Foreign billionaires are renting rather than buying luxury homes in London following increases in tax bills on upmarket properties. Lettings that cost more than £3,000 a week – £156,000 a year – increased by 28% in the last three months of 2016, according to research by the property data service LonRes.

The number of prime central lettings in the capital has risen steadily since the introduction in April 2016 of a 15% stamp duty tax on properties bought via offshore trusts, and a three percentage point surcharge on stamp duty on second homes.

Marcus Dixon, LonRes’s head of research, said that rich foreigners who previously would have shelled out £10m or more on a London home are choosing to rent to avoid paying the tax.

“The stamp duty cost at the very top end is significant,” he said. “Especially as you have to consider that a majority of these people would be buying it as an additional property so would be paying the additional 3% second-home tax as well.”

Stamp duty on properties selling for more than £1.5m is 12%, rising to 15% if it is a second home.. Last year, stamp duty raised £7.3bn for the government– £3.4bn from London. The boroughs of Kensington and Chelsea and Westminster both brought in more than £500m – more than 25 times what was generated in Northern Ireland.

The website Rightmove lists more than1,100 London properties with rents in excess of £3,000, including a £40,000 a week six-bedroom Knightsbridge penthouse apartment in a block next to the Candy brothers’ One Hyde Park development.

Also available for £40,000 a week is a seven-bedroom house in Mayfair, that features a movie room, swimming pool and underground garage.

Georgina Bartlett, the head of lettings at Savills, said there were far more luxurious properties available to rent than those listed online.

“Since the start of 2017 the market above £4,000 per week has been very buoyant,” she said. “We’re currently dealing with three applicants with budgets of over £5,000 per week who had previously been looking to purchase a property in London.”

Tom Smith, Knight Frank’s head of super-prime lettings, said: “The super-prime market has performed markedly better than the prime market. In fact, if anything, the [super-prime] pricing has held very firm, which we would link back to scarcity of supply.”

The agents said £3,000 a week would not come close to the cost of renting an apartment in One Hyde Park or other luxury developments, but would secure a large house or flat in Belgravia or Mayfair. They said the vast majority of renters in the £3,000-plus bracket were from overseas, particularly the Middle East and the US.



Dixon said: “They like wine cellars, spas and concierges – those that provide concierge services similar to really high-end hotels can command a premium.”

Some owners who had listed their luxury properties for sale are choosing to let them out instead.

Rupert Bradstock, a partner at a luxury London property investment fund, said he and his partners decided to rent out all of the multimillion-pound Kensington homes the fund had bought rather than sell them. “The plan was to buy them, hold them for a period, then sell them. Now we are going to keep them rented. We made the decision last year when it became clear the stamp duty was badly affecting the market.”

Bradstock’s fund, Lennox Investment Management, owns eight Kensington homes ranging in value from £8m to £20m. He said they deal with “a complete cross section of nationalities, all from overseas, all working”.

Bradstock said the interest in luxury rentals was directly related to stamp duty. “You’re now looking at trading costs close to 20%,” he said. “If you take a £5m property, the costs are going to be close to £1m – divided by five that is £200,000 a year, which is close to the rent of a house worth £5m. That is why so many people are choosing to rent, not buy.”