It's basing it off of reported cell tower locations and not necessarily instantaneously. I get a terrible cell signal at my home so Google used to occassionally map me in Malibu, California which is 20 miles across the ocean from where I live.
The nearest physical tower is less than a 5 minute walk away but behind dirt as I'm down on a steep slope to the ocean. My guess is some stray signal would hit from Malibu and that would be the only position it could map. Recently my signal improved to the point where I can even consider using EDGE at home so it now places me about 50 yards away.
My guess is you have a wormhole to London near your house and the cell signal is coming through. Watch out for roaming charges. Ok, my second choice on that is you're only getting one cell signal inside your house and it is mis-identifying as a tower in London. Seems like one database is fine and another isn't if latitude maps you ok and maps doesn't.
Maybe put the topic up on the Google forums and see if someone comes back with the real answer.