The word on the street is that demand for ‘mega mansion’ rentals is on the increase.
In the last quarter alone we received three active searches, one direct and two from other independent agents for ‘mega mansion’ rentals, ranging from £20,000 a week to £40,000 a week. These enquiries are from London-based residents who may have normally looked at buying a 10,000 square foot mansions in Knightsbridge, Belgravia, Mayfair or Chelsea for more than £40m.
If bought, in a ‘non-natural person’ structure, these would-be buyers would have a £6,000,000 stamp-duty bill, the equivalent of renting for six years at £20,000 a week. Renting provides a good alternative for the super wealthy who do not want exposure to the onslaught of tax changes since 2013.
These tax changes have exposed the overseas investor/buyer to CGT and IHT, the non-natural person vehicles to annual property tax (ATED) and the non-domiciles who plan to leave once they have been in the UK for 15 years do not want to make a substantial investment in buying a home when renting costs so much less and may even be a tax-deductible expense for them.
Non-domiciles who have been in the UK for longer than 15 years will start to pay tax on their world-wide income so many have a finite time that they will be in London. The property stock to meet this new demand is hard to find and renters have to offer high prices to encourage the owners of these mega properties to rent. These homes are either exclusively on the sales market or homes of multi-national billionaires neither of which are willing to lose the brand-new factor.
In July 2015 Knight Frank reported a 182% increase in applicants willing to pay over £5,000 a week in the quarter leading up to 30th June 2015. We are light years ahead of those prices now. Most large corporate agents now have a dedicated ‘Super Prime Rental’ department too.
As this market develops owners of empty mansions held in non-natural person names may be encouraged to take advantage of the demand and receive decent returns on their investments, avoid paying annual property tax (ATED) for keeping these mansions empty and have the ability to raise finance against these properties once let.
This is an area of the market that is truly off market. For all queries and questions please Contact Us
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