London is currently a buyers’ market. There is more stock available, sellers are negotiating, and mortgage conditions have eased from their peak. For an investor holding ten years or more, the conditions are favourable. For anyone needing to sell within three years, they are not, because UK transaction costs are high enough to eat a short-term gain entirely.
There is a version of this article that tells you London is always a good buy. That version is written by people who need you to transact this quarter.
This one sets out the actual conditions, the costs that catch overseas buyers out, and the situations where waiting is the better decision. Sherwoods has been advising property buyers since 1988, with an office in Kensington, so we have watched several of these cycles turn.
Why now could be the right time to invest in London property
Buyers have leverage they have not had in years
More stock on the market and longer selling times shift the balance of a negotiation. Sellers who need to move are accepting below asking, and buyers who are prepared and proceedable are the ones getting the discount.
This is the most important condition in the current market, and it is temporary by definition. Buyers’ markets do not persist. They close when either supply tightens or confidence returns, and neither gives much warning.
The practical effect is that right now, the return is being made in the negotiation rather than in the timing. A buyer who secures a meaningful discount has locked in value on day one, regardless of what the index does next year.
Financing has become more workable
Mortgage rates have come down from their peak as confidence has returned. For leveraged investors this changes the arithmetic materially, because debt cost is the largest single variable in a buy-to-let model.
Two cautions. Rates easing is not the same as rates being cheap by historic standards. And the direction of travel is not guaranteed. Stress-test any purchase at a rate meaningfully above what you are quoted, not at the quoted rate itself.
The demand fundamentals have not changed
London remains a global financial centre. It continues to attract international businesses, professionals, students and capital, and that demand feeds both the sales and the rental market.
This is the part of the argument that has held through every cycle since we opened in 1988. The specific numbers move. The structural demand does not.
Rental demand continues to outstrip supply
Tenant demand across much of London exceeds available rental stock, supporting income for landlords holding long term. For an investor prioritising yield over capital growth, that matters more than where the price index sits in any given month.
Where regeneration is actually happening
Most articles stop at the word “regeneration.” The specific schemes worth understanding, and how they differ:
The Elizabeth Line corridor. Stations along the route have seen sustained demand shifts since opening. Areas further out on the line still price below what the connectivity now justifies.
Old Oak Common. The HS2 interchange project is the largest regeneration scheme in the capital. The effects are long-dated rather than immediate, which suits patient capital and punishes anyone expecting a quick repricing.
Nine Elms and Battersea. Now largely delivered. That changes the play from speculative to yield-driven, and means the easy capital growth has already been captured.
Barking Riverside, Thamesmead and the Royal Docks. Eastern regeneration corridors at materially lower entry prices than central London, with correspondingly higher variance.
Brent Cross Town. A long-horizon north London scheme, still early in its delivery cycle.
Each carries a different risk profile and a different required holding period. Anyone describing them interchangeably as “regeneration opportunities” has not looked closely.
The case for waiting, and who should
Any adviser who will not tell you this is not advising you.
You need to exit within three years. Stamp duty, legal fees, agency fees on sale and the spread between buying and selling price mean a short hold is likely to lose money even in a flat market. London property is a ten-year instrument.
You are buying purely on the expectation of rapid capital growth. The conditions creating the buyers’ market are the same conditions suppressing price growth. You cannot have the discount and the immediate appreciation at once.
Your mortgage is only affordable at today’s rate. If a modest rate increase breaks your model, the model is too tight.
You have not modelled the running costs. Service charges on new-build London stock have risen sharply and are the single most common source of buyer regret we see. Ground rent escalation, cladding remediation exposure and energy efficiency requirements for rental property all carry real cost.
You are an overseas buyer who has not priced the surcharges. See below, because this is where the numbers change most.
What overseas buyers pay beyond the purchase price
The asking price is not the number that matters. These are the costs to model before you offer:
| Cost | What to know |
|---|---|
| Stamp Duty Land Tax | Charged in bands on the purchase price |
| Non-UK resident surcharge | An additional percentage on top of standard SDLT for buyers not resident in the UK |
| Additional dwellings surcharge | Applies if you already own property anywhere in the world, not just in the UK |
| Legal fees | Conveyancing, higher for leasehold and for overseas buyers |
| Survey | Strongly advised on any older or leasehold property |
| Mortgage arrangement fee | If financing |
| Annual service charge | Varies enormously between buildings. Check before offering, not after |
| Ground rent | Leasehold only. Read the escalation clause carefully |
| Income tax on rental income | The Non-Resident Landlord Scheme applies |
| Capital gains tax on disposal | Applies to non-UK residents on UK property |
Current rates and thresholds are published at gov.uk and change with each Budget. UK property taxation for overseas buyers has been revised repeatedly in recent years, including changes to the treatment of non-domiciled individuals. Take independent advice from a qualified UK tax adviser before you commit.
The gap between headline price and all-in cost is wider in the UK than in most markets internationally. Buyers coming from the Gulf are often surprised by it, and it is the single most useful thing to understand before you start viewing.
Where in London, at what budget
Rather than a list of areas, the useful framing is what each tier actually buys you.
Prime central. Knightsbridge, Belgravia, Mayfair, Chelsea. Capital preservation and prestige rather than yield. Gross yields here are typically the lowest in the capital, and buyers in this tier are usually optimising for something other than income.
Prime fringe. Kensington, Notting Hill, Fulham, St John’s Wood. A better balance of growth and yield, with a deep and liquid resale market.
Zone 2 to 3 established. Clapham, Islington, Hackney, Wandsworth. The strongest tenant demand in the capital and the most liquid resale market for a typical investor.
Regeneration and outer. Barking Riverside, Thamesmead, Croydon, Woolwich. Highest yields, highest variance, longest holding period required.
Yield and capital growth pull in opposite directions across these tiers. Decide which you are buying before you decide where.
Frequently asked questions
Is now a good time to invest in London property?
Conditions currently favour buyers, with more available stock, softer pricing and greater negotiating power than in recent years. It is a strong entry point for investors holding long term, and a poor one for anyone needing to sell within three years.
Can foreigners buy property in London?
Yes. There are no restrictions on foreign nationals buying UK property and no residency requirement. Overseas buyers do pay a stamp duty surcharge and are subject to UK tax on rental income and on capital gains when they sell.
Do I need a UK bank account to buy property in London?
Not strictly for a cash purchase, though it makes the process considerably easier and is normally required if you are financing.
Can overseas buyers get a UK mortgage?
Yes, from lenders offering expat and international mortgage products. Deposit requirements are typically higher than for UK residents and the application process takes longer.
Is buying property in London a good long-term investment?
London has historically delivered long-term capital growth alongside consistent rental demand, supported by its position as a global financial centre. Past performance does not guarantee future returns, and high transaction costs mean it suits long holding periods rather than short ones.
What is the best area to invest in London?
There is no single best area. Prime central suits capital preservation, zone 2 to 3 suits balanced growth and yield, and outer regeneration areas suit higher-yield strategies with longer horizons. The right answer depends on whether you are buying for income or for growth.
Should I buy leasehold or freehold in London?
Most London flats are leasehold. What matters is the length of the lease, the ground rent escalation clause and the service charge history. A short lease or an aggressive escalation clause can undermine an otherwise sound purchase.
Talk to us before you shortlist
The difference between a good London purchase and a mediocre one is rarely the area. It is the specific building, the lease terms, the service charge history, and how hard the negotiation was.
Sherwoods has been advising property buyers since 1988, with offices in Kensington and Dubai. We work with international clients looking to invest in London property who want the market explained properly, including the costs that never appear in the asking price.
Current London opportunities include The Lancelot Collection in Knightsbridge and One King’s Road Park. If a property is not worth what is being asked for it, you will hear that from us too.
- UK: +44 20 3962 9980
- UAE: +971 4 355 0094 or +971 50 591 5762
- Email: info@sherwoodsproperty.com
Tell us your budget, your holding period and whether you are buying for income or for growth, and we will come back with a shortlist worth your time.
Sherwoods Property, since 1988.
This article is general information and not financial, tax or legal advice. Market conditions and UK tax rules change. Confirm current stamp duty rates and tax treatment at gov.uk and take independent advice from a qualified UK tax adviser before purchasing.
