Letting agents in central London are reporting an enormous boom in business, with one in five tenants now prepared to pay their entire rent up-front along with their deposits.
Normally, says lettings firm E J Harris, the proportion is one in ten who are happy to hand over six or 12 months’ rent in advance.
The firm calculates that so far this year, over £100m in upfront rent has been paid, as tenants compete to seal deals.
On average, the typical “up-front” tenant will pay for a two-bedroom flat in the West End on a £3,500 per week let, giving the landlord over £200,000 up-front.
That sum includes £182,000 for the entire rental period plus a £21,000 deposit, but excludes any fees payable to the letting agency.
E J Harris says the surge in up-front rental payments reflects the current frenzy in the London lettings market.
The firm says that Stamp Duty reforms and pre-election mansion tax concerns have turned vendors into landlords and buyers into tenants, stalling the central London sales market.
E J Harris says that in a normal year, a home for let on one of central London’s most popular addresses will attract two or three bids. However, in this election year there are now six or seven tenants bidding to rent the best properties.
The firm also says that the wave of up-front payments is due to a rise in wealthy overseas tenants who are happy to pay entire rents up-front in order not have to undergo credit checks and personal references.
Such tenants will spend anything from £9,000 to £10,000 per week on renting in one of London’s best addresses. At this level of the marketplace, up-front rental payments can exceed half a million pounds.
A second agent, Napier Watt, echoes the view that London’s sales market has slowed to be replaced by hectic lettings activity.
Jonathan Adams, director of Napier Watt, said: “With tax change after tax change after tax change, many international buyers are questioning whether the UK is a place where they would like to buy.
“There are many international buyers sitting on their hands and not committing to a property purchase. It is the same with every general election, but this one seems to be worse, perhaps because of Labour’s proposed mansion tax.
“But while they wait to see what will happen with mansion tax, they still need somewhere to live.”
Surely rent in advance payments shouldn’t be accepted in lieu of reference checks otherwise how do Landlords really know who they are putting in their properties???
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When you are flapping £100,000 in front of a landlords nose you will be surprised what they are willing to “let go”
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Agreed Gump, problem is they always come looking for us when it goes wrong and then the judge says those famous words, but you are the professional agent and should know better, they are just a landlord, using you for your professional services and advice.
That’s life I guess – so always put it in writing! 🙂
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Exactly right, if you are paying upfront with us, you still get checked out. You need to know that after the initial term the tenants have the means to fulfil their obligation and still pay the rent.
How about, where is the £200k coming from in the first place?
I know of a case where a wealthy sugar daddy paid £30k upfront for their girlfriend to rent a flat and then she claimed it back through HB because she wasn’t working!
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