The UK, and in particular London, is one of the top spots for international real estate buyers and investors and, unlike some other countries, there are no restrictions on real estate ownership for overseas buyers. Property transactions can take time and may present some painful pitfalls along the way; so it is important to be well prepared before starting the process. When you buy a luxury property in London there are some easy steps that you can take to avoid disappointments but unfortunately these are often considered too boring or too simple to make a difference so many buyers fail to follow them. Consequently they make average or poor acquisitions and fail to protect their wealth.

Admittedly it takes time and energy to ensure that your purchase goes without a hitch, but a little forward planning will go a long way in saving you both money and stress . This is why we present you with a step-by-step guide on how to buy a luxury property in London (please consider that most of these principles also apply to the UK market in general).

1. Research the Neighbourhoods

If you are buying a property for your personal use we recommend that you begin by investigating your chosen area to make sure that it suits your style and expectations. Remember that you can always make changes to the house but not to the neighbourhood.

In London there are at least a dozen neighbourhoods where the average property price is €1 million or more making the choice rather wide. Aside from the main districts where foreigners buy such as Chelsea, Notting Hill or South Kensington, there are also the attractive but lesser-known areas of Maida vale, Hampstead, St John’s Wood, Marylebone etc, where there is a high international demand and good investment liquidity. The available property types also vary greatly between neighbourhoods; for example, the urban environments of Knightsbridge or Marylebone offer mainly apartments and luxury penthouses while districts such as Notting Hill, Chelsea or Little Venice have a higher percentage of larger homes and typical English townhouses.

Simply spending time in the area can give you a good idea of what it is like while researching related articles online will fill you in on important factors that will influence your daily life such as transport, nearby amenities, schooling and so on.

It is worth remembering that, unlike many big cities, London is ‘multicentric’ and many of the most important residential areas are often located far from the geographical centre and tourist attractions (obviously there are exceptions, for example Mayfair). This is reflected in the house prices and a property situated close to Leicester Square, just two steps from Piccadilly, can cost as much as half that of a similar property in Hampstead.

If instead you are buying an investment property it is probably more important to define the returns you require and the related risk profile, and it is generally a good idea to consider more than one area or neighborhood. It is also essential not to make the mistake of confusing your personal criteria with that of your prospective tenants – just because you would not live in a certain area or type of property does not necessarily mean it is a bad investment.

Some of the main questions to ask during the initial investigation stage are listed below:

• What is the neighbourhood like? Do you feel comfortable there? Who else lives there?
• What kind of local amenities are there? Check out the leisure facilities, activities, clubs, shops, public transport and so on.
• If you have children, research the local schools. Do they have a good reputation? Where do they stand in the league tables?
• What is the level of crime in the area? Check crime reports in the local newspaper or online statistics such as those supplied by the Home Office.
• How easy is it to reach your workplace?
• What council tax band will you be in?
• Is there sufficient car parking in the area?
• In what kind of condition are the other houses in your potential street? If they are in a state of disrepair or are badly maintained it could bring down the value of your property.
• Are there new development projects for the area?

Te Atrium will soon feature an Area Guides section containing in depth details of the main London districts. Register here to find out when they are online.

2. The Start of the Search Process

Once you have identified where you want to buy you can begin to search for your desired property. Here are some tips you may want to consider at the start of your luxury property search:

Start your search online: The vast majority of luxury properties that are on the market can be found on the internet (take a look at our luxury properties on www.teatrium.net) and are sold through estate agents. Most of the instructions are carried out by a sole agency while properties shared between agents tend to be those that they have problems selling.

Contact more than one agent: Agents can only show you the properties on which they have been directly instructed, therefore it makes sense to contact more than one agent to view a number of different properties in your preferred area. Remember that estate agents are employed by sellers and they are not too concerned about who buys the property as long as a high price is achieved for their client and the transaction is completed in the shortest possible time.

Off-market properties: Some of the most exclusive London homes are traded off-market. Having polled estate agents and property hunters we estimate that between 15% and 20% of prime London properties priced over £2 million are traded privately and this percentage may be even higher for more expensive properties. Later in 2012 Te Atrium will release a platform entirely dedicated to off-market transactions. Register on our site to be among the first to know.

Auctions: Auctions are another way to purchase London properties although they often require more renovation. Besides the lower cost, the advantage of buying a home at an auction is the transparency of the process; at an auction the other bids are public, so you do not end up bidding more than is necessary.

Do consider that at the end of the auction you will be expected to hand over a 10% deposit with a completion date usually 28 days later (although it may be possible to agree a longer date with the auctioneer beforehand). If you cannot get hold of the remaining sum in time for completion you risk losing your deposit.

Consider hiring a buying agent: If you are based overseas or are very busy it is difficult to view properties and it is hard to stay in regular contact with agents. As well as saving you time, qualified buying agents can use their contact networks to give you access to off-market properties, can potentially approach the owners directly, and can also help you with the valuation and negotiation process. If you intend to go down this route we advise you to contact more than one buying agent and choose the one you have the best rapport with. Also remember that local market knowledge is key!

The downside is that many buying agents tend to be expensive, so it is worth being aware of the costs involved beforehand. Despite the additional fees we believe that if a buying agent performs well and understand your needs, the investment will be worthwhile.

3. London Market Concepts

When considering a purchase there are some basic characteristics to bear in mind which are specifically related to the London and UK property market:

Freehold and Leasehold

There are two types of property in the UK, freehold, which are usually independent houses, and leasehold which are generally apartments or properties in shared buildings. When you buy a freehold property you buy it outright whereas in the case of leasehold you are effectively renting (or leasing) the property for a predetermined period of time (anything from a few decades to 999 years) and you are liable for extra service and maintenance charges. There may also be certain restrictions detailed in the lease which can be legally enforced if not adhered to.

Registered or Unregistered

In England and Wales, property can either be ‘registered’ or ‘unregistered’. All property or land that has changed hands or has been mortgaged since 1990 will have been registered with the Land Registry. Contrary to the impression given in some property listings, land that is unregistered is not also unowned. As the Land Registry points out, all land is owned by someone.

If property is registered, the title to the property is registered with the Land Registry and is guaranteed by the state. The owner has a ‘Land Certificate’ instead of the usual title deed. Buying a registered property is more straightforward than buying unregistered property.

If property is unregistered, ownership is not guaranteed by the state. The title can only be proved by a copy of the title deed, and your solicitor will have to check the property’s documentation over at least the last 15 years to certify it. With unregistered property, disputes over title are not uncommon.

When you buy an unregistered property, you must now register it for the first time with the Land Registry. This will take some time so the buying process will take longer than if you are buying a registered property and your solicitor/conveyancer’s fees will probably also be higher.

Gazumping

Gazumping is the term used when a seller accepts an offer from one potential buyer, but then accepts a higher offer from another buyer. If this happens the first buyer can either offer a higher price or accept that they have lost that property and continue looking. This practice occurs frequently in a market when house prices are quickly rising and there are more buyers than sellers (for instance when large bonuses are paid to the bankers working in the City) but it can happen in any market for the best properties or the ones with prices below market value.

The problem is that until contracts have been exchanged the sale agreement is not legally binding; once your offer has been accepted either you or the seller can pull out at any time until the exchange of contracts. Unfortunately agents are legally obliged to inform sellers of all offers made on their property, even after an offer has been accepted, but during this period between the acceptance of your offer and exchange you as the buyer spend a considerable amount of money on surveys, solicitor’s fees and confirmation of your mortgage offer.

To find how you can avoid being gazumped and other potential problems that could present themselves during the sales process take a look at our post on Completing the Transaction.

Once you have found the right property the next step is to make an offer. For more hints and tips read How to Buy a Luxury Property in London - Part 2: Making an Offer.

What tips would you give someone looking to buy a luxury property in London? Do you agree or disagree with any of our points listed here? Let us know your thoughts below.