More Billionaires Are Renting Homes Instead of Buying. Here’s Why.
There was a time when renting was looked down upon. Now, some of the world’s wealthiest people are opting to lease instead of buy.
According to a new report from Beauchamp Estates, rising interest rates and stamp duty charges have encouraged high-net-worth individuals to rethink their investment strategies. In the first half of 2023, multi-millionaires and billionaires spent roughly ￡15 million (or approximately $18.9 million) to rent high-end homes across London. As a result, rental prices in the British capital have increased by 8.8 percent annually and are now a whopping 30 percent above their pre-pandemic levels.
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The super-rich aren’t just snapping up rentals in London Town, though. Competition in the super-prime rental market is increasing worldwide, with cosmopolitan locales including Miami and Los Angeles going head-to-head. “London is competing with other rival wealth hubs such as Dubai, the French Riviera, and Manhattan to attract multi-millionaires and billionaires,” explains Jeremy Gee, managing director at Beauchamp Estates. “Domestic issues, including interest rates, taxation, and state regulation, play a significant role in the decision-making process.”
In the U.S., sales of existing homes continue to slow, making it clear that would-be homebuyers are still holding out in hopes of lower mortgage rates and greater inventory. Additionally, for those in the upper echelon, the properties may not be worth the investment right now. RentCafe found the number of affluent renters in the U.S.—those with annual incomes of over $150,000—grew by 82 percent between 2015 and 2020. Even more surprising, the number of U.S. renters with incomes in excess of $1 million hit a record high of 3,381 in 2020.
In October 2023, the median rent in America’s 50 biggest metros was approximately $1,750 per month, a $30 dip from last year. For context, the median rent across the U.S. hit an all-time high of $2,054 in 2022. Thanks to new inventory and a boom in construction, the rental market seems to be cooling off for those with affordability concerns. However, renters will find that rental rates are still well above pre-pandemic levels.
“Luxury property in wealth hubs such as London, Manhattan, and the French Riviera remains a safe asset class, and as a result, these ultra-prime markets have shown remarkable resilience,” adds Gary Hersham, founding director of Beauchamp Estates. “In the super-prime lettings market, strong demand, soaring rents, and a lack of supply have been the key features of the market this year.”
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