout your home continues to gain traction with homeowners. As we increasingly look to rely on technology to make our lives all the more seamless, smart technology throughout allows homeowners to control a variety of tasks and zones remotely, enhancing convenience, security, and even energy efficiency. This can include controlled heating and cooling from your phone, automatic lightning, voice control commands, and more.

“The technology for seamless appliances has come a long way. At Salone del Mobile Milano this year, we experienced the new Gaggenau fully integrated induction bench top, which in terms of kitchen design, is a huge advancement,” said Ms Wilson.

Gaggenau, the German manufacturer of high-end home appliances, is at the forefront of smart home technology, paving the way for intelligent cooking appliances that learn and adapt to user preferences. Gaggenau’s essential induction cooktop, the functional and seamless  cooking surface Ms Wilson speaks of (pictured below), is designed to be “seamlessly integrated into a kitchen’s worktop”.

Gaggenau
Gaggenau


4). Health and wellness features

Prioritising health and wellness in 2024 is paramount, and home design that can include features like air purification systems, dedicated exercise spaces, recovering hubs—like saunas and ice baths—and relaxation areas to support physical and mental wellbeing will go a long way in not only adding value to your home, but providing a space that is architecturally on-trend and with the times.

“I’m seeing a lot of demand for in-built saunas, both traditional and infrared, particularly in the homes of our US clients,” said Ms Wilson.

“Bathroom suppliers such as Kohler, Duravit and Toto are offering increasingly sophisticated products that incorporate an almost spa-like experience in your at home bathroom. Examples of this are fantastic multi-nozzle showers and steam showers, Japanese toilets incorporating bidet technology, and elegant and serene bathroom furniture that can be fully customised for clients.”

HUUM / Unsplash
HUUM / Unsplash


5). Sustainability is key

A common goal among homeowners and future buyers alike is to own a property that is flexible enough grow with them. Futureproofing your home with sustainable measures will not only ensure its longevity, but it will help homeowners to play their part in addressing their carbon footprint.

“The current cost of living crisis is leading to a lot more multigenerational living, meaning families are prioritising durable materials and sustainable power sources, like solar,” said Ms Wilson.

Consider adding solar panels to your home, utilising sustainable materials in any upcoming renovations or builds, like recycled timber, and utilising energy-efficient lighting throughout your home.

Giorgio Trovato / Unsplash
Giorgio Trovato / Unsplash


6). Minimalist design

Do as the Scandinavians do – introduce minimalist design into your home. Embrace simplicity and clean lines with a focus on interior design. Decluttering in main living spaces is surprisingly effective. Adopting the approach of ‘Swedish Death Cleaning’, which essentially involves slowly ridding your house of unwanted or unused items once you reach the other side of 50, will also help you whittle your possessions down to the beautiful and the necessary.

Minimalist design in home appliances is also making a resurgence in 2024 according to Ms Wilson.

“What I’ve been interested to see at Salone del Mobile Milano in 2024 is a huge return to stainless steel finishes, and more and more seamless integration of appliances,” said Ms Wilson.

“We’re seeing timeless materials in reimagined applications: copper baths and stainless steel basins are emerging trends with the potential to be timeless. These materials are so practical, and pair beautifully with natural stone and timbers.”

Above all, maximising different spaces through efficient and effective storage options will also do wonders in achieving that minimal aesthetic.

Kam Idris / Unsplash
Kam Idris / Unsplash


7). Multifunctional spaces 

As we move towards greater efficiency of space, it’s useful to consider multifunctional spaces throughout your home.  In 2024, we are seeing more homes incorporate multifunctional spaces and trends. This includes using multifunctional furniture in main bedrooms or living spaces—furniture that can act as storage ottomans or convertible sofa beds—as well as transforming wasted space, and open up indoor to outdoor living.

“Multifunctional spaces in homes are a great idea. Particularly in small homes, it makes a lot of sense to achieve maximum value out of the limited space available. The way you use a space can change as your family evolves over time, so it’s always good to design in such a way that allows for flexibility,” said Ms Wilson. 

Make sure that the functions you allocate to a single room are compatible with the space available and each other. For example, it works really well to combine a living room, a dining room and a kitchen in one open plan space because these are all public, lively spaces. It doesn’t work very well to combine, say a study, with these spaces because you will want control over the visual and acoustic privacy in a study.”

Sven Brandsma / Unsplash
Sven Brandsma / Unsplash


8). Think about biophilic design

A buzz word among architects and interior designers, biophilic design is one of the strongest trends in 2024 thanks to its benefits in garnering a sense of harmony and connection between your home and the environment. Consider incorporating natural elements into home design, such as large windows to maximise natural light, indoor gardens, and natural materials like wood and stone.

“Biophilic design is a timeless principle, in that home design should connect people in a positive way with their natural environment by maximising access to, and the ability to control, natural light and ventilation, which really helps to create an enjoyable (and healthier) environment to live in,” said Ms Wilson.

Increasingly, there is a demand for this positive relationship to the natural environment; by leaning on the principles of biophilic design, you can create a haven and retreat at home that can help with the daily stresses of life.”

Ways to foster that indoor-outdoor connection can be through the addition of smaller internal courtyard spaces filled with greenery, or incorporating indoor plants and adding greenery into different rooms throughout your home.

Georgina Wilson
Georgina Wilson

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35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

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