London house prices remain fiendishly high compared to most of the rest of the UK, making buying in the capital seem like an impossibility.
There are, however, a number of ways to get on to, and move up, the London property ladder.
Here, we take a look at the cheapest areas to buy a house or flat in London, the government housing schemes that can help, and whether it’s worth widening your search area to find the home of your dreams.
- For a free, expert chat about getting a mortgage in London, call Which? Mortgage Advisers on 0800 197 8461 or fill in the form at the bottom of the article for a callback.
Cheapest areas to buy in London
Despite having the UK’s most expensive house prices, some areas of London are a lot cheaper than others.
Previously home to the iconic Ford car plant which inspired the film Made in Dagenham, Barking and Dagenham is the cheapest local authority in London, with an average property price of £300,518. (If you’re interested, the car plant closed in 2002 after reeling off its final car, a cherry-red Fiesta.)
Birthplace of singer-songwriter Kate Bush and once home to children’s author Roald Dahl, the local authority of Bexley is the second-cheapest place to buy a home. The average property there costs £341,784.
The local authority of Newham – home of the Olympic Park, which hosted the 2012 London Olympic Games – is the third-cheapest area to buy a house in London, with a £365,182 average property price.
The graphic below shows the 10 cheapest places to buy a home in London.
- Find out more: buying a house or flat in London
Most expensive areas to buy in London
Kensington and Chelsea is one of London’s most affluent areas, and its popular hot spots include Knightsbridge, South Kensington and Portobello Road. Unsurprisingly, it came out as the most expensive area to buy in London with an average house price of £1,238,614.
With a similarly eye-watering average of £1,028,141, the City of Westminster came in as the second-most expensive area in which to buy a property. Westminster is is home to the Houses of Parliament and also includes famous landmark locations such as Soho and Victoria.
Home to one of London’s most well-known markets, Camden is the third-most expensive borough in which to buy property in London, with an average property price of £821,238.
The graphic below shows the 10 most expensive areas to buy property in London.
Getting a mortgage in London
In order to get a mortgage, you’ll generally need a deposit of 5-10% of the property value. This can be extremely difficult to save up for especially if you’re planning to buy in London, but there are steps you can take to speed up the process and boost your deposit with a government bonus – see our guide on how to save for a mortgage deposit to find out more.
Alternatively, a 100% mortgage could allow you to buy without any deposit at all – but you’ll need a parent or close family member to guarantee the debt, and these types of mortgage are pretty rare in the current market.
As a general rule, mortgage lenders are allowed to let you borrow up to four-and-a-half times the total amount of your annual income, and the annual income of anyone else you’re buying with.
They’ll take a number of other factors into account too, including your creditworthiness, debts you currently owe, average spending and your personal circumstances.
When deciding how much to lend to you, most lenders will look at the household bills, recent wage slips and bank statements before making a decision. Some lenders use automated systems, while others manually underwrite the loan – meaning they may be open to considering exceptional circumstances.
It’s well worth talking to an impartial mortgage broker for advice on the lenders who are most likely to say yes, as well as tips on getting your credit record into the best shape possible before making an application.
- Find out more: how much can you borrow?
Schemes to help you buy a home in London
In a bid to help more people buy homes in London, and other parts of the UK, the government has launched several housing schemes including:
London Help to Buy
This means that 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.
Shared ownership allows you to buy a share of between 25-75% of a property and pay rent on the rest.
It’s designed to help people with small deposits and lower incomes get on the property ladder.
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
Rent to Buy was introduced to help people buy a home, even if they don’t have enough of a deposit.
The scheme allows you to rent a property 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.
The supply of Rent to Buy properties is currently very limited.
Commuter towns: buying outside of London
Londoners are fleeing the capital in record numbers in pursuit of cheaper property prices and a different way of life. In 2018 alone, Londoners purchased £30 billion worth of property outside the capital, the highest level since 2007, according to estate agent chain Hamptons International.
More than three-quarters of Londoners leaving the capital moved to the South East, South West or East of England.
If you’re willing to live a little further afield, it’s important to factor the cost of commuting into your budget, to make sure that the potential saving you’ll make on the price of your home is not offset by rail fares.
It’s worth testing the commute of anywhere you plan to live, as well as checking it wouldn’t involve using one of the UK’s most-disrupted stations. Our analysis of the best and worst train companies revealed that Southern Railway, Southeastern and Thameslink are among the worst rated operators.
The table below shows the average house price and train fares as well as the average journey time and frequency for a number of London commuter towns.
Get expert advice
Wherever you decide to buy it’s important to speak to a mortgage broker to make sure you get the best mortgage deal for your personal circumstances.
For a free consultation with one of our team of friendly experts, call Which? Mortgage Advisers on 0800 197 8461 or fill in the form below for a free callback.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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