My wife and I just returned from an end of summer trip through some bucket list locations in Western Europe, one of which was London, England. It was a phenomenal trip that included a few days in Amsterdam (I am a proud Dutch boy), Brussels and finally a quick train through the chunnel (channel tunnel which I think is a brilliant amalgamation of words) to The Big Smoke for our final 4 days.
Whenever I travel, I am always fascinated by the real estate markets of the places we visit. The prices, the inventory, the marketing, etc. I always try to learn as much as I can while I’m there.
The things I have learned about European real estate are fascinating and mind boggling to say the least. Some of the processes that buyers and sellers go through to transact in real estate across the pond are wild compared to our local best practices. If you would like to give your head a spin, Google the term “gazzumping” something that happens regularly in the UK wherein a buyer can be outbid by any other buyer up until closing, regardless of the terms of their offer that we would consider firm and binding. Anarchy ensues.
Of course, the attitude of most European countries towards real estate is considerably different to our own, as is their attitude toward life and especially work. One of the things we saw on our trip was an engraving on a bread makers union building from the Middle Ages in Ghent, Belgium. A triangular shape with three 8’s inscribed to represent how the 24 hours in a day should be split up. 8 hours for work, 8 hours for family and 8 hours for rest. What a novel idea, something that makes infinite sense but would undeniably fail in North American grind culture.
It’s important to understand the cultural differences when it comes to real estate for the purposes of our conversation today. Real estate does not occupy the mind of every 20 something that grew up in a large city in Europe as it does here in North America, or at least Canada. Most first time homebuyers in European cities are in their 30’s or 40’s when they make the jump into home ownership. Here, there is massive pressure for young people to get into the housing market (whether that is self imposed or from outside influences) by the time you are in your mid 20’s. The thought of owning a home is so far removed from the minds of our European counterparts until much later in life, and I envy them for enjoying the freedom to work less and focus on more important parts of their lives.
Now, there is of course a major reason that young people don’t think about real estate in Europe until much later in life, and that is because of prices. Yes, London, Ontario is not on the same level as London, England in any way shape or form. Of course it is going to be more expensive to live in one of the most popular and famous cities in the world. I know all of that. But what I’m about to share should make all of us feel lucky from our perspective on our real estate market (even though it won’t). The funny thing is, the person who owns a home in London, England won’t feel envious in return because they just don’t care and fixate on the real estate market on a remotely similar level to us. Their real estate and rent prices are just another fact of life, much like the weather and gravity.
So, let’s get down to business. Just how expensive is UK real estate? Really fucking expensive. My wife and I found London to be an expensive city in general with prices feeling relatively even to Canada, except for the minor fact that everything in the UK is priced in pounds which are currently worth 1.72 Canadian dollars. Fish and chips at GT’s in Port Stanley? $21. Fish and chips at the pub in London, England? 18 pounds, or $31.50 CDN. Astounding.
The first thing we noticed as we looked at real estate listings in the window of every office we came across, Londoners pay their rent every week. And it’s not hundreds of pounds per week, it’s THOUSANDS. Thousands!!!!! Literally I saw a 2 bed, 2 bath flat, 700ish square feet for 2000 pounds per week. That’s 104,000 pounds per year, or almost $180,000 Canadian. Imagine trying to cover that expense on a weekly basis with maximum one roommate. Good luck homie, enjoy that London lifestyle while you drown in rental payments.
Now, of course not every flat is going to cost that much, but that’s one example and not even close to the most expensive listing we saw. The average price of a rental in London, England is currently 26,316 pounds per year, a figure that is up 14% since last year. According to rentlondonflat.com, the average London renter spends half their take home pay on rent, and well over half their income on living expenses. I also am told by that website, that the area we stayed in (Westminster) is the second most expensive neighborhood in the city, behind only Kensington and Chelsea which are just west of Westminster (and are quite lovely if I do say so myself). The average rents in these neighborhoods are 3,870 and 3,960 pounds respectively. The houses are gorgeous but are far from what we in Canada would consider roomy.
Here’s a 4 bed penthouse spanning 3000 square feet within walking distance to the London Eye, Westminster Abbey and Big Ben for the small amount of 10,385 pounds per week.
And there are more expensive listings out there!
Now, when we talk about owning a home in London, there are a couple of big differences, one of which I already touched on. The way people buy and sell real estate in this country is wild and I think most people in Canada would find it frustrating compared to what we deal with. Imagine submitting an offer on a house that is accepted, waiting 2 months for the closing date to come and then being told that somebody else submitted a better offer and you were now out of luck. What if you had already sold your house? The chain of events that could unfold is hard to picture. We often saw ”under contract” advertised on a listing but that the house was still available to view and purchase. Not to mention that there is no central MLS or database of listings to easily access, we Canadians would just shake our head and refuse to participate. This is too hard, please make it easier! Okay, go buy a house in Canada, an Englishman might say.
I thought that these two graphics were wildly telling when it comes to London, England real estate prices. Size is the number 1 factor when pricing a home which is why number of bedrooms is the leading distinguisher between listings.
4 bedrooms? On average just shy of 3 million pounds. Good lord that is a tough pill to swallow.
The last thing I want to touch on is freehold vs leasehold in London, England. In Canada, you usually own or rent your home, and if you own a home, you might be subject to condo/strata fees or in a very small amount of cases, a land lease fee. In London, England, leasehold properties are extremely common. Picture buying a rental contract for somewhere between 21 and 999 years. That’s not a typo, these contracts can be almost a thousand years long.
A leasehold agreement is between a homeowner and a landlord, somebody that owns the land but not the house that is on that land. So you buy the house, but you also pay maintenance costs and land lease amounts to the freeholder/landlord. It’s similar to a condo but there is a limit to the amount of time you are allowed to live there, similar to a lease. Weird. Learn more here if you like: https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/leasehold-v-freehold-whats-the-difference/
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