One of the biggest drawbacks of letting out high-value properties in London is the current financial crisis. There will be less properties purchased for lease as an extra monthly income.
Lenders have already pulled out of close to 300 mortgages. This has been a result of rumours of the base rate of borrowing increasing to almost six percent and the declining pound. This is the worst scenario since the 2018 crisis. It has been estimated that the only way to restore confidence in the pound would be to push up interest rates by a minimum of two-and-a-quarter percent up to as much as six percent. One major lender, Nationwide, increased its lending rate from 2.54% in the previous quarter to 5.59% on its two-year fixed rates option. This amounts to paying back almost £900 per month more on a mortgage of half a million pounds.
The prices of UK houses are predicted to drop by ten percent, at the very least, according to a senior mortgage technical manager reporting on BBC Radio. Other predictions go up to 15%. Potential buyers face enormous costs to obtain homes with reduced offerings of capital loans. This limits the ceiling on the price for properties within their means. It means that people purchasing property will be looking at cheaper options and not in the same class as they typically would have bought. Others will simply cry off the property market until it normalises. People will also be discouraged from selling their properties.
Is It Profitable to Be a Landlord in 2022?
Keeping an existing property rented out is still a viable option. For one thing, Mayfair, and London in general, attracts a constant stream of visitors interested in renting property. Despite the bleak performance of the pound, London has a lot to offer to these property seekers, ranging from students requiring digs to professionals and those on vacation. Interest in renting remains strong, so finding a lessee is never a problem, although rental prices are likely to increase markedly.
The Rental Market in London
For the prospective buyer, as long as there is demand for rental accommodation, there is a possibility to make an income. London property fetches top prices in UK, and some places, such as Mayfair, attract a higher clientele where rental prices are not as much of a problem as elsewhere. It is anticipated that the rental of properties in these locations in London will remain largely unaffected by the financial crisis. There are so many unique things about London and certain boroughs that have caused it to remain popular even in dire times and it remains highly desirable to a renting market of top-notch clientele.
The other side of the coin is the extent to which buyers can afford getting new properties to rent, but without any downturn for existing properties. Prospective buyers should get information on the rental prices of desirable properties in Mayfair. UpperKey can assist with property management Mayfair with access to high-level tenants who are willing to pay premium rentals for top class service. This ranges from short-term to long-term lessees. With the experience UpperKey has in seeing to the needs of lessees, who expect all the home comforts that they are used to when they rent, UpperKey is very familiar with the market and prices for both purchase and rental.
What Lessees Expect in a Mayfair/London Home Away from Home
Lessees looking for sought-after rental properties in Mayfair/London have high expectations of the place they ultimately rent and how it is managed. Bear in mind that these are corporate clients. If you don’t have the time to manage their needs, a great alternative is to let UpperKey see to property management Mayfair as they have the experience to provide exceptional care to your clients and the knowledge of what these guests require to be satisfied clients.
Many companies who frequently have senior managers or overseas guests arriving for conferences in London seek out suitable corporate accommodation. Most of their clients don’t want to be in a hotel but to be able to relax after hours as if they were at home. They want to be treated as privileged guests and enjoy the same standards as in their actual homes, with prompt attention to any problems. Looking after top-notch clients can be time-consuming but the returns in the form of monthly rental income make it worthwhile. If you cannot dedicate the time and effort required, let UpperKey take care of it for you.
Let’s look at what UpperKey’s experience has taught them about the specific rental needs of this group of clients.
Furnishings and Decor
This type of client has extremely high expectations akin to their own home décor. They are looking for superb fixtures and furnishings. You cannot outfit the property with the lower standards the average short-term holiday apartment provides. Fittings and fixtures must be high-end. The same is true of the furniture. This will be reflected in the rent you are able to charge, which these clients will willingly pay. Everything should be in pristine condition with no minor repairs apparent or required.
A standard fruit basket is no longer acceptable. Pricey champagne and chocolates are appropriate. If you opt for flowers, the arrangement should be exceptionally large and of good quality.
The Comforts of Home
Consider the upmarket appliances your tenant has at home and provide them, e.g., a hair dryer, hair straighteners, a coffee machine, a smoothie machine, a food blender, a freezer, a fridge, an ice maker, and a cooker. There should be sufficient quality clothing hangers, an ironing board, and an iron. Items should all be high-tech.
Many of these lessees will be in London on business. They will require efficient internet connectivity and Wi-Fi with high speeds and broad bandwidth. Home entertainment equipment is essential, i.e., Prime, Netflix, and pay-per-view movies, Smart television, Bluetooth speakers, and a voice-controlled assistant to switch lights on and off, and changes the volume on speakers, etc.
Service and Repairs
Your lessees will have a high demand for prompt attention and the immediate alleviation of service failures. This requires having electricians, plumbers, and Wi-Fi assistance on call 24/7. Feedback must be given about any delays, with explanations, for example, the need for special equipment to be brought in and the expected repair time.
Your guests may need information about transport, restaurants, and other venues. This means preparing a booklet with their welcome package that includes this information, useful telephone numbers, and applicable codes and instructions for equipment. The facilities must also be ultra-clean before guests arrive to book in.
Experience reveals that lessees want to be located within a half-hour commute of the centre of London and how and where to access transport. Directions to local facilities are also important. All these factors impinge on the amount a tenant is happy to pay for a rental property.
London has 32 boroughs, ranging from budget accommodation to upper-end rentals. These clients do not want to be housed directly in the centre of London but must still be able to get there easily. It is these properties that score the higher rental yields.
As can be seen from the above outline of requirements your rental clients will have, managing these aspects of your business could become quite a burden and difficult to attend to from a distance. UpperKey can manage your rental for you. They are highly focussed on maximising profit so that you receive the very best rental income. At the same time, they provide a super-efficient service to clients, resulting in many repeat visits. They can also help you to determine the right price to pay for a property in London at the right address.
Let’s take a quick look at the different types of visitors to London. This is the pool of potential lessees, although you will be mainly interested in the available upper-end clients.
International, National, and Local Visitors
London attracts 20 million international visitors annually. This is where a big portion of rental income is derived. Around £12 billion per annum is spent by international visitors. The length of these visits ranges from a couple of days to a month, with weekly being the norm, followed closely by two-week visits. Overall, 100 million nights a year are spent in London by international visitors.
National visitors who holiday in London make up the rest of the rental income in the capital while the capital sees day-trippers as well. It helps when you have UpperKey to take care of finding you tenants from these vast numbers of visitors. Corporate clients also provide a steady occupancy rate; you can read more about this here: What Landlords Should Consider When Renting to a Company.
Despite the poor financial market performance, London rentals are thriving in certain areas and making a good rental income is possible. The key disadvantage is trying to manage these leases without assistance, but that is easily resolved.