Why Italian capital still looks to London
The fashionable view is that Brexit and higher taxes ended the London story for Italian buyers, and that Milan and Madrid have quietly won the argument. There is something in it. Southern European cities are catching a good deal of the mobile capital London now releases.
But they are catching it for a different reason. Milan answers the question "where do I want to live and invest at home?" London answers a colder one: "where can I hold value I cannot afford to lose, in a currency the world still settles in?" Those are not the same question, and they rarely have the same answer.
Long-run nominal capital growth in London has run at roughly 5–7% a year across full cycles (Land Registry HPI). A store of value, not a promise about next year.
Milan is where you live well. London is where you store what you cannot afford to lose. The Italian investors who do best hold both ideas at once, and never confuse the two.
What the money does not buy
Many Italian buyers still arrive believing a large enough London purchase opens a door to living in the UK. It does not, and it has not for years.
The Tier 1 Investor visa closed to new applicants in February 2022, and in 2026 there is no golden-visa or real-estate residency route in the UK. Buying property and securing the right to stay are two separate files, advised by two separate specialists. A London address is a place to be, not a right to be there.
The tax and the euro
The asking price is the smallest number in the deal. A non-resident buyer pays standard SDLT, plus a 2% non-resident surcharge, plus a 3% additional-dwelling surcharge where a second property applies, with effective rates approaching 19% above 1.5 million pounds in 2026. On exit, a non-resident capital-gains return and payment fall due within 60 days of completion. Verify current figures with HMRC.
Then there is the euro. An Italian buyer purchasing in London has taken two positions, not one: the building, and a sterling exposure against the currency they actually live in. For some that FX position is the point. For others it is a surprise discovered only at sale.
Verify with HMRC before exchange; NRCGT reporting is due within 60 days of completion. As an Italian tax resident, take Italian advice on foreign-asset reporting in parallel.
Model the exit, in euros, before you fall in love with the entrance.
London, Milan, Madrid: not the same bet
The temptation is to rank the three cities and pick a winner. That is the wrong exercise. Each does a different job in a portfolio, on a different time horizon, with a different exit. We set out that argument in full in our note, Think in three cities.
Read qualitatively, not as a league table: London for depth and reserve-currency durability, Milan for a domestic market you already read fluently, Madrid for a different growth story again. The mistake is buying all three as though they were one asset.
Bought by strategy, not by postcode
Ask an Italian family office what it wants in London and it names a postcode, usually one everyone at home would recognise. The famous postcode feels like the strategy. It is a proxy for a decision nobody made explicit: home, hedge, base or status.
Which borough matters far less than which purchase you are making, at what price against comparable second-hand stock, in what structure.
The honest caveats
Leasehold reform, cladding status and the trajectory of service charges are live questions on a large share of London flats, and they stay qualitative until the specific building's paperwork is in front of you. An off-plan premium is real money and should be quantified in cash. The long-run averages above are cycle-length, not a forecast for the next eighteen months. And your Italian tax position sits alongside the UK one, never instead of it.
How we help
- Clarify the mandate. Home, hedge, base or status; ticket size; horizon; EUR/GBP exposure; and the ownership structure that fits an Italian non-resident holder.
- Map the grid. Borough-level supply and demand, price benchmarked against comparable second-hand stock within a tight radius, and any off-plan premium quantified in sterling, not brochure language.
- Select, never sell. We are paid by you and never by developers or sales channels. That independence is the whole point of a buyer-side adviser.
- Structure and exit. SDLT and the non-resident surcharges, the 60-day NRCGT rule, UK inheritance exposure, lease and service-charge trajectory, cladding status, and resale liquidity, coordinated with your Italian advisers before you commit.
Questions Italian investors ask
Yes. Brexit did not remove the right of Italian or other foreign nationals to own London residential property. What changed sits at the margins: financing from abroad is harder and the non-resident tax stack is heavier. Ownership itself is fully open.
No. The Tier 1 Investor visa closed to new applicants in February 2022 and there is no golden-visa or real-estate residency route in the UK in 2026. Property ownership and immigration status are separate questions.
A non-resident pays standard SDLT plus a 2% non-resident surcharge, plus a 3% additional-dwelling surcharge where a second property applies, with effective rates approaching 19% above 1.5 million pounds in 2026, and a non-resident capital-gains return due within 60 days of completion on exit. Italian tax residents may also face Italian reporting and tax on foreign assets, so take Italian advice alongside HMRC verification.
They do different jobs. London tends to act as a deep, liquid store of value denominated in a reserve currency; Milan is a domestic, largely occupier-led market you already understand. Neither is better in the abstract. The right answer depends on whether you are buying a hedge, a base, a home or a status asset.
We advise. Performa Capital is an independent, buyer-side advisory paid by the investor, never by developers or sales channels. We hold no stock to move, and we work in Italian and English.