London luxury rents rise as Gulf demand adds to supply crunch

[LONDON] Rents in London’s most expensive neighbourhoods rose in March as short-term demand from families relocating from the Middle East added to the impact of impending regulations weighing on supply.

The number of new rental listings in the first quarter in London’s prime central and outer districts was 8 per cent lower than a year earlier, according to Rightmove data compiled by property broker Knight Frank. At the same time the number of new prospective tenants increased by 7 per cent. 

Rents in prime central London, an area Knight Frank defines as including pricey postcodes such as Kensington and Westminster, rose 1.2 per cent in the year through March. In prime outer London, for which the broker includes districts such as Battersea and Hampstead, rents are up 2.8 per cent. 

Supply was already falling ahead of the Renters Rights Act that’s due to come into effect this month and will make it harder for landlords to evict tenants. Elevated mortgage costs linked to rising inflation expectations caused by the Iran war and an increase in enquiries from families seeking to return to London from the Middle East because of the conflict are exacerbating the imbalance, according to Knight Frank. 

“We have seen an influx of enquiries from the Middle East for people looking at short-term rentals of six months or less,” Knight Frank head of prime central London lettings David Mumby said. “They tend to be British, European or North American nationals with families who have moved to the Middle East recently, but who already have a network in London.”

After a two-week ceasefire was announced this week, some workers are preparing to return to the Gulf. Others are waiting to see if the truce holds. BLOOMBERG