Residents told Sky News television that they heard a plane flying in very low before hearing an explosion.
A pilot who gave his name only as John told Sky he was about to land at nearby Biggin Hill Airport when a "mayday" emergency call came over the radio.
He said the pilot from the stricken plane reported severe engine vibrations and alarms could be heard going off in the cockpit. The pilot said he had five people on board and wanted to make an emergency landing, he added.
John said after he landed, he turned back and saw the plane just before it went down. "It nose dived out of the sky and the radio went dead," he said.
Resident Karl Mills said the plane nearly hit his house.
"It was the loudest noise I ever heard. It was like a bolt of thunder," Mills told Sky News. "I looked out and saw a ball of fire."
He said the plane crashed into the roof of a neighboring house before bursting into flames. Police said several people on the ground suffered minor injuries.
London police said all five people on board - two pilots and three passengers - were unaccounted for.
The neighborhood is several miles north of Biggin Hill Airport, a small facility often used by executive jets and helicopters.
Sky reported that the plane was a Cessna Citation Executive Jet and was headed to France. It did not cite a source for the information.