Middle East expats rush back to London, luxury property rents spike
An influx of people who have recently moved to the Middle East are now seeking short-term refuge in London, pushing up rents in the capital’s luxury property market – according to a leading estate agency.
British, European and North American nationals have rushed to snap up short-term rentals in high-value London properties since the Iran war broke out, Knight Frank has said.
The outbreak of war in the Middle East sparked fears among the many Brits and North Americans who live in the region, particularly in cities in the United Arab Emirates like Dubai.
The British expat population in the UAE is among the largest outside the UK, with estimates of 130,000 to 240,000 British nationals living and working in Dubai and Abu Dhabi.
David Mumby, head of prime central London lettings at Knight Frank, said many of these expats are seeking to return to the UK to wait out the disruption caused by the war.
He said: “We have seen an influx of enquiries from the Middle East for people looking at short-term rentals of six months or less.
“They tend to be British, European or North American nationals with families who have moved to the Middle East recently, but who already have a network in London.”
The number of prospective tenants in London’s prime lettings market was more than 16 per cent higher in March than the same time last year.
Despite the two-week ceasefire announced earlier this week, Mumby said expats will be slow to return to the Middle East given the doubt surrounding the truce.
One in eight Brits flee homes in UAE
One in eight Brits have fled their homes in the United Arab Emirates since the Iran war broke out, according to official data.
While 240,000 Brits were in the Gulf emirate before the conflict began, 30,000 of these are now outside of the country, the Financial Times has reported.
“Many Brits have chosen to relocate temporarily to alleviate anxiety and share childcare and schooling with a home country support network,” a Dubai-based security expert told the FT.
The interest rate fears caused by the Iran war are also causing prospective buyers of luxury London properties to rent for the time being in an attempt to wait out the disruption, Mumby said.
The Iran war prompted lenders to pull mortgages off the market at rapid speed, with the number of deals on offer having shrunk by a fifth since the start of the conflict.
While analysts began the year expecting the Bank of England to cut interest rates at least once, the market is now bracing for several rate hikes.
The best five-year mortgage deals on offer now exceed 4.8 per cent, more than one percentage point higher than before the war began, according to Knight Frank.
Falling prime supply spikes rents
The estate agency said falling supply is also putting upward pressure on luxury rents.
The number of new prime rental listings fell by eight per cent year on year to March, while the number of prospective tenants increased by seven per cent over the same period.
Tom Bill, head of UK residential insights at Knight Frank, said: “Supply has fallen in recent years as it has become less attractive to be a landlord.
“In addition to a succession of regulatory and tax changes, the Renters’ Rights Act, which comes into effect next month, means landlords face added uncertainty around rent increases, repossession rules and selling their property.”
London’s luxury property market has been under pressure in recent years, with some estate agents blaming changes to stamp duty for a decline in investor interest in the market.
Department store Harrods announced the closure of its luxury property arm this week, with property experts naming the end to the non-dom tax regime among the factors behind the capital’s stagnating prime residential market.