Wealthy Londoners who can’t sell become ‘accidental landlords’

Wealthy Londoners who can’t sell become ‘accidental landlords’

8:01 AM, 22nd November 2022, About 2 years ago 1

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A growing number of wealthy Londoners who can’t sell their homes are becoming accidental landlords instead, a report has found.

That’s because the housing market in the capital has slowed down to the point where one real estate firm says there has been a big rise in the number of premium London rental homes being put up for rent.

The firm points to sellers giving up on selling their property and are now moving their homes onto the rental market instead.

According to Chestertons, in the first two weeks of this month, the number of London homes being listed rocketed by 15% year-on-year.

They have seen a rise in rental home numbers

A spokesperson for the firm told the Daily Telegraph that this was the first time this year that they have seen a rise in rental home numbers compared to 2021.

Chestertons highlights that most of this rental traffic is coming from the sales side with vendors who can’t sell are now looking to rent – while holding out for a better sales price.

The estate agents say that the turning point in this trend came after the mini-Budget which led to mortgage chaos in the sector.

However, the spokesperson says that some of these accidental landlords are writing clauses into their tenancy agreement stating that they will carry out sales viewings during the tenancy.

Rise in the number of property to let

The trend has also been seen by Knight Frank with their real estate expert telling the Telegraph that the rise in the number of premium properties to let is almost certainly ‘a result of the uncertainty seen in the sales market’.

Knight Frank also highlights that for prime rentals in the capital, that is those properties that are being let for between £1,000 and £5,000 per week, new listings rose by 70% last month, when compared with the beginning of the year.

London’s house prices had already begun to fall

However, the Office for National Statistics highlights that London’s house prices had already begun to fall, even before the mini-Budget led to financial turmoil.

It says that in September, the average London property lost 0.6% in value from August’s figure, or £3,206.

Knight Frank also reveals that the average rent on a recently let home in the capital’s priciest postcodes has risen by 17.8% year-on-year.

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13:21 PM, 22nd November 2022, About 2 years ago

I became an accidental landlord in 2003, when I moved for work and put my London apartment on the rental market. I bought a house just around the corner when I returned to London, and continued to let my apartment. The rent more than covered my mortgage on the apartment and gave me a nice income on top of my salary, which allowed me to scale back work in preparation for retirement. This lasted until 2015, when I sold the apartment and remortgaged my house to a BTL, with a view to buying outside London, and letting my house until the market improved. Then the ramifications of S24 became apparent to me, and the £3000 per month rental income plus my salary, would have been disastrous. Also, the CGT on selling the house would have been massive. I moved out of London but kept the house empty; my London pied a terre. 4 years later, I sold at a very healthy profit during the 'Boris Bounce' with zero CGT.
The government's landlord tax grabs meant 5 rental beds were removed from the London market, and no tax was paid on any potential rental income. I have since sold 2 more beds, and will sell my final 2 beds ASAP. That's why there's a rental crisis!

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