With its 32 boroughs of incomparable history, architecture, and cultural significance, London is a dream city for those who want to live in the center of it all. Although London features some of the higher-priced real estate in the United Kingdom (U.K.), it comes with storied properties and diverse neighborhoods. Proximity to transport links is never an issue in London with its world-famous underground train.
Nevertheless, despite recent fluctuations in London’s housing market brought on by Brexit, England’s capital city remains one of the world’s economic hubs and an excellent place to put down roots as a foreign buyer. There is a wide variety of home types and price points to fit everyone’s tastes and pockets, respectively. This article will go through the basic information you need to understand the process of buying a house in London.
In line with a recent British government initiative to build more affordable homes, your dream of owning a London property might seem more achievable than ever. House prices are slowly back on the rise after the impact of Brexit and the pandemic but are still accessible if you know where to look.
England is revered for its architecture, and location is everything in London. The difference is that London’s size and scope mean you have much more varied housing options than many other cities of the same size.
For example, the areas of Central London, such as Knightsbridge and Chelsea, are known for luxury townhouses and high-end new-builds that may appeal to more financially established expats who wish to be situated in the middle of the city’s activity. By contrast, South London neighborhoods, such as Wandsworth and Croydon, offer a more affordable property market, whether you are looking for a one-bedroom flat or a classically refurbished terraced house.
The average house price for a property in London is roughly £660,754, while the borough of Barking and Dagenham currently ranks as the most affordable place to jump on the London property ladder.
London welcomes investment and real estate purchases from people all over the world. There are a few things to know about the home buying process in London, though.
One such consideration is that U.K. banks are more likely to lend to borrowers who have proof of a visa, visa in progress, or formal job offer with intent to stay. It is possible to buy your London property while still in your native country. Yet, having paperwork to show you are meeting a partner in England, accepting a job there, or attempting dual nationality is always helpful if you intend to work with a British mortgage broker.
Being aware of the taxes and real estate fees that come with the purchase of your London home can help you budget.
For starters, the Stamp Duty Land Tax (SDLT) applies to all London purchases and will vary in amount, depending on when you bought your property and how much you paid for it. In addition, non-resident homebuyers in England will also be subject to an Income Tax on their London property if they purchased it as a company. Some buyers may owe a portion of Capital Gains Tax if the seller negotiates to split that mandatory fee into your contract of sale.
While it is not mandatory to retain the services of a British estate agent (realtor) and conveyancer (solicitor) when buying a home in London, doing so can save you stress and time. With the help of the right London solicitor and estate agent, expats can find their way through purchasing a London home with greater security.
The government’s Land Registry manages ownership records for every U.K. property in England and Wales. While it is possible to sift through these records and try to locate London homes for sale on your own, it can be a huge time commitment. Every borough of London will have estate agents to choose from to represent you when buying a new home.
The reasons for employing an estate agent go beyond just convenience, though. Because these are local professionals with expert knowledge of the real estate listings and histories of properties in their areas, you get access to properties it might take you weeks to find.
Further, London estate agents are aware of how the weather and climate conditions can affect the valuation of a London property. That information can be important from the standpoint of international homebuyers knowing what they are getting into. It can also be an excellent argument for them to negotiate more affordable contract terms.
For instance, let us say an estate agent finds a five-bedroom house in Belgravia that has mold in the attic from years of exposure. Prospective expat homeowners can then ask their solicitor to negotiate that repair or replacement into the property’s closing costs.
Many expats looking to become homeowners in London will need to borrow money to realize that dream. Finding a mortgage broker in London as an expat comes with unique challenges that can directly relate to your residency status. As stated, preferential lending is given to foreign buyers who can demonstrate an intention to live or work in the U.K. for an extended amount of time.
As with most home purchases, the total price you will pay for your London home will include your property’s value, your personal interest rate (as set forth by the lender), and all applicable taxes and fees. Interest rates can vary wildly depending on many factors associated with your personal finances. The two most important factors in securing a mortgage with viable repayment terms are your credit history and proven intention to maintain a financial relationship with the U.K.
It is smart to ask your estate agent early about recommendations for mortgage lenders in London that might be a good fit for your financial circumstances. Likewise, your solicitor might be able to help you draw up the necessary documents needed to secure a strong mortgage offer.
London offers some alternative pathways to becoming an expat homeowner for those who qualify through one of Britain’s special loan programs. The Help to Buy Loan Equity Program is one such program geared toward making price-limited properties in every region accessible and is available to first-time homebuyers who fall under certain eligibility criteria, which require that a homebuyer
Another governmentally sponsored lending scheme that expat homebuyers in London can utilize is the Shared Ownership Program. This initiative allows first-time homebuyers to purchase a certain percentage of a London property and pay rent on the remaining percentage. This allows for borrowing up to 40% of a property’s value and paying rent on the remaining 60%. Homes bought under the Shared Ownership Program feature lower deposits and allow expats to get on the property ladder in England a bit faster.
Taking on the services of a London solicitor for the purchase of your new home is wise for many reasons. One of the major ones is that the English real estate law can be tricky even for residents to understand. For example, the difference between a freehold versus leasehold property purchase may not be something non-resident buyers in England have encountered before.
Essentially, a freehold purchase occurs when you buy and become the official owner of both the land and buildings on it. A leasehold purchase is when you only own the building. You can get into unnecessarily difficult waters with the Land Registry if you are not aware of how to report such purchases.
By the same token, your London solicitor often works in conjunction with your estate agent to make any formal offers for housing in England. Moreover, there are rules about the completion date of property transfers that an expat may have no way of understanding without London legal counsel.
Depending on how you arrange to buy London property, your solicitor may extend bids for you at home auctions, relay contract details to selling parties on your behalf, or organize the visa paperwork you may need to secure a mortgage. Ultimately, using a real estate solicitor to ensure legal compliance can keep you out of trouble and prevent paperwork headaches as you search for your new home.
New London homeowners may wonder if their real estate purchase qualifies them to reside in London. Unfortunately, the process to be granted full-time or even extended residency in England is a bit more complicated than that. There are, however, a number of ways that non-resident homeowners can position themselves through visas for long-term and eventually permanent stays.
One such example is the Investor Visa. This visa allows eligible homeowners in England with enough investment capital to remain for three years and then gives the option to extend the visa for an additional two years. During that time, homeowners who meet the criteria for this visa can apply for British citizenship.
At present, due to Brexit concerns and an unstable relationship with the EU, it is not possible to apply for permanent residence in the U.K. if you have not already submitted paperwork to do so before Dec. 21, 2020. The ability to apply for permanent resident status in England is likely to change as Brexit regulations are formally set and become established.
In the meantime, England offers a wide variety of visa options that permit long-term stay and can offer pathways to full British citizenship. One good place to start figuring out which options for English residency are best for you is to consult with licensed Immigration Solicitors (i.e., lawyers) Advisors on Relocate for advice on all aspects of your move to London.
Whether you are looking to invest in business property in Canary Wharf from overseas or moving down from Scotland to find your new home in Hounslow, Relocate is here to help. Dig-deeper into relevant material about immigrating to the United Kingdom, browse through highly qualified experts and submit your questions to be addressed.
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