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London's luxury rental market was
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already tight, but a new geopolitical
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shockwave has just sent it into
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overdrive. A short-term refugee trend is
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currently pushing London prime rents to
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breaking point. The driver is the
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ongoing conflict between Iran and
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Israel. Since the outbreak of war, we've
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seen a massive influx of expats fleeing
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the Middle East. British, European, and
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North American nationals who recently
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moved to hubs like Dubai and Abu Dhabi
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and are racing back to London to wait
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out the disruption. The scale is
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significant. Official data shows that
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one in eight Brits living in the UAE
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have left since the conflict began. Out
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of a population of 240,000, roughly
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30,000 have already packed their bags.
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Estate agents like Frank say these
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expats are snapping up London properties
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on contracts lasting 6 months or less.
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These families aren't necessarily moving
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back for good. They're returning to
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their home support networks for help
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with childcare and schooling while war
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rages. As well as this flight to safety,
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a supply squeeze is driving up rents.
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The number of prospective tenants in
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March was 60% higher than last year,
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while the number of new rental listings
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fell by 8% at the same time. Supply has
1:01
tanked because, quite simply, being a
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landlord in London is becoming a
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headache. Between tax hikes and the
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Renters' Rights Act coming into effect
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next month, owners are nervous about new
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repossession rules and their ability to
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sell. Then, there's the mortgage panic.
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Before the war, the market was holding
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its breath for interest rate cuts. Now,
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we're bracing for hikes. In the last few
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months, lenders have pulled a fifth of
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all mortgage deals off the market. If
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you want a 5-year fixed now, you're
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looking at a rate of over 4.8%. That's a
1:27
full percentage point higher than
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pre-war levels. Prospective buyers are
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opting to rent rather than buy while
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they wait for better rates, adding even
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more heat to the market. The pressure is
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so high that even the big players are
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pivoting. This week, Harrods announced
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it's closing its luxury property arm.
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Experts say the end to the non-dom tax
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regime and stamp duty changes are major
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factors behind the capital's stagnating
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luxury housing market. The bottom line,
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you've got expats returning from the
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Gulf, prospective buyers who are too
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scared to commit to a mortgage, and a
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dwindling pool of desirable homes. For
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London's luxury tenants, the
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wait-and-see approach is becoming a very
