How to Buy a House in London [Prices, Areas, Property Types]

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Buying a house in London is a significant investment—possibly the largest in one’s lifetime. And it may seem impossible to acquire a London property. Our guide explains what you need to know about buying a house in the UK’s capital city, including London housing prices, where you should buy, and how the process works in various circumstances.

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How Much Is a House in London?

London property prices are significantly higher than prices in other parts of the country. The latest numbers from September 2021 show that the average house price in London is £507,000. There are, however, houses in London that cost considerably less (or more). Prices depend on the city’s location and type of house.

The Cheapest London Houses

If you’re on a budget and wish to buy a house in London, you should consider homes in the Barking and Dagenham borough—the cheapest area for purchasing a London house, with an average price of £317,947. Slightly more expensive properties (but still affordable) are found in Bexley, Havering, Newham, and Croydon for up to £383,293.

The Most Expensive London Houses

If you have a larger budget, you can opt for one of the more expensive London boroughs for your next home. The most expensive houses in London are in Kensington and Chelsea, where the average house price is £1,288,641. You can acquire slightly cheaper properties in Westminster, Camden, Hammersmith, and Fulham for no lower than £710,000.

Prices by Property Type

The cost of buying property in London depends on the type of property. Prices can vary significantly depending on whether you want a house or flat. On average, London flats sell for about £428,181 (including maisonettes), while both terraced houses and semi-detached houses are considerably pricier at approximately £553,729 and £654,928, respectively. Detached homes are the most expensive at an average of £1,023,120.

DID YOU KNOW? The most expensive house in Britain is in London’s Knightsbridge neighbourhood, Rutland Gate, selling for £210 million in 2020. The 62,000 ft2 mansion overlooking Hyde Park was the most expensive property sold on the British market.

Is Buying a House in London a Good Investment?

Buying a house in the capital is a lifetime investment, but is it a good investment? Only half of Londoners own property while renting for the other half is out of necessity. Young Londoners continue renting because fewer properties are for sale, and those available are out of their price range.

Buying a house in London on the UK market is a good investment if you have the opportunity and financial ability. With the rising prices of real estate in the capital, you can attain a return on your investment.

DID YOU KNOW? Despite the pandemic and Brexit, London property prices are experiencing an increase. House prices rose by 6.2% in 2020 regardless of the previous year’s 1.8% decrease. London property prices for 2022 are 60% higher than those in 2007.

Key Takeaways

The average London home costs £507,000, while the cheapest properties sell for £317,947.
Buying a property in the capital is a good investment due to the rising property prices.
Getting a mortgage is the first essential step toward becoming a London homeowner.
Government-funded schemes exist to help low-income and first-time buyers become homeowners.

Buying a House in London: The Ultimate Guide

Estimating the price movements in the capital, buying any property in London is a good idea. But how does the process of purchasing a London property work? And what is required to become a London homeowner?

Consider the following instructions for buying a house in the capital and more detailed explanations for first-time buyers, foreigners, and low-income buyers.

How to Buy a House in London

Purchasing a London property without a mortgage seems like Mission Impossible. So before you begin looking for that perfect London dwelling, work out how much you can borrow and the deposit you need.

Get a Mortgage

You first need to apply for a mortgage before attempting to buy a home. In general, lenders will approve a loan four or five times your annual income. But lenders also consider other factors, including credit rating, outstanding debts, average spending, and other personal circumstances.

If you wish to buy a house in London, keep in mind that the amount you can be approved for also depends on the property type. Some mortgage lenders may give out smaller loans to those buying new-build properties—between 75 and 85% of the total house value. On the other hand, if you’re buying an older property, you may be approved for a loan worth 90–95% of the total value.

How to Buy a House in London with Low Income

Londoners with low income often give up on becoming property owners. But although purchasing a London home on a low income may be difficult, it’s not impossible. Since saving for a house with limited income is more challenging, low-income homebuyers have to choose to live in smaller properties in one of the affordable boroughs in London to save enough for a deposit and make monthly payments.

Additionally, prospective homebuyers have access to three government-funded programmes: Help to Buy, Shared Ownership, and First Dibs for Londoners. People can apply for these programmes or use the Homes for Londoners search tool that lists many properties on a Discount Market Sale.

How to Buy a House in London as a Foreigner

Contrary to popular belief, buying a house in the UK as a foreigner is not difficult. There are no legal restrictions on who can own property in the country. Both foreigners and non-residents (foreign nationals) can be approved for a mortgage in the UK, although those without a job and less than two years of residency may have stricter requirements.

The process is the same for UK residents and non-residents, and they must pay the same taxes and fees. If you want to buy an investment property in London from abroad, you should have no trouble purchasing and managing the property.

What if You’re a First-Time House Buyer in London?

Buying a house in London as a first time buyer is made significantly easier by the Help to Buy programme, allowing first-time buyers who are purchasing a newly-built property to apply for an equity loan worth up to 40% of the total property value.

Londoners buying a house for the first time with the help of this scheme must put down a 5% deposit, borrow 40% from the government, and get a mortgage for the additional 55%. One of the requirements for this programme is that they must choose affordable housing that doesn’t exceed £600,000.

Additional Options for First-Time Buyers

Besides the Help to Buy programme, people buying property in London for the first time have access to even more programmes, including the Shared Ownership and the First Dibs schemes.

The Shared Ownership scheme allows Londoners to buy a share of the house (25 to 75%) and continue paying rent for the rest of the property. As time passes, homeowners can increase (staircase) the share, allowing them to acquire full ownership of the home.

First Dibs for Londoners—a programme introduced by London mayor Sadiq Khan—gives those living and working in London priority for buying properties worth up to £350,000 within the first month of the property being on the market.

Where to Buy a House in London

When choosing a house in the capital, location is of utmost importance. Proper transportation, for example, should be a primary consideration if you need to commute to and from work. There are, however, other things to consider when choosing the location of your next home, including the cost of living in the area, safety, the vicinity of schools, demographics, etc., which are also essential questions to ask upon viewing a house.

Consider the following London locations for first-time buyers, expats, young professionals, couples, etc.

Best Places to Buy in London for First Time Buyers

Those buying a house for the first time in London may find it challenging to decide where they should buy. Consider the following list of locations explicitly tailored for first-time homebuyers.

  1. Bromley, south-east London: Affordable prices and the many parks and meadows make Bromley a desirable destination for young, prospective homebuyers.
  2. Newham, East London: Newham was the site of the 2012 Olympics and is known as the hub of activity—ideal for young people searching for active lifestyles.
  3. Barking and Dagenham, East London: As the cheapest area in London and with many new housing developments, Barking and Dagenham is the go-to borough for those on a strict budget.
  4. Sutton, south-west London: When buying a house in London as a first time buyer, you won’t go wrong in Sutton, with many different house types at reasonable prices.
  5. Croydon, South London: Affordable prices and many job opportunities rank Croydon high on our list. And it’s only 20 minutes away from London Bridge.

When choosing the best London locations for first-time homebuyers, we considered several factors and narrowed our selection to the five London boroughs mentioned above. Keep in mind, however, that there are plenty of other London areas to choose from—just make sure they fit your budget and meet your requirements.

Best Places to Buy in London for Any Buyer

In addition to the best places to buy in London for first time buyers, consider the following recommendations for other categories of buyers.

  1. Central London: The city’s centre is the preferred location for expats and young professionals. But keep in mind that properties are pricier here.
  2. Dulwich Village, South London: Dulwich Village is a popular choice among young families—suitable for children and employed parents.
  3. Barnet, North London: The many excellent schools, transportation links, and green spaces make Barnet the ideal place for peaceful family life.
  4. Stratford, East London: Bustling with life and energy, Stratford is one of London’s most demographically diverse boroughs—ideal for young people, especially aspiring young professionals.
  5. Wandsworth, south-east London: Our last suggestion on where to buy a house in London includes Wandsworth. This borough is safe and lively—the perfect environment for couples and young employed individuals.

Although choosing only five London locations for those of different demographics is challenging, all the locations on our list are safe, well-connected to the city centre, and have reasonable property prices.

DID YOU KNOW? First-time homebuyers in London pay approximately £412,620 for a two- or three-bedroom house or flat, depending on the property’s location.

Conclusion

Our guide has aimed to alleviate your apprehensions about purchasing a London home by helping you understand London property prices and how to buy a house in London and presenting some of the best areas to house hunt.

FAQ

How much money do u need to buy a house in London?

The average London house costs £507,000, but there are much cheaper properties. You can buy a home in the capital for as little as £300,000, but there are also significantly more expensive properties.

Is it worth buying a property in London?

The rising property prices in London and the anticipated future growth make purchasing a house in the city an excellent investment. If you decide to sell the property later, you will undoubtedly see a return on your investment.

Can I buy a house in London as a foreigner?

There are no legal restrictions in the UK that prevent foreigners from buying a property. Foreigners and non-UK residents can also apply for a mortgage and purchase a property.

How much does a regular house cost in London?

The average cost for buying a house in London is £688,778, including semi-detached or detached houses with two or three bedrooms.

ABOUT AUTHOR

Alex is an IT wizz gone SEO gone fire-juggler. We’re not even joking. When he isn’t researching why one personal loan is better than the other and which piece of hardware you should buy next, he’s rollerblading or selling homes (because he does that, too, the smarty-pants).

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