By Ashley Osborne | Head of UK Residential & Managing Director – International Properties
Investing in London properties has always been one of the most sought-after venture due to its limited restrictions on buyers and sellers. However, with the recent Brexit resulting in a fall in property prices, uncertainty looms as many wonder if London is still worth investing in. At Colliers International, we recommend you to look at the broader picture, by getting to know different aspects of the city and why new property developments are already indicating the rise of housing value in the coming years.
Local Regulations and Legalities
As a foreign investor, your priority should be to understand London’s regulations and protocols when it comes to property investment. Besides online research, a property consultant or agent in London would be your best ally in figuring out the cost, processes, legalities, and due diligence. Choose a property consultant that is familiar with the legality of the country you are investing in and out of as laws vary widely across different countries (especially in terms of applicable income tax).
London Taxes and Liabilities for Property Investment
When you invest in property in London, there are certain applicable taxes and liabilities that you need to consider. Besides the legal cost of consultant mentioned above, a Stamp Duty Land Tax (SDLT) is applicable to certain properties. The current threshold is £125k for residential properties, where the tax can range from 1-12% and sometimes even more if the property value is more than £500k. The threshold is £150k for non-residential properties and the tax usually range from 1-5% of the value of the property.
There are also some smaller costs to consider that will eat into your capitol:
1. A survey fee (usually around few hundred pounds) is usually required to ensure that the property is in good condition and as described by the seller.
2. The ongoing cost of maintenance, mortgage, and property tax are all something you should pre-calculate and consider for your budget.
London’s Property Market – Still Strong and Growing
Once familiar with the legalities, learn about the property market of London and where it is headed. Post Brexit, the prices of property in London have fallen by 0.9% on average, a lucrative incentive for buying. In addition, the future of properties in London and counties surrounding it seems bright.
• Based on data, there has been a steady rise of housing prices in London since 2009 and is expected to continue rising in the coming years.
• With the new Crossrail opening in 2019, average prices of the properties along the line are already 16% higher than the greater London average and are expected to increase until the new line opens.
• London’s rental property will be in high demand as analysts predict a rise in the number of people privately renting by 2025.
New Property Developments in London
The biggest indication of a strong market ahead is the opening of the new Crossrail that will connect Greater London with the suburb counties beyond via 40 new stations. This will greatly improve journey times across London by providing easier, quicker, and more direct travel opportunities. It is estimated that the housing prices could rise by 20% along these Crossrail stations. This has given rise to several new property developments outside central London and investors with this knowledge are already investing in these rising property hotspots.
Do remember, as lucrative the market is for buyers, it is equally enticing for sellers. Therefore, it is essential to do a background check on the developers of the properties you would like to invest in, to get a clear sense of their track record.
Search for new property developments in London or learn more about London’s property market through local experts at Colliers International.