Buying property in London: The ultimate guide

4. Where to buy property in London?

London is a city that covers 1,572 square kilometres. That’s more than New York and its 1,213 sq km, 15 times more than Paris, and almost twice as much as Berlin. So you can’t invest just anywhere to make your property profitable, especially if you want to rent it out on a seasonal basis, such as an Airbnb.

The best areas to invest in London are:

1. Camden
2. Kensington and Chelsea
3. Battersea
4. Westminster

Camden

Perfect for Airbnb rentals, Camden is the area to invest in the English capital. All amenities are immediately on your doorstep. Its market is the fourth most popular tourist attraction in the city.
Crossed by the canal, Camden is a lively area, in which its streets welcome Indian, Mexican, Japanese, Spanish, English or Vietnamese cooks.

Kensington and Chelsea

It’s time to buy! Kensington and Chelsea are the only two areas of the English capital to have seen a 0.1% fall in house values in 2022. This may not sound like much, but when you consider that areas such as Merton, Barnet and Havering have all seen increases of 11%, you can see why you should be in a hurry.
Especially since Kensington and Chelsea, located in the heart of London, are perfect for Airbnb vacation rentals. Kensington has breathtaking architecture, with buildings that house the UK’s heritage.

Battersea

Good for property investment in general, whether short or long-term, Battersea is coiled around a beautiful park alongside the Thames. Between its ultra-modern housing and Victorian buildings, Battersea is a link between the past and the future.
Battersea is home to the famous Royal Academy of Dance, and the famous coal-fired power station, with its four white chimneys.

Westminster

Do we need to introduce this area, home to the Palace of Westminster and the Cathedral? The historic centre of London, Westminster is undoubtedly an outstanding investment location. Perfect for seasonal Airbnb rentals, your flat will not be empty all year round.
In the heart of British politics, owning a property in the Westminster district is a sign of financial power beyond compare.

Hackney

Another perfect area for property investment in general, both short and long term, Hackney is located in East London. Popular and still somewhat affordable, Hackney retains a British style that gentrification has not yet taken away.
Hackney is still the area that is neither too far nor too close to central London. Extremely well served by transport, Hackney is also the artists’ quarter, a place of creativity and celebration.

5. What are the pitfalls of buying property in London?

As a foreign buyer, you are easy prey for scammers of all stripes. The scam can be all the more complex to identify as the scammer may be playing on old practices that are no longer in use, or very rarely. To avoid bad experiences, make sure you check:

1. The seller’s title
2. The BIP
3. The real estate company you are transferring the money to
4. Any mortgages on the property
5. The protection of your property

When to check the title?

Historically, the title deed was produced by the seller once the sale contract was signed. This is no longer the case. Today, a seller must create the title for you before the contract is signed, especially before you have paid any money to the seller.
We discuss what you need to check in Section 8.

Checking the PIF (Property Information Form)

When selling a property, the seller is required to complete a PIF. The PIF contains a number of questions, two of which are particularly important in the section entitled “Disputes”:

Are you aware of any disputes concerning this property or any neighbouring property?

Have you had any negotiations or discussions with neighbours which might affect the ownership of this property?

This can range from disputes with neighbours over noise (Doe v Skegg, 2006) to a promise to use part of the land, or the whole property, to a third party (Thorner v Major, 2009). It may happen that the sellers, despite the falsity of their statements, answer “no”. You will then have to prove, in the event of a subsequent dispute, that the seller lied because they knew the situation.
Therefore, rather than waiting until you have a problem, do a little neighbourhood investigation before you buy a property in London.

Property company impersonation

This fraud has already cost £320 million a year. A scammer intercepts your emails and pretends to be the property company to whom you are paying the money to buy your property.
At present, only six UK banks protect you from this through a system called COP, for confirmation of payment:

• HSBC
• Barclays
• Lloyds
• RBS
• Santander
• Nationwide Building Society

The mortgage scam

We are not going to go into detail here, as this fraud is not to your detriment, but rather it is you who is trying to carry it out. So be aware that if you are considering buying a property in the UK, the solicitor handling the case will be obliged to break business confidentiality is a key sign on running into a mortgage scam.

Once purchased, protect your property

The new trend is identity theft, made particularly easy by the dematerialisation of procedures. Because you can’t protect yourself against it, you should at least protect your property, especially if you are a foreign investor renting out your property.
To do this, two protections are possible and cumulative:

• The alert on the land register
• Confirmation of your identity, for any change, by issuing a certificate

1. You can set up an alert, which will be sent to you by e-mail as soon as a change is made to the land register. You can be alerted on 10 different properties, free of charge, by visiting this site.
2. Because this alert does not prevent a change to the register, you may decide to make any change conditional on the issue of a certificate by a conveyancer or solicitor, i.e. legal advisers specialising in property law.
To do this, if you do not live in your property, which will be the case for an investment property, you can complete a form to be mailed to the Citizen Center (RQ), to protect your property from the change of ownership. You can find this form here.

Understanding the Airbnb 90-day rule

If your plan is to buy property in London as a second home, and you wish to rent it out while you’re abroad, have in mind that to regulate the sharing economy in London, Airbnb introduced a 90-day lettings limit. The idea was welcomed by locals and today Airbnb automatically restricts bookings to 90-days a year.

Beware of property debts

In the UK, it is not compulsory to mention the existence of a mortgage on the property in the sale agreement.
However, to find out whether the property you are considering buying is mortgaged, you only need to check the title deed at the Land Registry.
For unregistered properties, you need to check the release form in the title deed. For more details, go to point 8 of this article.

6. Why buy property in London?

In 2021 alone, property prices have risen by 9.2%. Over the next ten years, projections speak of a further 17% increase in the UK property market.
Over the last ten years, the London property market has grown by a solid 5.5% per annum. When related to property prices, these increases are enormous. Combined with short-term rentals, via platforms such as Airbnb, not only can property investments in London yield a monthly income, but also a handsome capital gain on the sale.

7. Is it worth buying a property in London?

Yes, it is definitely worth buying a property in London. The UK property market is doing very well, and London is attracting investors from all over the world. 48% of properties sold in London in 2022, were to foreign investors.
Putting a property up for short-term rental in London means entering a market that includes 30 million tourists every year. This is the equivalent of being able to offer a flat for rent to all the inhabitants of the Netherlands and Belgium combined.
If you’re worried about vacancies, you won’t have that problem in London.

8. Can foreigners buy property in London?

Yes, but be warned, property rights in Britain are a bit peculiar. While the owner of a parcel of land owns the soil, subsoil, and even the airspace above his property, to the extent necessary for the enjoyment of the property (Bernstein v. Skyviews and General Ltd, 1978), two different property rights must be distinguished:

• “Freehold”
• Leasehold

In addition, there is the type of title:

• Registered land
• Unregistered land

In 2016, almost 18% of residential purchases in London were made by foreign investors, and in four main areas:

• London City
• Westminster
• Kensington
• Chelsea

What is freehold?

Freehold is a virtually absolute property right. It has three characteristics. It is:

• Transmissible by succession
• Simple: can be owned by anyone
• Absolute: not limited in time

So why is it only almost absolute? Because, in Britain, all land belongs to the crown.

What is a leasehold?

Leasehold has two characteristics. It is:

• Limited in time
• Absolute, within the time limit provided

When you buy a leasehold property, you have to pay a monthly rent to the freeholder, who is the owner of the land. The length of the lease can vary, usually ranging from 90 to 120 years. In other words, under this status, you will never really own the property, let alone your children, as the property is not transferable.
When it comes to selling the house, the length of the remaining lease can have a negative impact on the sale price. Few people want to buy a property in London with only 20 or 30 years left on the lease.

Registered and unregistered land

It’s not as simple as it sounds. Land registration does not mean that the title to the land is registered, but that the titles, which also correspond to third-party rights of enjoyment over that land, are registered. In other words, you buy a piece of land, and your neighbour has the right to come and cut wood on it for his benefit.
Registration in the land register allows you to see at a glance whether such titles exist. The land register is based on three principles:

• The Mirror Principle: everything about the land is recorded in the register
• The Curtain Principle: the buyer does not have to consult anything other than the register
• The Insurance Principle: any error in the register leads to compensation for the injured party

Freeholds are normally all registered. In contrast, for leaseholds, the principle is that only leaseholds with a term of more than seven years should be registered.
Fortunately, most properties are now recorded on this register. Therefore, no third party can, in principle, challenge your title to the property you are buying if it does not appear in the land register (the curtain principle).

What to check when buying unregistered land

• The title deed
• The chain of ownership
• The certificate of probate
• The release form
• Stamp duty
• Charges

1. If you are buying a property that is not registered in the Land Registry, you will need to ask the landlord for his title deed. This is a document that gives the full ownership history of the property you are buying.
2. Documents relating to all previous owners must be present. You will then need to check each element in this chain.
3. Where previous owners have died, the transfer to heirs is evidenced by a Grant of Probate.
4. In the case of mortgages on the property, checking the ‘vacating receipt’ will enable you to verify that all mortgages have been paid off.
5. Each assignment must have been subject to stamp duty. This is verified by the stamp on the document from the Land Registry and Inland Revenue.
6. Finally, you will need to check that the property is not subject to any encumbrances (preservation of trees on the property, right-of-way agreements, etc.). To do this, go to a register which can be accessed here.

9. Is now a good time to buy property in London?

Yes. When it comes to investments, the right time is always now. If you have the money at your disposal to buy a property in London, don’t hesitate for a moment. Waiting for a downturn in the property market is likely to keep you waiting for a very long time. The problem is that the good ones are always spotted once they’ve passed.
As you have read in this article, all the indicators are green to see the value of your property increase over the next decade. The return on investment in short-term rentals in one of the world’s most visited cities will also be there.

10. Investing with GuestReady in London

Investing abroad is always a bit anxiety-inducing. You wonder how you’re going to manage short-term rentals, the most profitable ones. With so many people coming and going, you think you’d have to be on the ground, or have someone you trust in town to look after your properties.
Well, there is such a thing. With GuestReady, you can invest in London without the worry of having to travel to the UK capital to manage your property affairs. GuestReady takes care of everything:

1. Interior design and photography of the property
2. Publishing the advert on the most profitable sites, such as Airbnb
3. Optimising the placement of your advert for search engines
4. 24/7 communication with your clients
5. Reservation management in 15 languages
6. Checking in and out of the apartment
7. Cleaning of the flat after each departure
8. Availability of guests for any request

GuestReady allows you to invest in London without having to worry about managing your property in the UK capital. GuestReady is your trusted team.

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