Renting Out Premium Properties in London: UpperKey Weighs in on the Pros and Cons

One significant drawback to renting out high-end properties in London is the prevailing economic crisis. Consequently, fewer properties are being acquired for leasing purposes as a supplementary source of income.

Close to 300 mortgages have already been withdrawn by lending institutions. This development is attributed to speculations about the possible hike in the base rate of borrowing to nearly six percent and the dwindling strength of the pound. This situation is considered the most critical since the crisis in 2018. Experts believe that to revive faith in the pound, interest rates must surge by at least two-and-a-quarter percent and potentially up to six percent. Nationwide, a major lender, has escalated its lending rate from 2.54% in the prior quarter to 5.59% on its two-year fixed-rate package. This implies repaying almost ￡900 extra per month on a mortgage valued at half a million pounds.

There is a forecast that the prices of houses in the UK will experience a minimum fall of ten percent, as mentioned by a senior mortgage technical manager on BBC Radio. Other predictions go as high as 15%. Aspiring homeowners are confronted with staggering expenses to secure houses with diminished capital loan options. This sets a cap on the affordability of properties. This indicates that buyers will seek more economical alternatives compared to their usual preferences. Some will retreat from the property market awaiting stabilization. Moreover, individuals are likely to be hesitant about selling their properties.

Is Being a London Landlord in 2023 Lucrative?

Maintaining a rented property continues to be a feasible alternative. London, and particularly Mayfair, consistently draws in a steady influx of individuals eager to rent properties. Despite the gloomy performance of the pound, London still offers a plethora of options to renters, including students seeking accommodation, professionals, and tourists. The demand for rentals remains robust, but rental costs are anticipated to surge significantly.

London’s Rental Market

For an aspiring property investor, as long as the demand for rental spaces persists, there is an opportunity to earn revenue. Properties in London command premium prices, and some areas like Mayfair appeal to an affluent clientele who are less bothered by rental costs compared to other regions. It is expected that rentals in these prime London locales will be relatively unaffected by the economic slump. London and certain boroughs possess distinctive attributes that sustain their popularity even in challenging times, making them highly attractive to a sophisticated rental market.

The other aspect to consider is the capacity of buyers to acquire new properties for rental, but with no downturn for existing ones. Aspiring investors should seek information on rental prices for sought-after properties in Mayfair. UpperKey can facilitate Mayfair property management by connecting you with high-caliber tenants willing to shell out premium rents for top-tier service. This encompasses both short-term and long-term renters. UpperKey’s expertise in catering to the demands of tenants, who anticipate home-like amenities during their stay, makes them well-versed with the market and pricing for both acquisition and rentals.

What Tenants Anticipate in a Mayfair/London Temporary Residence

Tenants on the hunt for coveted rental properties in Mayfair London hold elevated expectations regarding the residence they choose to rent and its management. It is important to recognize that these are corporate clients. If managing their requirements is beyond your capacity, delegating this task to UpperKey for Mayfair property management is an excellent alternative. They possess the know-how to deliver exceptional service to your clients and are acquainted with what these guests need to be gratified.

Many corporations with frequent visits from senior executives or international delegates for conferences in London are in search of appropriate corporate lodging. The majority of these clients prefer a home-like environment rather than staying in a hotel. They expect privileged treatment and standards on par with their own homes, coupled with swift resolution of any issues. Catering to high-profile clients is labor-intensive, but the returns in terms of monthly rental income are rewarding. If dedicating time and effort is unfeasible, UpperKey can step in to handle it for you.

Here’s what UpperKey’s expertise can highlight regarding the particular rental necessities of this clientele.

Furniture and Interior Design

This clientele group harbors exceedingly high expectations akin to their own home interiors. They seek top-quality fixtures and furniture. Equipping the property with subpar standards typical for short-term vacation apartments won’t suffice. Fixtures and fittings must be upscale, as must the furniture. This will be mirrored in the rent you can charge, which these clients are ready to pay. Everything must be impeccable, with no visible minor repairs needed or pending.

Welcome Baskets

A basic fruit basket won’t cut it. Premium champagne and chocolates are more fitting. If opting for flowers, the arrangement should be exceptionally lavish and high-grade.

Homely Conveniences

Think about the luxury appliances your tenant has at home and make them available, such as hair dryers, hair straighteners, coffee machines, smoothie makers, food processors, freezers, fridges, ice makers, and stoves. Ensure the availability of ample quality clothes hangers, an ironing board, and an iron. All items should be cutting-edge.

Digital Amenities

Many of these tenants will be in London for business. They will need reliable internet connectivity and Wi-Fi with high speeds and ample bandwidth. Home entertainment devices are vital, including Prime, Netflix, pay-per-view movies, smart TVs, Bluetooth speakers, and a voice-controlled assistant for tasks such as light control and volume adjustment.

Property Maintenance and Repair

Your tenants will expect quick responses and immediate resolution of maintenance issues. This demands having electricians, plumbers, and Wi-Fi technicians on standby 24/7. They must be kept informed of any delays with explanations, such as the requirement for specialized equipment and anticipated completion times.

Tenants may seek information regarding transportation, eateries, and other venues. This necessitates compiling a booklet as part of their welcome package containing this information, useful phone numbers, and relevant codes and instructions for appliances. The premises must also be impeccably clean before guests check in.

Transport Amenities

Experience indicates that tenants prefer locations within a 30-minute commute of central London, and information on accessing transportation and directions to local amenities is crucial. All these factors influence the rental price tenants are willing to pay.

London comprises 32 boroughs, with options ranging from budget accommodations to high-end rentals. These clients are not keen on being accommodated in central London but should be able to access it with ease. Properties meeting these criteria command higher rental yields.

London Property Management

As deduced from the above summary of tenant requirements, managing these facets of your business could become burdensome and challenging if you are remote. UpperKey can oversee your rental property. They are highly dedicated to optimizing profits so that you receive top rental income. Concurrently, they render ultra-efficient service to clients, which results in repeat business. They can also guide you in determining the appropriate amount to pay for a property in London with the right location.

Let’s briefly examine the different categories of visitors to London. This constitutes the pool of potential tenants, although your focus will primarily be on the high-end segment.

Global, Domestic, and Local Visitors

London draws in 20 million international visitors yearly, contributing significantly to rental income. Approximately ￡12 billion is spent annually by international visitors. The duration of these stays varies from a few days to a month, with one week being standard, closely followed by fortnight-long stays. Collectively, international visitors spend around 100 million nights a year in London.

Domestic holidaymakers in London, along with day-trippers, supplement the rental income in the capital. UpperKey’s assistance in securing tenants from this vast visitor pool can be invaluable. Corporate clients also contribute to a steady occupancy rate; you can delve deeper into this topic here: Considerations for Landlords When Renting to Corporations.

Despite the faltering financial market, London’s rental market thrives in certain districts, and securing a substantial rental income is achievable. The primary challenge lies in managing these leases independently, but this can be readily overcome.