Tips for First-Time Buyers in London
If you’re looking to get your foot on the property ladder in the capital, it’s a good time to take advantage of the falling house prices in London that could leave you bagging a bargain. Current events such as the coronavirus pandemic and Brexit have left property sales in London suffering from a lack of demand, which in turn has led to an average house price drop that’s set to continue in the near future. While it might not be the best time for sellers in terms of how much they can get for their property, those looking to save money on buying a London property for the first time are at an advantage right now.
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How to Buy a House in London for the First Time:
Properties in London are currently dropping at a faster rate than anywhere else in the UK. While the capital has long been seen as one of the most expensive places to purchase, particularly for first-time buyers, this might be set to change in the near future due to the current economic events and the impact that they are having on the London housing market. There’s never been a better time to be a first-time home buyer in London, and if you are looking to get your foot on the property ladder in the capital, there are several things that you can do to make it easier – and perhaps even cheaper.
Buy With Friends:
Many people consider buying their first home with a long-term partner or spouse, but if you’re single and have no plans to mingle in the near future, buying with friends could be the perfect opportunity to help you get the keys to your perfect London pads. A ‘tenancy in common’ mortgage is the ideal choice for this as it allows two people to each own 50% of a property – the ideal solution compared to splitting a mortgage that’s the sole responsibility of just one of you. Just make sure that you choose your friend wisely and go with somebody who you can trust.
Ask Your Parents:
While it might not be the solution for everybody, two-thirds of first-time buyers in the capital have some support from their parents. And even if you’re in the other third where your mum and dad definitely can’t afford to fork out thousands to help you with your deposit, they might be nice and agree to be guarantors on your mortgage, which involves promising to make repayments for you if you can’t. This increases your chance of being accepted.
Consider a New Build:
If you prefer the modern style of home and aren’t interested in period property features, a newbuild home in London might be the ideal choice for you since developers will sometimes offer equity loans on newbuild properties to first-time buyers. This is because first-time buyers are appealing customers for developers as you can move in quickly without having to worry about selling a current property.
Shared Ownership:
If you want to go it alone when buying your first house but aren’t sure how you’re going to manage, shared ownership schemes could provide the perfect solution for you. These schemes allow you to buy a percentage of a property and pay rent on the percentage that you don’t own. While it does mean that you don’t exactly own all of your home and you’re paying a mortgage and rent at the same time, the upside is that it’s often an easier way to get on the property ladder since you’ll require a smaller deposit and a smaller mortgage.
Consider a Lease:
Another option to consider if you are renting is to go for a rent-to-buy or lease option instead. With this scenario, you move in as a tenant with the option to purchase the property for yourself once you are able to. You may need to pay a deposit, but this can be quite small compared to traditional buying, possibly as low as 2% of the total property value. And, since your purchase price is agreed upon and fixed when you move in as a tenant, you don’t need to worry about property prices rising while you rent.
Get a Lifetime ISA:
While the Help to Buy Scheme has come to an end and you can no longer open a new Help to Buy ISA, the alternative of a Lifetime ISA can be just as good when it comes to helping you save up for your first home in London. You can put in up to £4,000 each year and the government will add a 25% bonus to your savings, up to a maximum of £1,000 per year to help with extra money to fund your first home.
Consider a Property Auction:
If you want to get a bargain property and don’t mind spending a bit of money to get it fixed up, going to a property auction might be a good option for you. However, it’s worth bearing in mind that properties that are sold at auction tend to be impossible to sell on the open market, so make sure that you do your research before you start bidding.
Where to Buy Property in London as a First-Time Buyer?
In January 2019, £412, 620 was the average price spent by first-time buyers in London. However, with property prices falling in London this year, you could manage to spend less on your first home. There are a number of affordable properties in different areas of London that are an ideal choice for those getting on the property ladder.
Harold Wood:
Data from Right Move shows that Harold Wood along the border of Essex is a popular London spot for first-time buyers. In the last year, the average property price here was lower than the London average at £368,085 and semi-detached properties were being snapped up for £417,653. If you don’t mind not being in the middle of all the action in the capital, this could be the ideal area for you since it’s well-connected to the M25 and close to several train stations that can get you into central London in less than an hour.
Croydon:
Croydon is another London area that is popular with first-time buyers due to its affordability. Thriving with increased tech job opportunities, the area has seen a huge growth in investment, which is attracting first-time buyers from all over the UK. Flats have an average sale price of just under £300,000, and semi-detached houses come in at an average of just over £450,000. There are lots of properties to choose from here with something for everybody whether you are looking for a large detached property from the turn of the century, a modern flat or a quaint Victorian home. London Bridge is less than twenty minutes away.
Bromley:
Bromley is very popular with first-time buyers as a London area that really does have it all. From small flats that are perfect for single professionals to large houses with big gardens that suit families down to the ground, there’s something for everybody here. Over the past year, the average property price in Bromley was just over £480,000, and flats coming in at around £316,000 and semi-detached properties just under £550,000. There’s a huge range of different properties to choose from here whether you want to invest in a vintage cottage or a sleek newbuild on a shared ownership scheme. And Bromley is also home to some of the largest green spaces in London making it an ideal choice for first-time buyers who are looking for an escape from city life.
Manor Park:
Located in the East of London, Manor Park is a very multicultural area that is popular with first-time home buyers. The area’s Crossrail station makes the area very popular since you can reach Bond Street in just over twenty minutes. There are plenty of inexpensive terraced houses available here that are ideal for first-time buyers, and the average property price over the last year was just over £460,000. If you’re on a budget, a flat in Manor Park might be the ideal property choice for you with an average sale price of just over £270,000. It’s home to a busy high street with plenty of things to do including restaurants and shopping opportunities.
Stratford:
If you are a first-time buyer considering taking advantage of the Shared Ownership scheme, Stratford could be the ideal location for you. Although it is more expensive than some of the other London areas with an average selling price of just over £460,000 in the past year and flats coming in at just under £450,000, there’s a high amount of Shared Ownership properties here compared to other parts of London. It has excellent travel connections with easy tube access where you can find fast, direct connections to both Oxford Circus and Bond Street.
With property prices in London set to drop even further, now’s a great time for first-time buyers to get their foot on the property ladder in the capital.
