Some characters sound American. Others sound English.
At first I think the movie seems to take place in the UK but in Hellbound: Hellraiser II American police offiers visit the house. They even carry guns.
It was filmed in London but it's set in New York. It's not very clear because they say things like Julia being on her own turf and many characters being English and such. I used to wonder myself but it's confirmed that it's New York.
I need confirmation onscreen that it is New York, which of course doesn't exist. With that, I honestly think that it can take place wherever the viewer thinks. Like the OP, I feel that it takes place in the United Kingdom. At the end of the day, it doesn't really matter. If you want to go with New York, that is fine. I'll go with the U.K.
- - - - - - - I am not a fan. I just happen to enjoy movies. Fans are embarrassing.
I don't think the execs at New World gave it much thought. They just wanted more American voices in the movie, even if it didn't make sense. I think the notion that it's set in New York comes from Julia mentioning that they had moved from Brooklyn, and also the bystander in the Yankees cap. It's also possible that the Pillar of Souls and some items from the Channard Institute being found at the Pyramid Gallery suggests that the location of the institute(as well as Larry and Julia's house) isn't far from NYC.