What to know before you buy

Buying your first home in London is a major milestone—but it can also feel overwhelming. The capital’s property market is famously competitive, with high prices, unique government schemes, and a wide variety of neighbourhoods to explore. Whether you're eyeing a flat in Zone 2 or a house in the suburbs, this guide will help you navigate the complexities of buying in one of the world’s most dynamic (and expensive) cities.

Understanding your budget - Is it affordable?

London’s property market is undeniably tough, but with smart financial planning, getting on the ladder is achievable. Here's what you need to consider:

Check Your Credit Score

Your credit score remains a key factor in mortgage approval. Lenders assess your score, income, and debt levels to determine affordability. A strong credit score is especially important in London to access competitive mortgage rates.

 

Save for a Deposit

London’s property prices are significantly higher than the UK average, making deposit saving more demanding. Most lenders require a deposit of 10% to 20% of the property price.

 

Consider Your Maximum Budget

• Average Price: As at mid-2025, the average property price in London was £661,000, with a median of £510,000.
• Central Boroughs: Prime Areas like Kensington and Chelsea average £1.4 million or more.
• Outer Boroughs: More affordable options include Croydon, Barking & Dagenham, and Waltham Forest, with prices typically ranging from £300,000 to £500,000 

 

Government Schemes for London First-Time Buyers

 

First Homes Scheme:

This initiative offers 30% to 50% discounts on new-build homes for eligible first-time buyers. The discount is locked into the property for future resales, ensuring long-term affordability. To qualify, buyers must:

• Be 18 or older
• Be first-time buyers
• Have a household income under £80,000 (or £90,000 in London)
• Be able to secure a mortgage for at least 50% of the discounted price

 

Local councils may apply additional criteria, such as prioritising key workers, local residents, or those on lower incomes. Special exemptions apply for members of the armed forces and their families

 

Mortgage Guarantee Scheme:

The Mortgage Guarantee Scheme, made permanent in July 2025, supports buyers across the UK who have a small deposit (as little as 5%). It encourages lenders to offer 91–95% loan-to-value (LTV) mortgages by providing a government-backed guarantee against potential losses. Eligible applicants must:

• Be buying a main residential property in the UK
• Have a deposit between 5% and 9%
• Apply for a repayment mortgage (not interest-only)
• Pass standard affordability checks, including a credit assessment

This scheme is open to both first-time buyers and home movers, making it a flexible option for many.

 

Shared Ownership Scheme:

The Shared Ownership scheme allows buyers to purchase a share of a property (between 10% and 75%) and pay rent on the remaining share. It’s ideal for those who can’t afford to buy a home outright. Buyers can increase their ownership and reduce rental costs over time through a process known as “staircasing”. To qualify, applicants must:

• Be 18 or older
• Be a first-time buyer or in the process of selling a current home
• Have a household income under £90,000 in London
• Be unable to afford a suitable home on the open market
• Have a good credit history and no rent or mortgage arrears

Homes are typically offered by housing associations or local councils, and all are leasehold properties.

 

Help to Buy ISA: 

• Closed to new applicants, but existing account holders can still save and claim the 25% bonus until December 2030.

 

Lifetime ISA (LISA): 

• You can save up to £4,000/year with a 25% government bonus, usable for homes up to £450,000 in London. This cap has not increased despite inflation, and exceeding it incurs a 6.25% penalty on withdrawals.

 

Get a Mortgage Agreement in Principle (AIP)

An AIP (also called a Decision in Principle) is essential in London’s competitive market. It shows estate agents you're a serious buyer and can strengthen your offer in competitive scenarios.

 

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2. Finding the Right Property in London

London’s diversity means there’s something for everyone, but narrowing your search is key.

 

Decide on Your Location

• Commuting & Transport Links: For many, proximity to public transport outweighs property size and is a consideration that should not be overlooked.

 

• Trendy vs Affordable:
• Trendy areas command premium prices and offer access to fashionable amenities. However, trends shift, and what’s “hot” today may not be tomorrow.
• Affordable & Up-and-Coming: Affordable and up-and-coming areas may lack prestige but offer financial practicality and potential for future growth.

 

• Regeneration Zones: Areas undergoing investment and development often see faster value appreciation. These can be smart choices for long-term buyers.

 

Consider Flats vs. Houses

• Flats: Typically more affordable but often come with high service charges, especially in buildings with amenities, such as lifts, gyms or concierge services.
• Houses: Offer more space and long-term value but are generally more expensive.

 

Leasehold vs Freehold

• Leasehold: Common for flats. You own the property but not the land. Expect ground rent and service charges. Lease length and terms are critical - short term leases can affect mortgage eligibility and resale value.
• Freehold: You own both the property and the land. More common with houses and generally preferred for longiterm ownership.

 

Research Local Amenities and Transport Links

Properties near major transport hubs tend to command higher prices. Look for areas with good schools, parks, shops, and healthcare facilities to support your lifestyle and future resale value.

 

3. Making an Offer and Getting Legal Support

Making an Offer

In London’s fast-paced market, acting quickly is often key. Once you’ve found a property:

• Decide on your offer amount.
• Ask your estate agent to present it to the seller.
• Agents are legally required to pass on all offers, regardless of amount.
• Offers close to the asking price are more likely to be accepted, especially in competitive scenarios.

 

Instruct a Conveyancer

Once your offer is accepted:

• Choose a solicitor or conveyancer experienced in London property law, especially for leasehold flats.
• Ensure they understand service charges, ground rent, and management company structures.

 

4. Securing a Mortgage

The mortgage process in London mirrors the rest of England, but higher property prices mean careful planning is essential.

 

Mortgage Types

• Fixed-Rate Mortgages: These remain the most popular choice, especially in uncertain economic conditions. Around 85–90% of first-time buyers opt for fixed rates to lock in predictable payments.
• Tracker and Variable Mortgages: These follow the Bank of England base rate or lender’s standard variable rate. While they may offer lower initial rates, they carry greater risk if interest rates rise.

 

Agreement in Principle (AIP)

An Agreement in Principle (also called a Decision in Principle) shows sellers and agents that you’re financially credible and ready to proceed. It’s a powerful tool in multi-offer scenarios.

 

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5. The Legal Process and Exchange

Surveys and Searches

Due to London’s mix of old and new housing stock, surveys are vital:

• RICS Level 2 (HomeBuyer Report): Suitable for most properties. It covers visible defects, damp, and structural movement.
• RICS Level 3 (Building Survey): Recommended for older or unusual properties. It offers detailed structural analysis and repair advice.

 

Exchange of Contracts

Once surveys and legal checks are complete:

• Contracts are exchanged, making the sale legally binding.
• A 10% deposit is typically paid at this stage.

 

Completion Day

• Mortgage funds are transferred to the seller.
• You receive the keys and officially become the owner.

 

6. Additional Costs to Consider in London

Stamp Duty Land Tax (SDLT)

As of April 1, 2025, first-time buyers in England (including London) benefit from the following relief:

• 0% on properties up to £300,000
• 5% on the portion between £300,001 and £500,000
• No relief for properties over £500,000 — standard rates apply

 

Service Charges

If buying a flat, especially in a building with amenities:

• Average in London: £2,633 per year or £219/month
• Charges vary based on facilities like lifts, gyms, and concierge services

 

Legal Fees

Legal costs in London typically range from:

• £1,500 to £2,000, depending on complexity (e.g. leasehold issues)
• Additional costs may include search fees (£200–£300) and Land Registry fees (variable, based on property value)

 

7. Top Tips for Buying a First Home in London

• Research Different Areas: Prices vary widely. Outer boroughs offer better value and good transport links.
• Plan for the Long-Term: Choose areas with regeneration potential for future growth.
• Get Pre-Approved: An AIP speeds up the process and strengthens your offer.
• Understand Leasehold Issues: Know your ground rent, service charges, and lease length.
• Factor in Commuting Costs: Living further out may save on property costs but increase travel expenses.

 

Final Thoughts

Buying your first home in London is a major life step. While the process can be complex and costly, understanding your options and preparing thoroughly makes it achievable. With this guide, you’re now equipped to navigate the market confidently.

All the best with your home-buying journey.

This article is for informational purposes. Always seek professional advice before making any property and/or financial decisions.