An oversea buyer’s guide to investing in Prime properties in London, UK
Luxury properties in Prime Central London (PCL) present a solid investment opportunity for overseas buyers.
The financial and political stability that London affords means that, with the right advice and preparation, investing in London property could result in a springboard for your investment portfolio, a secure pension, or a route to setting your family up for the future.
Whatever your investment goals, this expert guide is designed to help. Explore the potential opportunity when investing in Prime Central London real estate, the attractions that make PCL such a desirable place to buy, and the mechanics of buying a UK property as an overseas investor or non-UK citizen.
What is the size of the opportunity in Prime London properties for an investor?
Prime Central London real estate – sales growth
According to the JLL Prime Central London Sales Index – our quarterly study into how the PCL market is performing, there was a 3.3% annual increase in achieved prices in Q1 2022, with prices up 0.6% on Q4 2021. Achieved prices for Q1 2022 came in at 4.7% higher than pre-pandemic (Q1 2020).
The same study showed a 7% annual increase in sales, making Q1 2022 the busiest Q1 for five years. Activity was predominantly driven by properties listed at between £2million and £5million, with sales up by a quarter (25%) on Q1 2021.
Post-pandemic, Londoners continue to make the return to the office, on a full time or flexible working basis, which in turn is driving demand for Prime Central London flats. Between January and March 2022, we saw a rise of 13% in the number of PCL flats sold, compared to Q1 2021.
With Prime Collection properties commanding strong prices, there continues to be opportunity for overseas investors who are looking to own and occupy or buy to let.
Prime Central London real estate – lettings growth
Now is a good time to invest in the buy to let Prime Central London real estate market. Our JLL PCL Rental Index recorded a 15% increase in
rents achieved – the highest annual rise in more than 10 years.
This 15% annual increase in achieved rents also put Q1 2022 3.1% higher than Q1 2020, pre pandemic, proving that the rise wasn’t the result of a pandemic dip.
As always, there is movement out of and within Central London, with renters negotiating a competitive market. In 2021, some PCL tenants were in a strong position to negotiate significant rent reductions. In 2022, we are seeing many tenants appreciate
how competitive the Prime Central London rental market is and therefore paying more to stay in exclusive locations.
JLL research shows an 18% annual increase in the number of rent renewals across Prime Central London in Q1 2022, compared with Q1 2021, during the pandemic.
Attractions in Prime Central London that make this area a unique investment opportunity
London’s mix of the historic and the modern makes the city a truly unique place to explore, invest in and live. There is an overview of the local area and property types in Knightsbridge, Kensington & Chelsea, Mayfair, Marylebone, Belgravia,
and Westminster in: ‘Are luxury properties in Prime Central London a good investment?’.
Prime Central London covers the following six areas:
- Knightsbridge
- Kensington & Chelsea
- Mayfair
- Marylebone
- Belgravia
- Westminster
To make sure you find the right property, in the right area, at the right price, it is critical to work with trusted experts who have in-depth knowledge of the Prime Central London real estate market.
The mechanics of buying Prime properties in London as an overseas investor
According to research published in Showhouse1, overseas investment in Prime Collection properties collectively brought an estimated £1,188million to
the Prime Central London market in 2020. Of Prime transactions in 2020, 11% came from French nationals, 9.2% came from Hong Kong and the USA, 8.3% from China, and 7.3% from India.
Here, we answer some frequently asked questions from overseas buyers:
- Can a foreigner invest in UK property?
Yes. In 2020, more than 40% of investment in Prime Central London’s luxury properties came from overseas investors. Residential estate agents like JLL are well versed in guiding
overseas buyers through the UK buying process.
- What do overseas buyers need to know about the UK buying process?
The estate agency you partner with (i.e. JLL) and the conveyancing solicitor you appoint are both critical to this process. Once you’re ready to buy, the amount you are offering to pay (your ‘offer’) is presented to
the seller by the estate agent. You will need to be able to prove how you will fund your offer, how quickly you are looking to ‘exchange’ and ‘complete’ (more on these below), and who your solicitors are.
If your offer is accepted by the seller, your solicitor will carry out the conveyancing process on your behalf. This is complex, but, in brief, your solicitor will carry out ‘searches’ of the Land Registry and Local Authority
records to examine the planning history and to look for any potential developments surrounding the property. You will also need to instruct a property surveyor to check the structural strength of the property – this is known as getting a ‘survey’.
Next, the seller’s lawyers draft a sale agreement (also known as a ‘contract’), which, once agreed by both parties, is signed by you and them. The signed sale agreements or contracts are then exchanged between your lawyers
and theirs. This is known as ‘exchange’ and means you are legally bound to proceed with the purchase and pay a deposit.
The next step is to ‘complete’ on the purchase, at which point you pay the balance of the purchase price and formal documents will be signed and dated, transferring the property from the seller to you. Your proof of ownership, known as ‘title deeds’,
can then be found on the public register at the Land Registry.
It is important to be aware that there are different types of ownership in the UK. Freehold means you own it completely, and leasehold means there is a time limit on the number of years you will own it for. However, many
leaseholds are very long (up to 999 years) and freeholds can also be purchased if the freeholder is open to selling it.
Once you have completed on a property and you become the legal owner of the property, you will be liable for Stamp Duty land tax, which is payable to the Land Registry within 30 days of completion.
Get in touch if you are considering buying in the UK for the first time and would like our experts to guide you through this process over the phone.
- Invest, or own and occupy?
UK property tax laws can be complex, which makes it crucial to work with estate agents and conveyancing solicitors who can direct you through the process efficiently.
Depending on whether you decide to invest in UK property to live in (own and occupy) or as an investment (buy to let), the tax implications will be different.
Since 1st April 2021, UK non-residents purchasing residential property in England and Northern Ireland are required to pay a 2% Stamp Duty surcharge. This is in addition to:
- The 3% Stamp Duty surcharge on purchases of ‘additional’ dwellings. This could be property you are buying as a second home or as a buy to let property;
- The 15% Stamp Duty rate on property purchases more than £500,000 by companies; and
- The Stamp Duty rate for UK home buyers.
- Do you need UK residency to invest in London prime property?
No, you don’t need to be a UK resident to buy Prime properties in London, or anywhere else in the UK. Our experts can talk you through the buying process,
tax implications, expected rental yields for buy to let investors, and much more. Get in touch.
Share your investment goals with us and our Prime Central London property experts can help match you to the right type, value and location of property for your needs.
1 https://www.showhouse.co.uk/news/foreign-buyers-make-up-over-40-of-londons-prime-property-market/
