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Buying a house or flat in London

From average London house prices and council tax bands to first-time buyer schemes and transport fares, we explain how to buy a home in the capital and the costs you'll need to factor in

In this article
London house prices  Cheapest areas to buy in London Getting a mortgage in London Schemes to help you buy a home in London
London commuter towns: buying outside the city Area comparison tool: where should I buy?  Get expert advice on buying a home in London

London house prices 

House price growth has fallen to its lowest rate in six years, according to recent figures, but property prices in London remain much higher than the national average. 

In October 2018, the average house price in London was £473,609, more than double the UK average of £231,095 cited by the ONS in its Land Registry House Price Index.

Similar trends can be seen with first-time buyer properties. In London, the average first-time buyer property costs £419,059 – almost double the average first-time buyer house price in England of £207,840.

This is more than triple the average first-time buyer property prices in Wales and Scotland, which stand at £138,743 and £122,346 respectively.

Cheapest areas to buy in London

The cheapest area to buy a property in London is Barking and Dagenham, where the average property price in October 2018 was £300,518. Bexley came in as the second cheapest area to buy a home, with the average price totalling £341,784. The third cheapest local authority to buy in London is Newham, where the average house price is £365,931. 

By contrast, the most expensive area in London is Kensington and Chelsea, where the average house price in October 2018 was £1,238,614. The City of Westminster is currently the second most expensive area to buy in London and the average property there costs £1,028,141. Camden is the third most expensive location for buyers, with an average price of £821,238.

If you're thinking about buying in London, you'll need to consider expenses such as council tax and commuting in addition to the cost of buying a house.

The map and table below show average house prices, council tax rates, travel zones and travel fares for each London local authority. 

Getting a mortgage in London

With property prices as they are, getting a mortgage for a home in London can seem like a daunting task, especially if you're a first-time buyer. 

Before you start looking for homes, it's important to work out how much you can borrow, to get an idea of the types of properties you can afford. 

As a general rule of thumb, mortgage lenders are allowed to loan up to 4.5 times the total annual income of you and anyone else you're buying with, but they'll also consider a variety of other factors including your creditworthiness, debts you currently owe, average spending and your personal circumstances. 

While online mortgage borrowing calculators will give you a rough idea of budget based on your income, it's worth speaking to an impartial mortgage broker for an accurate, personalised view on how much mortgage you'll be able to get.

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Schemes to help you buy a home in London

Help to Buy London

In a bid to help more people buy homes, the governments in England, Scotland and Wales offer equity loans to put towards the cost of a property.

London has its own version of the scheme, which is more generous than anywhere else in the UK. Under the London Help to Buy scheme, people buying a new-build home in Greater London can apply for an equity loan of up to 40% of the property’s value. 

This means you can put down a deposit of 5%, borrow up to 40% of the property price from the government and take out a mortgage on the rest, potentially unlocking better interest rates and improving your chances of getting accepted by a lender.

London Help to Buy equity loans are available for both first-time buyers and existing homeowners looking to buy a new-build property worth £600,000 or less.

The loan is interest-free for the first five years, but after that you’ll have to pay a monthly admin fee, starting at 1.75% of the loan.

You’ll need to repay your equity loan in full after 25 years, when your mortgage term ends or when you sell your home – whichever happens first.

Help to Buy can sound very appealing, but it isn't without its drawbacks. Make sure you take professional advice on whether it's right for you before going ahead. Our story on 95% mortgages vs Help to Buy might help.

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Shared ownership

If you can't afford to buy a home outright, shared ownership could be another option to consider. 

This involves buying a share of between 25% and 75% in a property and paying rent on the remaining share. 

Some shared ownership schemes allow you to increase your share at a later date, known as 'staircasing', allowing you to build towards full ownership. 

Rent to Buy

The Rent to Buy scheme was introduced to help people struggling to save enough deposit to get on the property ladder.

The scheme allows you to rent a home at 20% below the normal market rate for up to five years. 

During this time you'll get the option to buy the whole property or part of the property through the shared ownership scheme. 

To be eligible for London Rent to Buy, you must:

  • be a first-time buyer
  • have a household income of less than £64,300 (£60,000 outside the capital)
  • have a good credit history.

The supply of Rent to Buy properties is very limited and you may have to pass further eligibility criteria depending on which housing association the property is offered under. 

'First dibs' for Londoners

In 2018, London Mayor Sadiq Khan announced that lower-cost, new-build homes worth up to £350,000 will be offered exclusively to people who live or work in London.

The properties will be offered solely to London buyers for the first month of the property being on the market. Buyers from the UK as a whole will be able to make offers in the second month, and foreign investors will be allowed to make an offer in the third month if the property is still available. 

The scheme was launched after research commissioned by the Greater London Authority found that around 50% of new properties bought by overseas buyers in Central London cost under £500,000. 

The launch date of the scheme is yet to be finalised.

Starter Homes Initiative

The Starter Homes Initiative will allow first-time buyers aged 23-40 to purchase a new-build home at a minimum discount of 20%.

To be eligible for the scheme you'll need to have a combined household income of less than £90,000 in London (£80,000 for the rest of the UK) and be taking out a traditional mortgage. 

It's important to note that no properties have been built under the scheme so far, despite plans being announced in 2014. So if you're looking to buy a property soon and want to use one of the government schemes, it might be best to look into Help to Buy, shared ownership or Rent to Buy instead. 

London commuter towns: buying outside the city

Choosing to live further out from the city can help you find cheaper property prices. 

It's important to factor in the cost of commuting into your budget, to make sure that the potential saving you'll make on mortgage payments isn't cancelled out by rail fares.

The reliability of trains can be another drawback, so it's worth checking that you're not going to have to use one of the UK's most disrupted stations and train lines before committing to a commute. 

Our analysis of the best and worst train companies revealed that Southern Railway, Southeastern and Thameslink are among the worst rated. 

The table below shows the average house price and train fares as well as the average journey time and frequency for each London commuter town. 

Area comparison tool: where should I buy? 

Whether you're looking for a home in the heart of London or further afield, our area comparison tool reveals key information for each area. Discover average house prices, council tax bands, life expectancy, quality of life, Ofsted school ratings and more.

You can compare one local authority against the national average or another area that you're interested in.

Get expert advice on buying a home in London

It doesn't matter if you are just beginning to think about buying a home or you're ready to apply for a mortgage, you can have a free chat with the friendly team at Which? Mortgage Advisers

You can call them for free on 0800 197 8461 of fill in the form below for a free callback. 

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