Is London property Investment a good choice in 2023?
While the recession worries continue to simmer, investments that focus on capital preservation and stable return began to gain investors attention. London, a global city with great stability and liquidity, has always come top in the buzzing buy-to-let market. Let’s explore everything you need to know about property investment in London with this expert guidance.
Property Investment in London 2023
Statistically speaking, London offers a very profitable market for property investments.
Even during the economic downturns, the capital’s monthly rents for new private tenancies still grew by 15% at a very rapid rate, and the annualized rental growth stays well above the national average of 11%. According to Andy Halstead, HomeLet and Let Alliance CEO, London’s housing prices shall remain in an uptrend throughout 2023.
In case you are hoping to have a clearer picture of how property investment in London has performed, the below table compares the average rental values in London to the country’s other regions:
|Region across UK
|East of England
|Yorkshire & Humberside
Factors to Consider when Investing in London Properties
To guarantee a profitable investment in the London property market, informed decision-making is crucial. Here are 5 factors you should take into account when investing in London properties.
1. Foreign Taxes on Foreign Properties
While London has long been an attractive place for overseas property investment, you should pay particular attention to the taxation. Apart from the one-off Stamp Duty Land Tax (SDLT) you are obligated to pay when buying the London property, you are also required to pay Income Tax on a yearly basis if you have earned any rental income from London properties, not to mention other taxes such as Ground Rent, Council Tax, Capital Gain Tax and Inheritance Tax.
2. Mortgage Payment Structure
If you are looking for a mortgage to land a property in London, there are many types of options available in the market. Be sure to clarify the mortgage principal, interest, taxes and insurance before getting one, it is of utmost importance to calculate how much your monthly mortgage payment will be so as to safely budget for your property investment in London.
3. Overseas Property Management
Investing in London property can be challenging, especially when you are living abroad. Therefore, you might need to hire professionals to help you take care of the maintenance tasks, for example, to inspect the house regularly, figure out problems with maintenance, and have a system to find and screen potential tenants.
4. Exchange Rates
When it comes to London property investment, you often complete the transaction in British pound instead of Hong Kong dollar, meaning you need to be aware of the currency risk involved. Looking back to 2022 when the pound had once been weakening sharply, if you were renting the London property in British pound during that period, such a big shift in currency exchange rates can potentially cause a direct impact on your property financing.
5. Developer’s Background
If you are interested in new builds and developments in London, it is highly recommended to research the developer before signing a purchase agreement. Some developers might lure overseas investors by making misleading or false representations, you should therefore do necessary homework in order to make sure the developers are capable of finishing the project within budget and on time.
Is It Worth Investing in London Property?
In general, London is a good place for property investment.
Similar to Hong Kong, London is one of the leading financial hubs with unique advantages and unlimited opportunities, which explains why there has always been a strong demand for property investment in London.
With its strong economy, diverse culture as well as higher average wage, London serves as an ideal destination for property investors that want to build wealth and meet their financial goals. As of October 2022, the demand for privately rented homes in London has maintained a strong momentum, plus there has been an exceptional rental growth in prime London housing markets, as concluded in the London Housing Market Report.
In other words, investing in London property can be a great way to capture the city’s rising trends and leverage them for diversifying your investment portfolio.
The Best Area for Investment in London
Although the London property market is well recognised as the most coveted investment markets in the United Kingdom, it has been further assigned into 6 different zones, among which some are hailed as the “wealthiest neighborhoods” and enjoy higher return on investment (ROI) .
Panda Residential has put together the housing prices across various zones in London over the past 12 months:
|Average House Price
|肯辛頓和車路士 (Kensington and Chelsea)
|City of Westminster
|City of London
|Hammersmith & Fulham
|Richmond upon Thames
Other than evaluating the property investment potential on a zone-level, you can also consider taking a regional approach.
|Average House Price
|Average Gross Rental Yield
|Capital Growth Since 2011
*All statistics have been calculated and taken from Zoopla’s house price database
More Tips on London Property Investment?
It is never easy to invest in property overseas and you might have already been overwhelmed by the above tons of information.
Whatever your financial goals are, Panda Residential is here to help you make a decision that will be of the greatest benefit to you. We are dedicated to providing a uniquely tailored service for Hong Kong and overseas investors, offering an unrivaled ability to represent their interests in the acquisition of London high-street property.
We are your single best way to enter London’s Property market.