# Living in London



## Mark from Plano (Jan 29, 2007)

Question for the Brits on the board (or others that may have relevant knowledge). My wife and I are contemplating an opportunity which would involve a move to London. I've been doing some investigating of various issues, including housing costs, transportation and schools, among other things and am just dumbfounded at the costs of living in London.

We are committed to the fact that our lifestyle is likely to take a hit and that's fine with us. It is more than made up for by the experience (for us and the kids) of living abroad for a few years. But in trying to investigate the cost of school and housing in London I'm just stunned. How does a middle class family afford to live in London these days? Housing costs alone, even in the suburbs, seems like it could eat up all of our income (not absolutely sure what that would be yet).

I know nothing of London and the surrounding area and am wondering several things:
1. What areas of the city would be best to look at for middle class professional families? I'm in banking and my wife is an attorney. We would like a nice area but have something short of a large family fortune to work with.
2. What areas have the best public (state) schools since sending our boys to private (you call them public, right?) schools seems out of reach (30,000 pounds a year for 2 boys...ouch) on top of the high cost of housing?
3. We'd probably like an area that is somewhat accessible to central London where we'd be working, preferably by train.

I'm still very early in this process and I'm sure that my employer will have much input into this, especially as it regards the expat package, compensation, suggestions on all of the topics above, etc. Plus we'd certainly need to make sure that my wife could work in some capacity there. Still, I'd be interested in your thoughts on this as well.

Thanks for your input.


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## Albert (Feb 15, 2006)

Mark,

Please note that, if you calculate living costs in London, you can just take the equivalent amount of living in, say, Chicago (that's my data point) and substitute the dollar sign by a pound. And that's not considering the really fancy areas.

In terms of your questions, I am not particularly familiar with the schooling thing (I'm 26, please forgive my age ), but regarding family-appropriate areas I would recommend the following:

- Fulham (45 mins to the City via District Line)
- Kew Gardens (one hour to the City)
- Holland Park (25 mins to the City via Central Line)

Any other suggestions?

You might get a good idea of the associated costs at https://www.findaproperty.com/. Please note that, in any given area, you have premier and less premier sports. This is due to a (former) UK regulation that every area has to contain a certain proportion of council flats.

All the best and good luck,
A.


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## Mark from Plano (Jan 29, 2007)

Wow. I wish that I could simply put a pound sign in front of the value of my house and replace it in London, the trip would be a "no-brainer". However, I'm looking at potentially selling my house in the suburbs of Dallas at around $100 per square foot and needing to buy one in London for upwards of $700 to $800 (or more) per square foot. Yikes. Makes negotiating the expat package particularly important it seems.


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## Wayfarer (Mar 19, 2006)

Mark from Plano said:


> Wow. I wish that I could simply put a pound sign in front of the value of my house and replace it in London, the trip would be a "no-brainer". However, I'm looking at potentially selling my house in the suburbs of Dallas at around $100 per square foot and needing to buy one in London for upwards of $700 to $800 (or more) per square foot. Yikes. Makes negotiating the expat package particularly important it seems.


Mark:

Having a couple of friends that lived for anywhere from 3 years to over a decade in the UK, it seems that rental/leasing is much more common there than here. Maybe look into a leased flat vs. a buy?


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## Albert (Feb 15, 2006)

Wayfarer said:


> Mark:
> 
> Having a couple of friends that lived for anywhere from 3 years to over a decade in the UK, it seems that rental/leasing is much more common there than here. Maybe look into a leased flat vs. a buy?


Mark,

You should particularly think about leasing for the first three years as you have *SIGNIFICANT TAX ADVANTAGES* as a non-national, non-ordinarily resident. These are usually *forfeited as soon as you buy a property* as it makes you ordinarily resident and hence non-eligible for the said tax advantages.

To give you some background: if your compensation is paid offshore and if you fulfill said conditions of non-ordinarily residence, you can claim back marginal tax on any income earned abroad, e.g. on business travel to a client meeting, up to 120 days per year. That can be quite a significant portion of your income (bonuses fully eligible for this treatment). If you need further information, please feel free to drop me a PM.

Cheers,
A.


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## Trilby (Aug 11, 2004)

Even without the tax benefits that Albert correctly describes, the economics probably work in favour of renting rather than buying at the moment. Purchase prices have rocketed upwards over the past several years, but rents haven't gone up as much. Bear in mind also that there is no tax benefit to owning here - there is no mortgage interest deduction.

Are you looking for something in central London, or further out in the suburbs? Central London prices are higher than New York, but there are more affordable places further out. By the way, Albert's suggestions included a couple of the very most expensive areas in London - you can definitely find less expensive areas.

I suggest that you start reading the property sections of some of the British papers online - the Times and the Telegraph would be a good place to start. People in this country (and especially in the London area) are completely obsessed with the property market, and there is always a lot of coverage of the market in the papers.


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## Infrasonic (May 18, 2007)

Rent for a year or so and get a feel for the different areas of London and their local property markets before committing to a purchase.

Tenancy agreements (Assured Shorthold Tenancies) generally run for six months or a year. On a family house it would more likely to be a year initially. You may have to sign a Section 21, which gives the landlord the right to reposess at the end of the fixed period. Standard procedure, you just sign a new tenancy agreement/S21 if you want to stay for another six months/year and the landlord agrees. Landlord will have to give you two months notice to quit if vacant possesion is required.

If you can, deal with a professional landlord direct rather than going through a third party letting agency. Apart from very top end agencies, they have a justifiably bad reputation nationally for doing as little as possible when you need them most. 
Beware of the amateur Buy To Let landlords that have flooded the market during the last few years of low interest rates, most are clueless about their responsibilities to tenants, and farm the work out to equally useless LA's.

Have a look at the Rightmove website https://www.rightmove.co.uk/ for both rental and sale property. Will give you a good feel for prices etc.

HTH

I


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## globetrotter (Dec 30, 2004)

Mark,

keep in mind that dallas is extremly low cost, in terms of living expenses, for the US. I was amazed at the low cost of everything, when I was looking at a job there a while back. 

you might be looking at a few years in a small flat, as opposed to a house. on the other hand, the expereince would be great for the kids.


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## Wayfarer (Mar 19, 2006)

GT makes a good point, Dallas housing is incredibly underpriced, especially considering the size of the city and the amount of money sloshing around in that area.


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## Scarred by Homer (Sep 8, 2006)

*London Schools*

OK, I'll try tackling the bit about schools.

First off, there are different definitions of a 'public school.' Some say it's any school for which you pay fees, some that it's any school that's a member of the Headmasters and Headmistresses Conference (about 200 schools, IIRC) and some that it's limited to a group of eight or nine elite, and generally extremely old, institutions. To be honest, it doesn't really matter, as most people just say 'private schools' and the schools themselves tend to call themselves 'independent schools.'

As to the question of whether to send your boys to private or state schools: how old are they? If under 11, the choice is, IMO, easy. Prep(aratory) schools (as the private u13 schools are called) are, to my mind, a complete waste of money, unless your local state primary school is truly dire. I get to meet lots of boys who have recently left prep schools, and the state school boys are almost invariably better behaved and far better rounded individuals. Don't waste your money.

With secondary schools the choice is much trickier. It all depends on where you live. Neither the state nor private options favour those who don't want to drop big money, on the whole. If you want to go private, you're probably going to have to pay a lot of money. If you want to go state, you're probably going to have to live in a more expensive area to get a good one (good state schools push up house prices in the catchment area massively.)

There are, of course, exceptions. There are some pretty good state schools in areas with relatively low (by London standards) house prices. These tend to be further out from the city centre, as there's a pretty strong positive correlation between house prices and proximity to the centre of London. You could also look at selective state schools, (which, because of their selective nature, have bigger catchment areas, or even no catchment area), some of which are excellent. These will probably have an entrance exam though, and possibly also an interview.

Nevertheless, you should still at least consider going private. Many people with similar or lower incomes to what I'm guessing you'll be earning manage it, though they obviously have to make sacrifices. The vast majority of private day schools don't charge anything like the £15k a year you're assuming. Many good schools are less than half that. Again, the further out from the centre you go, the lower fees tend to be. If your boys are very able, you should also look at what scholarships are on offer. Almost all private schools now offer some form of discount for the most able, generally defined as those who perform exceptionally well in the entrance exam, and possibly also in a supplementary scholarship exam. Most scholarships will be for only 10% or 20% of fees, but there are many 30% or 50% scholarships, and even some which offer up to 100% fees + uniform costs + school trip costs + travel costs. Thanks partly to government pressure, several schools (including some of the most prestigious and academically rigorous) have declared an aim of not turning away anyone capable of passing the exam and/or interview for financial reasons, so this area is definitly worth looking into, if your boys are very strong academically.

The general message of all this is look very closely at schools BEFORE deciding where to live, as it should be a big factor in your decision. If I had to give only one recommendation, knowing almost nothing about you or your sons, it would be: look at houses in Hackney. It's relatively close to both the Square Mile and Canary Wharf (if you're in banking, there's a good chance you'll be working in one of these areas.) Despite a dubious reputation, it has improved massively in recent years, and some bits are actually pretty pleasant, with lots of large Victorian terraces. It has a very good state secondary (Mossbourne Academy), which is quite possibly the most successful of all the government's new City Academies - the Schools Minister, Lord Adonis, seems to spend more time there than he does in Westminster. Yet, because of Hackney's lingering reputation, lack of tube station (soon to be remedied) and a few unpleasant social housing estates, house prices are still fairly low. Take a look.


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## Mark from Plano (Jan 29, 2007)

Trilby said:


> Are you looking for something in central London, or further out in the suburbs? Central London prices are higher than New York, but there are more affordable places further out. By the way, Albert's suggestions included a couple of the very most expensive areas in London - you can definitely find less expensive areas.


We don't know at this point what (or even if) we're looking for. This process is in the VERY early stages and it will need to mature a bit before we can intelligently make any decisions about what to do. What I was hoping for was a few suggested areas to look at to get a sense for the rental/purchase rates.

Do you have any other suggested neighborhoods?



globetrotter said:


> keep in mind that dallas is extremly low cost, in terms of living expenses, for the US. I was amazed at the low cost of everything, when I was looking at a job there a while back.
> 
> you might be looking at a few years in a small flat, as opposed to a house. on the other hand, the expereince would be great for the kids.


Yes, tell me about it. I'm potentially a seller in one of the lowest priced urban markets on the planet and a buyer in the second most expensive. Not exactly the prime arbitrage situation. We've utilized this to our great advantage over the past several years, enjoying a very nice home for the cost of an empty lot in other markets. Prices have not risen much here over the past several years the way they have in other markets, but then they are expected to continue rising here as some other markets have started falling, so there is a small tradeoff I guess.

I think that everyone's suggestion of renting for a time is probably the best suggestion.


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## Mark from Plano (Jan 29, 2007)

Scarred by Homer said:


> OK, I'll try tackling the bit about schools. ...


Thanks for all the good information. Just as background, the boys are 14 (15 by the beginning of next term) and 12. Both are very academically able. Both are in the gifted and talented programs at their schools and the older one was just accepted into the International Bacheloreate program at the high school for next year (which I've noticed is also offered at a number of schools in the London area as well).

The experience for the boys is a key factor for us in this whole process. Going to London and having them in a less than capable school would defeat the entire purpose for considering the move.


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## Karl89 (Feb 20, 2005)

Mark,

Also take a look at income taxes. The top rate in the UK is 40% (kicking in at on income in excess of 35,000 GBP) as opposed to 35% in the US (which kicks in in the mid 300s.) Couple that with a 17.5% VAT so that in many cases your effective tax rate in the UK will be well over 50%. You would be eligible either to offset your US tax liability with either the amount of UK taxes you paid or be able to take around a $90,000 USD deduction - in your case I am sure the former would apply.. If you did keep your house in Dallas you would lose your mortgage deduction in the US as well. And renting in the UK would probably be advisable as the property market in the UK is overpriced IMO plus you run a currency risk unless you hedge.

The UK does have the advantage of only taxing UK sourced income, so if you have signifigant investment income or other income that would remain sourced outside of the UK it would not be liable to UK taxation.

Unless your lifestyle would take a tremendous hit, and assuming you can find good schools the experience would be worth it, good both for your family and career. Good luck.

Karl


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## Wayfarer (Mar 19, 2006)

Mark:

Maybe keep your house in Dallas if it is your ultimate goal to return? Hand it over to a leasing company.


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## globetrotter (Dec 30, 2004)

is this the type of thing where you are thinking about it, and then maybe you will look for work, or do you have job offers on the table? are you locked into london? there are probrably places you could have the "global" experince that wouldn't be so expensive.


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## JRR (Feb 11, 2006)

Wayfarer said:


> GT makes a good point, Dallas housing is incredibly underpriced, especially considering the size of the city and the amount of money sloshing around in that area.


Dallas and Houston way overbuilt in the 70s and 80s..


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## Mark from Plano (Jan 29, 2007)

globetrotter said:


> is this the type of thing where you are thinking about it, and then maybe you will look for work, or do you have job offers on the table? are you locked into london? there are probrably places you could have the "global" experince that wouldn't be so expensive.


This is a particular job opportunity in London. No offer yet, we're in the early discussion phase. I am trying to gather information so that if/when it gets to a serious discussion phase I'll have enough information to intelligently negotiate a package.


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## Trilby (Aug 11, 2004)

Mark from Plano said:


> Do you have any other suggested neighborhoods?


To get some ideas about prices and what you get for your money, you might want to look at Islington (relatively central and generally quite expensive) and then take a look at Highbury, Finsbury and Stoke Newington (same general area, but less central and getting progressively further out from the centre of town). They are all in north London and should give you some idea of what's available.

You could also look in west London -- Chelsea, Fulham (expensive, more so than north London). Alternatively, look south of the river - Battersea, Clapham, Wandsworth.



Karl89 said:


> Also take a look at income taxes. The top rate in the UK is 40% (kicking in at on income in excess of 35,000 GBP) as opposed to 35% in the US (which kicks in in the mid 300s.) Couple that with a 17.5% VAT so that in many cases your effective tax rate in the UK will be well over 50%.


Taxes are definitely higher than in the US. If you're coming from NY and are used to combined federal/state/city income taxes, it's not such a big adjustment -- but if you have low (or no) state income tax, it will be a big increase. But I think Karl is exaggerating about an effective rate of well over 50%.

On the other hand, your taxes give you free medical coverage. The Health Service is far from perfect, but the basic level of coverage that everyone in the country is entitled to is pretty decent.


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## guitone (Mar 20, 2005)

If you can swing it I would do it. On my last trip I met a lady and her daughter, her husband was on transfer to London..they lived in the city. Now when my company relocates someone for a foreign position they have a living and car allowance, basically they pay the rent and supply a car. I would hope your company would do this for you. This allows you to keep your home, sublet is best if you can...

Best of luck, I am envious of your opportunity.


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## Leon (Apr 16, 2005)

Mark from Plano said:


> Thanks for all the good information. Just as background, the boys are 14 (15 by the beginning of next term) and 12. Both are very academically able. Both are in the gifted and talented programs at their schools and the older one was just accepted into the International Bacheloreate program at the high school for next year (which I've noticed is also offered at a number of schools in the London area as well).
> 
> The experience for the boys is a key factor for us in this whole process. Going to London and having them in a less than capable school would defeat the entire purpose for considering the move.


If they are doing the IB already, that would be less disruptive, as I don't think whatever you study in US high schools would easily translate into GCSEs and AS/A levels. Of course that limits you to the schools that offer the IB (Southbank?). Of course there is an American school in St. John's Wood.

Leon


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