The prime central London rental market is being boosted further by another new trend brought about by the increased taxes levied one prime property purchases.
Wealthy families of overseas students coming to study in London, have long purchased properties for their offspring to live in during their studies, both as a way to preserve their anonymity and reduce tax bills. However, thanks to new measures introduced by the government to combat property tax avoidance, many are now choosing to rent instead of buy. In fact, lettings agents in the capital are reporting a surge in demand for rental properties worth up to £2m from the families of overseas students.
As well as introducing a new top rate of stamp duty at 7 per cent for all homes over £2m, the government recently brought in a 15 per cent levy on residential properties costing £2m or more and bought through a company structure.
"They are coming from all around the world and their tenancies are generally being guaranteed and paid for by their parents who are paying up to £1,000 per week," said Lucy Morton, senior partner and head of lettings at W A Ellis.
"We have been absolutely inundated with high net worth student enquiries from those wanting to get settled prior to the new academic year."
However some agents believe that the decision to rent could be temporary until the tax situation is more certain. Mark Harris, chief executive of mortgage broker SPF Private Clients said:
"Many wealthy parents who would normally have bought an apartment for their children to live in during their studies are delaying a decision until the tax position is clearer, and renting in the meantime. This is having the effect of pushing up rents and leading to a scarcity of property for rent at the top end"