London vs New York: An Honest Comparison of Two Financial Capitals
Featured Question
Is London or New York better for property investment?
New York imposes no foreign-buyer surcharge — a genuine advantage over London. But most Manhattan co-ops will not approve non-US-resident buyers, financed purchases add ~1.9% mortgage recording tax, and FIRPTA withholds 15% at sale. London's entry tax is heavier, yet its entire stock is open to foreigners and its exit is simpler. The choice is tax friction (London) versus structural friction (New York).
London and New York are the world's two most liquid housing markets and the default answers to "where do I park wealth in property." On the surface they rhyme: deep law, transparent title, global demand. For the foreign investor, however, the friction sits in completely different places. Here are the 2026 numbers.
Quick Answer: Unlike London, New York charges foreign buyers no surcharge; cash resale closings run just 1.5-3%. In exchange: mansion tax of 1-3.9% on every $1M+ purchase, ~1.9% mortgage recording tax when financing, FIRPTA withholding of 15% at sale — and most Manhattan co-op boards will not approve non-US residents, shrinking the practical stock to condos. London's entry costs can reach 10-15%, but the whole market is open. Choose your friction: tax (London) or structure and procedure (New York).
Disclosure: Optivest advises on London and UK property; we do not sell New York real estate. Read this comparison accordingly.
Entry Costs: New York Is Cheaper to Enter — Yes, Really
The direct answer: at the moment of purchase, New York beats London for foreign buyers. NYC — unlike London, Vancouver or Singapore — levies no foreign-buyer tax of any kind; you pay exactly what a local pays. We state this plainly: against London's 2% non-resident and 5% additional-property surcharges, it is a real advantage.
- Cost: Foreign-buyer surcharge · London: +2% (+5% if additional property) · New York: None
- Cost: Purchase tax · London: Tiered SDLT 5-12% · New York: Mansion tax from 1% at $1M to 3.9% at $25M+
- Cost: Financing tax · London: None · New York: Mortgage recording tax ~1.8-1.925% (not on co-op loans)
- Cost: Typical all-in closing · London: Up to 10-15% for non-residents · New York: Cash resale 1.5-3%; financed 2.5-5%; new dev 3-7%
- Cost: Worked example · London: ~£39K SDLT on £700K · New York: ~3.1% (~$46-50K) on a $1.5M financed condo
- Cost: Withholding at sale · London: None · New York: FIRPTA 15%
New York's hidden cost lives in new developments: sponsors routinely shift transfer taxes (1.825-2.075%) onto the buyer, buried deep in the offering plan. On any new-dev condo, the first page to read is the buyer's closing-cost summary.
The Co-op Barrier: New York's Real Foreign Filter
The direct answer: New York's true barrier to foreigners is not tax — it is ownership structure. A large share of Manhattan stock is co-operative, and most Manhattan co-op boards will not approve a non-US-resident buyer. In practice, the foreign investor's market is condos only — narrowing choice and adding a foreign-demand premium to condo pricing. Financing differs too: foreign buyers typically face 30-50% down-payment requirements.
London has no structural filter of this kind. Leasehold has its own traps (we cover them separately), but no London building subjects a foreign buyer to board approval.
Optivest Note: The most common error we see is budgeting from Manhattan-wide price averages. The stock actually available to foreigners — condos — prices above the general median. Benchmark against condo indices, not the citywide median.
Holding and Exit: Two Differences in Two Directions
Holding: New York combines annual property tax with common charges into a substantial yearly load; London owners pay no direct annual property tax (council tax falls to the tenant when let), with the burden sitting in service charges instead. In both cities, amenity-heavy buildings erode net yield.
Exit: London's sale side is clean — CGT with 60-day reporting, no withholding. New York seller costs reach 6-8% (commission plus transfer taxes), co-ops may add a flip tax, and a foreign seller faces FIRPTA withholding of 15% of gross price. The withholding is not the final tax, but it locks up cash for months; a withholding certificate can reduce it — which requires CPA planning before, not after, the sale.
Yields and Momentum: Two Capital-Preservation Markets
The direct answer: neither city is a cash-flow market. Prime gross yields compress to 2-4% in both; the investment thesis is capital preservation and liquidity, not rent. The dynamics differ: London prices have slipped in real terms with 2026 forecasts at 0-2%, while New York volumes track the rate environment and the co-op/condo segments are diverging. In both markets, the building and the block matter more than the citywide average.
Tax and Estates: The Quiet but Critical Gap
- US estate tax: the exemption for non-resident aliens is just $60,000, with rates up to 40% above it. A $2M Manhattan condo passing on death can produce a severe outcome. Structuring (e.g., corporate ownership) exists but carries its own costs — do not buy high-value New York property without an internationally experienced CPA and estate attorney.
- UK IHT: the non-dom reforms changed the rules (see our dedicated guide); UK property sits inside IHT, but thresholds and planning tools work differently. In both countries, estate planning belongs before the purchase, not after.
Disclaimer: General information only; not investment, tax or legal advice. Optivest is not a licensed financial adviser and does not advise on US tax or law. Use a qualified UK tax adviser and SRA-registered solicitor for the UK; a CPA and real estate attorney for the US.
Who Should Choose Which?
- Profile: Dollar asset without surcharge · Better fit: New York (condo) · Why: No foreign-buyer tax
- Profile: Wide stock + simple exit · Better fit: London · Why: No co-op filter, no FIRPTA
- Profile: Sub-$1M budget · Better fit: London · Why: NYC's investable sub-$1M condo stock is thin; mansion tax starts at $1M anyway
- Profile: Estate planning priority · Better fit: London (with planning) · Why: US $60K exemption is punitive
- Profile: Child studying in the US · Better fit: New York · Why: Use value decides
- Profile: Child studying in the UK · Better fit: London · Why: Same logic
Frequently Asked Questions
Does New York tax foreign buyers extra?
No. NYC imposes no foreign-buyer surcharge; closing costs match domestic buyers'. The load comes instead from mansion tax (1-3.9% on $1M+), mortgage recording tax on financed condo purchases, and FIRPTA withholding at sale.
Why does co-op vs condo matter so much for foreigners?
In a co-op you buy shares in a corporation and the board approves buyers; most Manhattan boards reject non-US residents. The foreigner's practical market is condos. Co-op loans escape mortgage recording tax — but most foreigners cannot buy co-ops anyway.
How much does FIRPTA take at sale?
15% of gross sale price is withheld at closing. Final tax is settled by filing; a withholding certificate can reduce the amount if projected liability is lower. Plan before listing, not after.
What is London's strongest card against New York?
The entire stock is open to foreigners, the exit is simple (no FIRPTA), and sub-$1M budgets find genuine depth. UK estate-planning tools are also more workable than the US's $60,000 exemption for non-residents.
Why are yields low in both cities?
High price bases compress prime gross yields to 2-4%. Both are capital-preservation and liquidity markets; yield-focused investors should look to outer districts or other markets entirely.
Conclusion
The London-New York decision is tax friction versus structural friction: London is an expensive but fully open door; New York is a cheap but narrow one.
Whether you are researching or ready to proceed, Optivest's advisory team is available for a no-obligation consultation. Contact us or reach us on WhatsApp. For the London side, our investment consultancy and taxes and costs guide are good starting points.
For 6 years we have advised international investors on UK property investment from London.