Buying property in London
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Buying property in London:
A complete guide for foreign investors
Are you planning to invest in property? Want to get a foothold in one of the most lucrative property markets in the world?
If so, you’re in the right place!
London is the capital of the United Kingdom and has one of the liveliest, most profitable property markets anywhere in the world.
If you’re looking for high returns on property investment, London is a key place to explore!
Why buy a property in London?
While the London property market is the most expensive in the country, it also offers some of the highest demands and best returns for investors.
Whether you’re looking for investment property for rental income, a long-term investment, or something else, London properties deliver.
While there are never any guarantees, the UK property market is relatively strong and stable on an upward trend. That makes it fertile ground for investment.
You’ll need more upfront capital to buy a property in the city but the returns can make it well worthwhile.
Types of property to buy in London
London has evolved as a city over the past 2,000 years. The streets are full of period properties, ultra-modern developments, blocks of flats, and everything in between.
Having seen two world wars, the city combines history and culture with contemporary architecture to offer a mix of both new and old, modern and traditional properties. You’ll see Victorian, Georgian or Edwardian terraces alongside high-rise blocks, sleek glass buildings or something completely different.
If it’s the variety you’re looking for, London delivers.
The London housing market is typically made up of flats, penthouse apartments, terraces, semi-detached, and fully detached houses from every period.
Houses will tend to be freehold, where you own the property and the land it sits on. Flats are usually leaseholds, where you own your flat but someone else owns the building and/or the land.
Freehold is the most desirable option but leaseholds can also be lucrative if there is sufficient time left on the lease.
Where to buy Investment Property in London
London city as a whole is a good place to invest, but there are up-and-coming areas that offer great potential.
For foreigners new to the area, first explore different areas across Central London, North London, South London, East London, and West London.
Key areas to look at include King’s Cross, Tottenham Hale, Meridian Water, Walthamstow, Barking, Dagenham, Tower Hamlets, Newham, Greenwich, Thamesmead, Canada Water, Lewisham, and Old Kent Road.
There will be others of course, but this should be enough to get your research started.
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Giving you peace of mind while you sit back and let us do all the work for you while finding you the best deal for your financial situation.
Can foreigners buy property in London?
Yes, foreigners can buy property in London. There are currently no restrictions on foreign property ownership in England.
In fact, a large portion of London property is in foreign ownership so you’re in good hands.
If you’re investing in property from a purely financial perspective, you don’t need a visa or any special permits to buy.
If you’re investing in property to live in, you’ll likely need a visa. Much will depend on your country of origin.
You should be prepared for stringent identity verification and affordability checks if you need a mortgage as a foreign investor, though. The UK has strict lending rules to help ensure people don’t borrow more than they can afford.
Steps to buy a property in London
Buying a property in London is relatively straightforward, although it can take 3-6 months from beginning to end.
The process looks a little like this:
Prepare your finances and set a budget for the investment
Properties range from around £300,000 to £30 million so you’ll need to know how much you can afford before you begin purchasing. As a general guide, the average property price in London is £724,718.
Get an agreement in principle
A mortgage agreement in principle (AIP) is a useful way to show estate agents you have the means to purchase the property you want to view. GPS Financial can help with this if you need.
Find a property
Now you have a budget in mind, you can begin looking for property to invest in. Use local estate agents, national property websites, property auctions, and specialist property finders as you see fit. Most properties offer online viewing, but it’s always a good idea to view in person.
Make an offer
Once you find a property you want to buy, you need to make an offer through the estate agent. That offer isn’t binding but can prevent it from being marketed further during the purchase process.
Hire a conveyancer
A conveyancer, or solicitor, is a specialist property lawyer that will manage the purchase on your behalf. They represent you throughout the process and will perform all necessary checks and searches, and coordinate with interested parties.
Secure finance
Once you have a conveyancer and a property under offer, it’s now time to apply for finance if you need to.
If you need a mortgage as a foreign investor, a reputable property finance specialist can help find competitive deals and assist with the process to help ensure a successful mortgage application. Talk with our friendly team of mortgage brokers at GPS Financial today.
Allow the process to complete
There’s a lot of waiting around during a property purchase, but that’s normal.
Buying property in central London is no different from anywhere else. If there’s a chain, it can take from 3-6 months depending on how many properties are involved.
Your conveyancer should keep you up to date on progress throughout the process.
The cost of buying property in London
There are other costs aside from the purchase price and mortgage to consider when buying a property in London. Typical costs include:
Stamp duty
Stamp Duty Land Tax (SDLT), usually referred to as just stamp duty. It is payable to the government at rates depending on the purchase price.
Property prices:
- Up to £250,000 = 0% stamp duty
- £250,001 – £925,000 = 5%
- £925,001 – £1,500,000 = 10%
- £1,500,001+ = 12%
If you’re investing in a second home or investment property, you’ll need to add an extra 3% on top.
As a foreign investor, there’s a further 2% stamp duty levy on top of the rates you see above. Unless it is done within a UK limited company.
Buying fees
Buying fees include the legal fees from your lawyer, as well as the fees for your mortgage, valuation, survey, and searches. Your conveyancer should give you a breakdown of all applicable fees in cash terms when you hire them.
You’ll pay stamp duty via your conveyancer too.
Speak To An Expert
Giving you peace of mind while you sit back and let us do all the work for you while finding you the best deal for your financial situation.
What to consider when buying property in London as a foreign investor
There are a few other things you’ll need to consider when buying a property in London as a foreign investor.
Identity requirements
All property buyers in the UK are required to prove their identity and the source of the funds they are purchasing with. You’ll need to do the same.
You’ll need:
- Proof of identity – Usually a passport or driving licence
- Proof of address – Bank statements and/or utility bills
- Proof of funding – Proof of cash for the deposit and funds for the purchase
You’ll need all of these for a mortgage application if you intend to apply for one. You’ll also need to provide these details to your conveyancer during the process.
Declaring rental income
If you’re buying an investment property to let out or use as an Airbnb, you’ll need to declare all rental earnings to HMRC.
How you do that is up to you but it’s usually through a Self-Assessment. You can submit these yourself annually or seek expert help from an accountant.
Laws regarding rentals
The UK is a liberal market when it comes to property and rentals but there are specific landlord legislations you’ll need to comply with.
We recommend working with a professional estate agent to handle the rentals to ensure compliance.
How to buy Investment Property in London
Buying investment property in London as a foreign investor is a largely straightforward process as long as you can afford it.
If you do your due diligence, consider your finances, use a reliable estate agent, research locations and choose wisely, you could be making the best property investment you could make.
While a lot of administration is involved, work with GPS Financial for your mortgage and select a reputable conveyancer to handle the purchase.
Between us, we can manage every aspect of your property investment. Contact GPS Financial today to see how we can help!
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