Despite the recent political and economic turbulence, the demand for pied-à-terre properties in London – particularly among international buyers – is higher than ever. Our London specialist, James Burridge, explores which areas of the city offer the best value, how to maximise the benefits of a London pied-à-terre and how to avoid paying over the odds.
The Labour government’s change in taxation rules for non-UK domiciled individuals and its increased surcharges on second homes has, of course, impacted the market. Yet property in London remains a trophy asset – with buyers still drawn to the city for its world-class lifestyle, its status as a global hub and the unique history that a home here offers.
The Unwavering Appeal of London
We are working with growing numbers of overseas buyers – particularly from America – who are spending more time in London and are looking for a comfortable base in the city for themselves and their families. Buying property in London is no longer seen as a profitable short to mid-term investment in the same way that it once was, thanks to the steep rise in stamp duty, cooling price growth and the wider economic slowdown. That said, with uncertainty comes less competition; there is some fantastic value in the market right now for those with a long-term view.
This rise in demand for a London pied-à-terre is very much a lifestyle choice; for work, for family, for education, for its culture and connectivity. London is a safe, well-regulated market, which makes it a magnet for buyers who value long-term security.
The US dollar’s strength has further accelerated demand, among American clients as well as dollar-based buyers from the Middle East. I recently worked with an American client whose husband works for a major bank. They are based on the West Coast of the US so it’s a long journey to London and they spend more than just two or three nights at a time here. Previously relying on One Fine Stay when visiting London, they were tired of the transient nature of short-term rentals and wanted something more permanent where they could leave their belongings and immediately feel at home. We brought a lovely flat near Sloane Square, overlooking green space.
Another recent client from America often comes to London to see her daughters – one is in further education here and the other was studying here and has stayed in London to work. We bought a beautiful apartment in Notting Hill to avoid the hassle of booking with the likes of Airbnb every time she visited.
Pied-à-Terre Non-Negotiables
Pied-à-terre buyers want immaculate, turnkey properties. They aren’t interested in tackling a renovation from overseas, particularly on a leasehold apartment. Yet only about 10-20% of the properties we see are immaculate – the rest require significant work, whether that’s updating kitchens and bathrooms, or a complete renovation. This means that buyers either need to be patient or consider expanding their search areas beyond the most in-demand areas of Marylebone, Kensington and Notting Hill, known for its patchwork of communal gardens.
With a clear shortage of immaculate stock at the higher end of the market, it’s imperative that buyers stay ahead of the competition. Our experience and connections ensure that we gain unparalleled access to the very finest homes and 80-90% of the properties that we find for our clients are off-market.
London is seen as a hub and another key prerequisite for many London pied-à-terre buyers is ease of access to Heathrow. The second busiest airport in the world after Dubai, Heathrow is a gateway to Europe and we see many people from America or Asia choosing to stay in London before they travel on into Europe or elsewhere.
We recently worked with a Japanese client who was planning more frequent visits to Europe. We helped him to buy a fantastic apartment in a prestigious London development with easy links to Heathrow to act as his European base.
The Best Value London Pieds-à-Terre
London property prices have dipped since the last peak in 2014 and there is some good value to be had in the market right now – the best we’ve seen in a decade. But the cost of purchase is high and it’s impossible to tell what the political landscape will look like after the next general election in 2029. For now, buyers have to maintain a long-term view; they need to be prepared to hold on to their property for 10 years plus to make a good return on their investment.
While clients are often drawn to well-known areas like Notting Hill, Marylebone and Kensington because of their ease of access to Heathrow and their status, it’s definitely worth exploring further. There is comparatively good value to be had in nearby Sloane Square and Belgravia, which also offer fantastic architecture, good transport links and well-managed buildings with solid infrastructure.
Typically, it takes a year from the start of the search through to completion, in part because there is a shortage of suitable properties. Why? The cost of stamp duty in the UK is a large part of it – a significant 12% for properties over £1.5m, 17% for second properties in that price bracket. Unless you are a needs-based seller who is upsizing or downsizing, divorced or bereaved, there is little motivation to move. The volume of stock shrinks each year as the cost of trading gets higher.
While we are seeing non-doms leaving the UK for the likes of Dubai or Italy in reaction to the Labour government’s new rules, we are seeing many of them holding on to their London property. They may still have children at boarding school here, or they may be biding their time until the next general election when the rules could change again. If they sell now and decide to come back in four years, it’s likely to be a costly move.
Our specialist knowledge of London’s prime residential market not only unlocks access to some of the most exceptional homes before anyone else, but also ensures that you are not overpaying for it. This can make a huge difference in the current climate, as we regularly see people paying vastly inflated prices for a London pied-à-terre.
Not only are we highly experienced, we act with discretion and care to handle all of the intricacies of the buying process in London, wherever you are in the world.
James Burridge is our specialist Partner in London.
