European bankers / PE professionals working in London, where did you buy your first property?

Based on the most helpful WSO content, here are some considerations for your situation:

1. Buying in London:

   • London property prices have historically risen, but the market is currently at the peak of a housing cycle with rising interest rates. This could lead to potential negative equity if you buy now with a large mortgage.
   • Transaction fees and taxes in London are significant, with costs like stamp duty and other fees potentially amounting to £10-30k.
   • If you plan to live in the property, there are no capital gains taxes on your primary residence. However, if it's a secondary property, capital gains taxes can be as high as 28%.
   • Renting in London is often seen as "throwing money out the window," but it provides flexibility, especially if you don't see yourself staying long-term.

2. Buying in Your Home City:

   • Investing in a buy-to-let property in your home city could be a safer option if you don't plan to stay in London long-term.
   • You might benefit from familiarity with the local market and potentially lower transaction costs compared to London.
   • However, managing a property remotely can be challenging, and rental yields may vary depending on the city.

3. General Advice from WSO Threads:

   • Many professionals in your position have opted to rent in London for flexibility while investing in property in their home countries.
   • If you’re considering buy-to-let, ensure you understand the local rental market and potential returns.
   • Think about your long-term plans and whether you want to tie up capital in a property in a city you don’t envision living in for the long haul.

Ultimately, the decision depends on your financial goals, risk tolerance, and long-term plans. If you’re unsure, consulting a financial advisor familiar with both markets might be a good next step.

Sources: London - How to invest my bonus?, European IBs & Commercial Banks, IB not worth it (London vs Continental Europe), Do banking and PE make you a better business owner?, 20 Most Frequently Asked Questions - London Edition