Navigating London's unique property landscape Are you moving overseas and not sure whether you want to rent or buy? Don’t worry, you’re not alone. This is a pivotal decision during any international relocation, and we’ve been helping people make the decision that works best for them and their family for decades. Before delving into the specifics of each location in our series, it's essential to understand the overarching factors that influence this decision, regardless of where in the world you're headed. We've prepared a list of questions and considerations that you should be asking yourself regardless of where you're moving in the world. These should be the very first things you weigh up in your mind, before you make a decision about renting or buying in your new home. Remember too, that if you're moving for work, much of this is contingent on what your assignment contract stipulates about living expenses (if any): How long are you staying? Just a Pit Stop?: If you're only setting up camp for a short while – for example, a short-term assignment or secondment, renting might be your best bet. After all, it has a lower up-front cost. Here for the Long Haul?: Is it a permanent move, or maybe your employer has booked it in as a long-term assignment? Maybe buying's your game. Just remember, it's a commitment. What's the local housing scene like? The Money Talk: Different places, different rules. Get the lowdown on local market dynamics. Is it a buyer’s market, or are you better off renting? Can You Even Buy Here?: Dive into the do's and don'ts. Some countries have restrictions for foreign property owners. How liquid are your finances? Upfront and Ongoing Costs: Owning isn't just about the buying price. There are maintenance costs, taxes, and maybe homeowner association fees. Renting might be easier on the wallet, at least for now. Thinking of Another Move?: If there's another potential move in your future, think about how fast you can sell and get your money out. How fast do you adapt? Dive into the Deep End: Renting can be a quick way to get a feel for the local vibe, helping you adjust faster. Custom Space, Custom Pace: Owning means you get to shape your space. If leaving a personal touch is your thing, buying might be up your alley. Rent first, buy later? Best of Both Worlds: Sometimes, it's smart to complete your move and rent first. Get the lay of the land, then decide if buying's the move. Plus, it’s a two-step approach to settling down. Logistical hurdles Buying from Afar: It's doable to buy property overseas without visiting. But, like buying shoes without trying them on, there can be surprises. Do your research and if you can, maybe take a trip to see it first hand. Remember that "buying from afar" may involve a higher down payment and interest rate from the mortgage lender. The London Housing Market The average rent for a property in London is £2,200 per month, according to Rightmove. This is significantly higher than the average rent in the rest of the UK, which is £1,150 per month. As of 2023, this was a record high. The average house price in London is £525,678, according to Halifax. This is also significantly higher than the average house price in the rest of the UK, which is £286,000. This represents a year-on-year fall of about 4.6%. It’s important to keep in mind that in some countries, the disparity between the capital and other cities is particularly high. The U.K. is one of these countries. While there are no restrictions on non-U.K. residents or citizens purchasing property in the U.K., be aware that it may be harder to obtain a mortgage from a mortgage broker. While it certainly isn’t impossible, banks will likely ask you for a larger deposit than they ordinarily would from a citizen or permanent resident and your interest rate might be higher. As of October 2023, The London housing market is currently cooling, with house prices falling in recent months. This is due to many factors, including rising interest rates and the cost-of-living crisis. Stamp Duty in the U.K. Anyone who purchases property in the U.K. is required to pay SLDT (Stamp Duty Land Tax). SLDT varies depending upon the cost of the property and whether you are a first-time buyer. The U.K. government website has some useful information breaking down the increments, here. As of October 2023, stamp duty in the U.K. ranges from 5-12% and only kicks in for properties above £250,000. Remember that in London however, this encompasses the vast majority of properties, including apartments. Important things to remember in London 1. Ground Rent Ground rent is a payment that leaseholders pay to the freeholder of the land on which their property is built. Ground rents are typically very low, but they can increase over time. According to Tayntons, a property law firm, the average ground rent in the U.K. generally sits between £200-500 per annum and is unlikely to exceed £1,000. In recent years, there has been a growing controversy over ground rents, as some freeholders have been charging excessive ground rents. This has made it difficult for leaseholders to sell their properties or get a mortgage. 2. Legislation Even by the standard of property law internationally, U.K. property law is notoriously complex. There are several regulations that buyers and sellers of property in the U.K. should be aware of. These regulations include: Housing Act 1985: This act gives leaseholders the right to manage their own buildings. The Estate Agents Act 1979: This act regulates the activities of estate agents. The Conveyancing and Land Law Reform Act 2008: This act made several changes to the law relating to the sale and purchase of property. What's the interest rate situation? Interest rates are currently rising in the U.K. and as of October 2023, the base rate sits at 5.25%. This is making it more expensive to borrow money, including mortgages. As a result, it is becoming more difficult for people to afford to buy homes. This is one of the reasons why the London housing market is currently cooling. The London market, with its unique quirks and challenges, exemplifies the necessity of being informed before making such a pivotal choice. Remember, while London's prices and policies may differ from other regions, the fundamental considerations we've laid out hold true universally. So, whether you're leaning towards renting a chic city apartment or investing in a home to call your own, arm yourself with knowledge, weigh the pros and cons, and make the decision that aligns with your life's trajectory. And, as always, whenever you're in doubt, consult professionals such as mortgage brokers who know the ins and outs of the market to guide you to the best decision for you and your family. If you’re moving to London, the wider U.K., or anywhere; we’re here to help. From finding a home to live in, to finding a school for your children, to taking care of your precious belongings as they move to your new home, Crown Relocations can be with you all the way. Get in touch with one of our experts today to start planning your move.