Advice on transacting in USD when buying a property in London
Insight
Each month, the Farrer & Co Residential Property partners give us a brief insight into their working lives. This month, we give an overview of advice given to US clients buying a flat in London against the backdrop of global events causing currency volatility.
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The Brief
We were recently instructed by an American couple based in New York on the purchase of a wonderful flat in Chelsea. Our clients had already received tax and structuring advice but were concerned about exposure to currency exchange rates.
Executing the Brief
During our initial meeting, our clients explained that they had sold an apartment in New York and were going to use the proceeds of that sale for the purchase of the flat.
Our clients asked whether it would be possible to buy the property using US dollars (USD) instead of pounds sterling (GBP), in order to mitigate the risk of currency fluctuations between exchange and completion (which was tabled to be several weeks after exchange). We were able to reassure them that this was perfectly possible (albeit unusual) from a legal standpoint; however, the main barrier would be whether the seller would be amenable. Our clients took that away and discussed it with the agent, who was able to agree with the seller to fix the price in USD. The memo of sale was circulated later that day stating the USD price.
As a firm, we have a USD client account, so are well placed to act on matters of this nature, although it is highly unusual for UK property transactions to be agreed in a different currency, so there were several interesting implications.
Once we knew that a USD transaction was agreed, we had a very early call with the seller’s excellent lawyer, as we wanted to settle the legal practicalities as soon as possible, particularly given the seller’s lawyer does not have a USD client account (so we would be unable to transfer the deposit to them between exchange and completion in the usual manner). We explained that for us to be comfortable that our clients’ position was adequately protected, the seller would need to accept that all funds would have to be held in our USD client account until after completion. This would mean that our clients would get the keys to the flat before the seller would receive the sale proceeds.
The seller was happy to proceed on this basis if we would undertake (to his lawyer) to instruct our bank to transfer the sales proceeds directly into the seller’s account following completion, so no funds would need to flow through the seller’s solicitor’s client account, and therefore no currency conversion would be necessary. This was a reasonable request, and one that we were willing to accept in the circumstances, but it meant that we had to complete a Know Your Customer (KYC) exercise to satisfy ourselves that the funds were being sent to a legitimate individual.
We worked collaboratively with the seller’s lawyer to agree thoughtful variations to both the Standard Conditions of Sale (5th edition) and the Code for Completion by Post (which contains the standard undertakings that solicitors give each other to facilitate the usual completion process).
We explained to our clients that Stamp Duty Land Tax (SDLT) would still need to be paid in GBP (and this would need to be calculated by converting the SDLT payable into GBP using the London closing exchange rate on the completion date). They wanted to understand the best way to make this conversion, and we were able to introduce them to an excellent currency broker to help with this.
The debrief
Our clients completed their flat purchase last month (during a period of particular currency volatility) and were relieved to be able to work towards completion without having to overly worry about the impact of global events on the value of the USD against the GBP.
We are always happy to introduce clients to people in our extensive network of professional contacts and Adam Fletcher, a Senior Associate in the Residential Property team, has prepared an article on the types of intermediaries that we frequently work with, and how they help facilitate transactions and advise our clients, click here to read.
For more information on buying property in England and Wales please refer to our buying guide and our general tax considerations article.
We are always happy to discuss the conveyancing process and how to manage a transaction.
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This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, May 2025
