During this economically convulsive year, with so much uncertainty in the wind, renting a property has made a lot of sense. It has been ‘a port in a storm’ for some. Tenants from the UK and those from abroad, who have managed to circumnavigate the quarantine arrangements in the UK, have been gorging themselves on the appetising stock of properties available to rent within our catchment area, over the past year.
Renting a property does serve a multiplicity of purposes. Let me explain...
It is an excellent short-term fix for those who are moving up or down the property ladder and haven’t yet bought their dream home. It is also the parish for the senior citizens of this sector, who have sold their own home and choose the long-term rental option, instead of purchasing, since this is an alternative tax saving scheme, so as to avoid inheritance tax. The proceeds of one’s home can therefore be distributed to one’s family, in a fiscally efficient fashion. By doing so, they also avoid paying Stamp Duty, which today is a very significant amount of post-tax capital and is a ‘double- header’ win for them.
Whilst on the subject of fiscal efficiency, we are delighted to tell you that some of the ‘Uber’ lettings that we have done up to £ 40,000 per week no less, are the product of sophisticated former purchasers, who have chosen instead to rent rather than buy, during their 5 year stay in the UK. Were they to buy a property, they would be paying circa 25% of the value in STLD, solicitors and estate agents’ costs, however by renting the same property, this will save them 5 years rent-free, with no questions asked.
From the Chancellor’s point of view, this is the unfortunate consequence of the draconian Stamp Duty tax imposition, made in 2014. Lest we forget, STLD is perfectly collectable by the Exchequer but also, if you are clever, perfectly avoidable.
For those Buy-to-Let landlords, since rental levels are stable, and in some cases growing consistently, yields of 3-5% are now fairly common, on investments.
During the Covid lockdown, some of our clients have chosen to rent a super-mansion in the Kenwood area, in order for them to enjoy a self-contained retreat with a sizeable garden - ‘a quasi-hotel’, if you will - in order to accommodate 3-4 generations of the same family under one roof, without the need to venture out.
There has been a significant flight of tenants to properties with outside space and gardens, which could be a permanent legacy of the Covid-19 issue.
We all anticipate air corridors will open to the rest of the world before too long and we believe there will be a tsunami of tenants from abroad looking for homes to rent in the capital, in the forthcoming months.
The problem for us, as agents, is the shortage of supply and therefore, if you are thinking of renting your home, there is possibly no better time than today!
We believe the rental market is set fair to continue its onward march for the foreseeable future.
Trevor S Abrahmsohn
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