Prime Purchase, the buying arm of estate agency Savills, says renting may be “a more financially sound route” for some wealthy individuals who previously would have purchased homes in high-value areas such as prime central London.
Guy Meacock, Prime Purchase’s director, says his firm traditional dislikes renting because it is dead money, but accepts that the current mood of uncertainty over global and national economic issues is filtering into individuals’ property deals.
“Uncertainty is never good for the housing market, and unfortunately there is plenty of it. Whether it is President Trump’s policies, increasing fiscal constraints and slowing growth in China or upcoming French and German elections, there is great uncertainty around the world” says Meacock.
“Closer to home we have the impact of the Brexit negotiations, rising inflation and slowing wage growth, to concern us. Subsequently, many buyers and sellers are biding their time. Vendors question whether it is the best time to sell and generally many aren’t doing so, unless they are forced to, because they are unlikely to get best value” he adds.
Meacock says that with stock levels limited, despite this being well into the traditional spring market, it is no surprise that some are considering renting.
“Those who need to be in a particular area for their children’s schools or for work, or who have sold up and are renting in the hope that the market will soften in the next couple of years so they can pick up a bargain, are renting. Others are renting because they can’t find what they want to buy or because stamp duty is prohibitive if you are spending more than £1.5m and especially if it is a second home” he says.
Meacock adds that if you plan to live in the UK for five years, and rent a £10m property for £5,000 a week, it won’t cost you much more than the stamp duty if you had bought outright. “In a market which is not really moving, neither can you rely upon price inflation to offset that” he admits.
Last month another buying agency, Middleton Advisors, announced that it was opening a rental division because of increasing demand.