Next Stop: Buying a second home in London

Key Summary: Thousands of Londoners are choosing to keep their property when they move rather than sell, turning their home into a rental investment while buying elsewhere. It's a smart strategy, but the 5% stamp duty surcharge, buy-to-let mortgage requirements, landlord obligations under the Renters' Rights Act, and capital gains tax exposure all need careful planning. This guide breaks down the costs, mortgage options, letting strategies, and practical steps to help you decide whether keeping your London property is a smart decision..

Introduction

London leavers face a difficult choice. Maybe you've outgrown your flat, the kids need a garden, or retirement in the Cotswolds is calling. But selling your London home feels like giving up a piece of your future, severing your connection to a city where property values and rental demand show no signs of fading.

You're not alone in weighing this up. Hamptons' latest research shows that buying a second home in London (or keeping one when you leave) is becoming an increasingly considered strategy, even as London outmigration trends have slowed to their lowest rate in over a decade. Just 5.3% of homes bought outside the capital in early 2025 were purchased by Londoners. But for those who do move, holding onto a London property offers both financial upside and future flexibility.

The question isn't whether it's possible. It's whether the numbers work for you. This guide covers how stamp duty, mortgages, tax, and lettings all fit together when you buy a second home while keeping your London property, and how Hamptons can support you on both sides of the move.

Why are Londoners keeping their properties when they move?

Many Londoners who relocate outside the capital are choosing to hold onto their property rather than sell. London's long-term price growth, strong rental demand, and personal connection to the city make keeping a property an increasingly popular strategy for those moving to start families, retire, or gain more space.

The days of pandemic-era lifestyle relocations are largely over. Hamptons' research shows that today's London leavers are making more pragmatic, affordability-driven decisions. They're not fleeing the city on a whim. They're carefully planning a move that lets them keep a financial foothold in the capital while building a new life elsewhere.

What's particularly striking is the shift in who's leaving. Inner London leavers now account for a record 30% of movers, up significantly from previous years. These are often homeowners sitting on strong equity positions in prime or zone 2-3 locations, exactly the kind of properties that let well and hold their value over time.

The bottom line: for many, keeping a London property means maintaining exposure to one of the world's most resilient housing markets. It's a rental income stream, a long-term investment, and a bolthole if circumstances change. Selling, by contrast, means buying back into London later at a potentially much higher price.

That financial logic only works, though, if you understand the costs involved. And the biggest one hits before you even pick up the keys on your new home.

Stamp duty, tax, and the true cost of a second home

Buying an additional property in England means paying a 5% stamp duty surcharge on top of standard rates, plus potential capital gains tax if you sell later. On a £400,000 second home, you could face around £30,000 in SDLT alone. Understanding these costs upfront is essential to making the numbers work.

The surcharge was increased from 3% to 5% in October 2024, and it had a significant impact on the buy-to-let and second home market. Research, reported by Mortgage Solutions, found that the surcharge has contributed to 2.2 million fewer privately rented households over the past decade. For individual buyers, the numbers are stark: a £350,000 buy-to-let property now attracts £25,000 in SDLT, compared to just £2,500 for a first-time buyer purchasing at the same price.

Stamp duty on a second home: what you will pay

Here's what SDLT looks like at three common price points when the 5% surcharge applies:

You can check your exact figure using Hamptons' stamp duty calculator. It's worth noting that if you're replacing your main residence and sell your previous home within 36 months, you can apply for a refund of the surcharge from HMRC.

Council tax on a second property

Council tax is another cost that's easy to overlook. From April 2025, local authorities in England have the power to charge a premium of up to 100% on second homes. That means you could end up paying double the standard council tax bill on your London property if it's no longer your primary residence.

Not every council has implemented this yet, but many are moving in that direction. Check with your local authority before committing to keeping your property, as this can add several thousand pounds a year to your running costs.

Capital gains tax when you sell

If your London property is no longer your main residence, any increase in value will be subject to capital gains tax when you eventually sell. The current rates are:

• Basic-rate taxpayers: 18% on gains above the annual allowance
• Higher-rate taxpayers: 24% on gains above the annual allowance
• Annual tax-free allowance: £3,000 for the 2025/26 tax year

CGT can take a significant bite out of your profit, particularly on London properties that have seen substantial growth. It's worth modelling the numbers with a tax adviser early on, so there are no surprises down the line.

The tax picture is one side of the equation. The other is how you structure your mortgages to make two properties affordable.

Mortgage options: keeping your London home and buying another

When you own one property and want to buy another, your mortgage setup becomes the linchpin of the whole plan. The right structure can make two properties comfortably affordable. The wrong one can leave you stretched or stuck.

There are three main routes, and the best one for you depends on whether you plan to let your London home, keep it empty, or test the waters before committing.

Let-to-buy: how it works

Let-to-buy is the most common route for Londoners who want to keep their property and move on. Here's how the process typically works:

1. Get a rental valuation on your London property to confirm expected income.
2. Remortgage your London home onto a buy-to-let product, releasing equity in the process.
3. Use the released equity as a deposit on your new primary residence.
4. Apply for a standard residential mortgage on the property you're buying.
5. Let your London property and use the rental income to cover the buy-to-let mortgage.

The key advantage is that you unlock the equity you've built in London without selling. Hamptons' guide on using equity to buy another property walks through the mechanics in more detail.

Buy-to-let mortgage requirements

If you're remortgaging onto a buy-to-let product, lenders will typically require:

• A minimum deposit of 25% equity in the property (some lenders require more)
• Rental coverage of 125-145% of the monthly mortgage payment
• A satisfactory credit profile and evidence of income, even if rental income covers the mortgage
• The property to meet minimum EPC standards, usually a rating of E or above

Lenders will also stress-test your affordability across both mortgages. They want to see that you can manage repayments on your new home even if your London property sits empty for a period.

Consent to let vs full remortgage

If you're not ready to commit to a full buy-to-let remortgage, consent to let is a useful halfway step. This is where your existing residential lender gives you temporary permission to let your property while keeping your current mortgage in place.

It's quicker to arrange and avoids the cost of remortgaging, but it comes with limitations. Consent is usually granted for 12 months at a time, and your lender may charge a higher interest rate or a one-off fee. It's a good option for testing whether being a landlord suits you before making a permanent switch.

For a second residential mortgage (keeping your London home without letting it), lenders will assess your ability to service both loans from income alone. This is a tougher affordability test and typically suits higher earners who don't need rental income to make the numbers work.

Whichever route you choose, speaking to a specialist mortgage broker early is essential. Hamptons' mortgage partners at Capital Private Finance can advise on the right structure for your situation.

Once your mortgage is in place, the next question is what's actually involved in letting out your London home.

Letting out your London property: what you need to know

If you're moving out of London but keeping your property, letting it out can cover your mortgage and generate income. London's average rental yield sits between 4% and 6%, with outer boroughs often delivering the strongest returns. But becoming a landlord brings legal and financial obligations you need to plan for.

London rental yields: what to expect

Rental yields vary significantly across the capital. As a rough guide:

• Outer London (Barking, Thamesmead, East Ham): gross yields of 5-6%, driven by lower purchase prices and solid tenant demand
• Mid-zone London (zones 3-4): gross yields of 4-5%, balancing reasonable capital values with competitive rents
• Inner London (zones 1-2): gross yields of 3-4.5%, where higher property prices compress returns despite strong headline rents

These are gross figures before mortgage payments, management fees, and maintenance. Net yields will be lower, so it's important to model your costs carefully. You'll also need to account for void periods between tenancies, which typically run at 2-4 weeks per year in London.

Landlord obligations under the Renters' Rights Act

The Renters' Rights Act 2025 introduced significant changes that every new landlord needs to understand. The headline shift is the abolition of Section 21 no-fault evictions, meaning all tenancies are now periodic and you can only regain possession using specific grounds.

Beyond that, your core obligations as a landlord include:

• Gas safety certificate renewed annually by a registered engineer
• Valid EPC at a minimum rating of E (with tighter standards expected in future)
• Deposit protection in a government-approved scheme within 30 days
• Right to Rent checks confirming your tenant's legal right to live in the UK
• Electrical safety inspection every five years
• Smoke and carbon monoxide alarms on every floor

Depending on where your property is located, you might also need to consider Local Authority Licencing Schemes. There are some neighbourhoods where all rented properties must have a Licence, no matter the type of tenant. Failing to meet your obligations can result in fines, repayment orders, and restrictions on your ability to serve notice.

Short lets vs long-term tenancies

If you're considering platforms like Airbnb rather than a traditional tenancy, be aware that London has strict rules. Entire-home short lets are capped at 90 nights per year without planning permission. Exceed that limit and you're technically in breach of planning regulations.

For most London leavers, a long-term tenancy offers more predictable income, lower management overhead, and fewer regulatory headaches. Short lets can deliver higher nightly rates, but the void periods, cleaning costs, and compliance burden often erode the yield advantage.

Using a letting agent vs self-managing

Managing a London rental from outside the city is doable, but it adds complexity. Midnight boiler breakdowns, tenant queries, and compliance paperwork are all easier to handle with a professional on the ground.

Our lettings and property management service offers three tiers depending on your personal circumstances including full management, rent collection and tenant find only. We let a property every 11 minutes, manage 14,700+ tenancies annually, and collect £345+ million in rent each year for our UK landlords, keeping void periods low and arrears significantly below market average. Our buy-to-let blog is also worth bookmarking for ongoing landlord insights.

Don't forget the tax side of rental income either. You can deduct allowable expenses like letting agent fees, maintenance, and insurance from your rental profits. Mortgage interest relief has been replaced by a 20% tax credit, which is less generous than the old system but still worth factoring into your calculations.

With the lettings side covered, it's worth stepping back to look at the bigger picture: does London property still stack up as an investment?

Is it worth buying a second home in London? The investment case

London property has underperformed the rest of the UK over the past decade, with prices rising just 23% compared to 55% elsewhere. But this relative stagnation may present an opportunity. Strong rental demand, limited supply, and London's status as a global city mean the long-term investment case remains solid for those buying at current valuations.

This section is for readers coming at the question from the other direction: you live outside London and you're considering buying a property in the capital as a second home, perhaps a weekday pied-à-terre for work, a long-term investment, or both.

The numbers paint a mixed short-term picture. Our research shows that London prices have grown just 8% over the past five years, compared to 26% outside the capital. Cushman & Wakefield's 2026 residential forecast suggests this trend is likely to continue in the near term, with UK-wide house price growth expected to outpace London again this year.

So why would you buy into London right now?

The counter-argument is compelling. London's relative underperformance means you're buying at a lower point in the cycle compared to many regional markets. The capital's fundamentals haven't changed: global demand, constrained supply, world-class infrastructure, and a rental market that consistently outperforms most UK cities on occupancy rates.

There's also the infrastructure story. The Elizabeth Line has already boosted values along its corridor, and longer-term projects continue to reshape connectivity across the capital. For investors with a 10-15 year horizon, buying into London at a point of relative value could prove to be well-timed.

The honest assessment is this: London isn't the place for quick gains right now. But if you're looking for a stable, long-term asset with strong rental demand and deep liquidity when you eventually sell, it remains one of the most dependable property markets in the world.

Whether you're keeping a London home or buying into one, the practical steps are largely the same. Here's how to put the plan into action.

Practical steps: how to buy a second home while keeping your London property

If you've weighed up the costs and decided that keeping (or buying) a London property makes sense, here's how to move from decision to completion:

1. Define your goal. Are you keeping your London home as a rental investment, a future bolthole, or both? Your answer shapes every decision that follows, from mortgage structure to letting strategy.
2. Get a financial health check. Map out your income, equity, existing mortgage balance, and monthly outgoings. You need a clear picture of what you can afford across two properties.
3. Speak to a mortgage broker. A specialist broker can walk you through let-to-buy, buy-to-let remortgage, or second residential options and stress-test your affordability. Our mortgage partners at Capital Private Finance can help structure the right approach.
4. Understand your tax position. Calculate your stamp duty liability using our stamp duty calculator, and speak to a tax adviser about CGT exposure and rental income tax.
5. Prepare your London property for letting. If you're planning to let, arrange a gas safety certificate, check your EPC rating, set up a deposit protection scheme, and ensure the property meets all current landlord requirements.
6. Instruct a letting agent. Our lettings team can handle everything from tenant-find through to full property management, so you can focus on your move without worrying about your London home.
7. Begin your property search. Whether you're looking in the Cotswolds, the Home Counties, or further afield, start viewing properties and get your mortgage agreement in principle in place.
8. Instruct solicitors and begin conveyancing. If you're letting and buying simultaneously, your solicitor will need to coordinate timelines across both transactions. Allow 8-12 weeks for a standard conveyance.

The process is more manageable than it looks when you break it down. The key is getting professional advice early, particularly on mortgages and tax, so you're making decisions based on real numbers rather than assumptions.

Conclusion

Keeping a London property while buying a new home elsewhere is a viable and increasingly popular strategy, but it's not a decision to take lightly. The 5% stamp duty surcharge, mortgage restructuring, landlord obligations, and ongoing tax implications all need careful planning before you commit.

The reward, though, can be significant. A London property gives you continued exposure to one of the world's strongest rental markets, long-term capital growth potential, and the security of knowing you still have a foothold in the capital if your plans change.

The key to making it work is getting the right advice early. Whether you need a valuation on your London home for letting, guidance on mortgage structuring, or help finding your next property, we've been supporting moves like this for over 150 years across 85+ branches nationwide.

Ready to take the next step? Contact your local Hamptons branch to discuss your options, whether that's letting your London property, starting a new property search, or both.