The increased scrutiny from the Panama Papers leak is encouraging many potential buyers of London properties worth over £10 million ($14 million) to rent instead, according to a report in the Financial Times.
A rise in stamp duty and economic uncertainty over the UK’s June 23 referendum on whether to leave the EU — known as “Brexit” — is also turning super wealthy home buyers into “generation rent,” it said.
Lettings have doubled on homes worth more than £10 million since 2011, and risen a third from the year up to March 2016.
Meanwhile, sales of homes of a similar value fell 33% in the same period.
Henry Pryor, a buying agent, told the Financial Times that the Panama Papers leak had shown that “no one can [buy] quietly.”
“There are some people who will be put off by that, and they should be,” he added.
The Panama Papers are a leak of 11.5 million files from the database of the world’s fourth biggest offshore law firm Mossack Fonseca. They revealed the ways in which many wealthy individuals used offshore tax havens, including purchases of London property.
On top of that, the rise in second home stamp duty — a UK tax on property purchases — has hurt luxury home sales further. According to the report stamp duty on a £15m home now amounted to £1.7m — which is about three years’ rent for the same kind of property.
The areas affected include South Kensington, Knightsbridge, Mayfair and Holland Park.
Business Insider previously reported on the the London luxury property market downturn. There has been a 6.7% drop in prices since 2014, and analysts predict that a revival in 2016 is unlikely.
On top of that, investment in property funds have plummeted, suggesting many think a property crash may be imminent.