Becoming a homeowner or investing in a buy-to-let property may have crossed your mind as you consider moving to London or have already lived there as an expat for some time. Either way, purchasing real estate in London will require thorough research, guidance from a legal representative, and a substantial sum of money.
Before the purchase of property in London
Property in London is an attractive investment. However, before you invest your time (the process may take up to three months) and money in it, consider the reason for your purchase. Has London's diverse, fun, and businesslike personality won your heart? Has the city become your second home? Or do you see real estate in London merely as an investment opportunity? Defining your goals will help you choose the right property.
Then, consider the area of your property. London's outskirts are more affordable, and houses there are spacious. However, travel time to central London is long, often not hassle-free, and expensive. For more information on London's neighbourhoods, please read our article Areas of London to help you decide which location is best for your lifestyle.
It's essential to understand the additional costs of your purchase, such as taxes. If you buy a home in England worth more than £125,000, you must pay Stamp Duty Land Tax (SDLT).
Attention:
From 1 July 2021, you will pay less or no tax if the following apply: firstly, you and anyone else you're buying with are first-time buyers; secondly, the purchase price is £500,000 or less.
Lastly, create a payment plan and define the payment method(s) you will use. For many, paying cash is an option, whereas, for others, the only way to become owners is to borrow money from the bank.
Important:
You won't be able to buy a home in London unless your residency status is in place.
The property purchase in London
Once you have made your offer to the seller (or their estate agent), they must draw up a legal contract, transferring the ownership of the property to you.
Attention:
No matter how much money you pay upfront and regardless of the discussions and promises between you, the seller, or your estate agents, no offer is legally binding until both sides have signed and exchanged the contracts. If you or the seller decides to pull out later, the other side is entitled to compensation.
The final steps are simple. They include emptying the property the departure of the previous tenants or owners, and the handover of the keys to you.
Useful link:
Key points about buy-to-let properties in London
- Buy-to-let properties can bring a regular income.
- Buy-to-let mortgages are usually more expensive than residential loans and require a higher deposit (25% or more).
- The lender will evaluate how much money you will make from renting the property to establish the amount they will lend you.
- Before committing to a buy-to-let property, consider other ongoing costs such as maintenance, insurance, and agency fees.
Brexit and the London property market
London house prices fell after the Brexit referendum in June 2016 due to political uncertainty. London house prices fell from £930,979 in 2017 to £761,434 in 2019. Three years had to pass for property transactions to pick up again. September 2019 had the most property transactions since the Brexit referendum. Analysts tend to explain this increase in sales due to a long-anticipated reduction in SDLT that the Conservative Party brought into force at the beginning of 2019.
It's still too early to tell the impact of Brexit on the London property market. COVID-19 led to an unexpected financial crisis, and it isn't easy to pinpoint where the implications of COVID-19 end and the impact of Brexit begins. A big drop in house prices was again observed in June 2020, and there's a trend of house prices in London dropping. The average house price in London is £675,309, whereas the UK average is £250,34.
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
