Hi Salla,
For myself, as I am an Aussie, I bought a property in Stratford when I was working over there a few yeas ago.
If I was going to buy another property, it would be an investment loan and would be done through a Buy to Let mortgage.
If you are able to get mortgage rates of 1.5%, I would say go full steam ahead.
I realise if you were buying a PPOR, the mortgage rates are better. I was planning a trip to London a few months ago to purchase another property, but pulled out after finding out the the BTL rates were much more than the PPOR rate.
For example, I can only go through one mortgage lender, as my current property is with them. (As the banks don't like too much risk dealing with foreign investors at the moment, so since I have one with a particular lender, I might be able to get through their doors for a second one?? All other banks have refused.) The difference between their PPOR rate and BTL rate was about 5%. (I think off hand the PPOR was 2.5% and the BTL was 7.7)
I found it very frustrating.
Also, as you point out, I had to come up with a 40% deposit.
I do think though that some pockets in London are going for a steel, and unfortunately, I cannot go playing in that sandpit for a while, until at least the BTL rates come down
With regards to a first home buyers incentive, I thought I received a small discount for something. To settle this, maybe do some google searches regarding this matter.....or maybe your daughter might be able to speak with some friends / real eatate agents.
Regards