Investing in London Property: How to Get Started

Buying London property as a home or investment can be a daunting prospect. We often see unprepared buyers starting their London property search before considering many of the points below. Here are ten things to consider if you are looking to invest in London. 

  1. Understand your objectives. Are you looking for a long-term capital growth, prioritising rental yield over a five year period or simply a home for life? Having a clear goal in mind will help the search go more smoothly.
  2. Factor in all costs. The asking price is not the total cost of buying a property. Factor in Stamp Duty Land Tax, conveyancing and surveyor fees. You may also need to account for the annual cost of service charges, ground rent, council tax etc. 
  3. Understand the legal environment. With property regulations increasing every year in the UK, it’s more important than ever to know where you stand. For instance,  if your planning to let out your property on short-term letting platforms like Airbnb, you can only do do this for a maximum of 90 days in London. UK landlords now have many legal obligations. You may want to consider using a good letting agent to ensure you are complying. 
  4.  Understand lending rules. If you are not a cash buyer, borrowing has also become more complex. You can no longer simply deduct the cost of your mortgage from rental profits. The Mortgage Interest Relief rules can get quite complex when limited company structures etc. come into play.  A good accountant can be worth their weight in gold and it’s best to know what structure will suit you best before beginning a search. International buyers or individuals with more complex income may also want to speak to a mortgage broker. 
  5. Prepare paperwork. There’s nothing worse than finding the perfect property only to realise you don’t have the required documentation to take it off the market. Before beginning your search you should at the minimum have proof of funds, ID and proof of address in place. Even better, know the solicitor and surveyor you will be using and what timeframe for exchanging contracts you can work towards. A well organised buyer can sometimes have a lower offer than the competition accepted if the vendor thinks the sale will be efficient and stress free.  
  6.  Research the local market. Many buyers decide to invest in London after reading a headline saying the market has fallen or risen by 5% and assume it’s the case for the whole city. Whilst there are some general market trends in London, there is a huge variation in market performance from area to area. Research the local area of any property you’re interested in.
  7. Narrow down the search area. London is a vast, sprawling city and it is best thinking of it as a collection of towns and villages. Try to identify 3-5 areas which fit your criteria and keep your search to these areas. As you carry out viewings you will gradually get a clearer idea of what you’re looking for in a neighbourhood and narrow down the search  area even more.
  8. Factor in currency conversion rates. UK sterling currently has excellent conversion rates against many major currencies and international buyers should consider when they are prepared to move funds into sterling during the process. Our role as a property finder definitely does not extend to predicting currency fluctuations! 
  9. Don’t be led by the selling agent in terms of price. Remember to do your own diligence on the asking price. We have previously provided an overview of How to Value a Property. It is important not take selling agents at their word and always try to verify any information. London is a buyer’s market but many properties are still being priced unrealistically and due diligence is a must before making an offer. 
  10. Consider using a buying agent. Last but not least! If all the above sounds like a lot of work you may wish to consider using a buying agent to guide you through the process. Buying agents are no longer just for ultra high-net worth individuals and we work with clients with budgets ranging from £250,000 to £2.5m. Read more about how we can save clients time and money. 
Looking to invest in London? Contact us today to discuss your search.