Complete 2023 Guide.

First Time Buyers
Guide London

FIRST TIME BUYERS
GUIDE LONDON

 

  •        Chapter 1: Should You Live in London?
  •       Chapter 2: London House Prices
  •       Chapter 3: London Cost of Living
  •       Chapter 4: Mortgages
  •       Chapter 5: First Time Buyer Schemes
  •       Chapter 6: Additional Costs of Buying a Home
  •       Chapter 7: Top Tips and Tricks for Saving
  •       Chapter 8: Best Areas for First Time Buyers in London
  •       Chapter 9: London’s Best Commuter Towns and Cities
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Chapter 1: Should You Live in London?

London is iconic. From Big Ben to Buckingham Palace, the capital holds some of Britain’s most signature sights and neighbourhoods.

But who wants to live in a tourist haven? First-time buyers are looking for a lot more than just pretty sights. They want job opportunities, great transport links, top schools, and excellent amenities. Luckily, London has all these things too.

And although it isn’t for everyone, with high house prices and cost of living some significant drawbacks, the UK capital offers the signature living experience in England in 2023.

So, why exactly should (or shouldn’t) you live in London this year? Chapter 1 in our guide covers three reasons why living in London is an excellent choice in 2023 and two reasons it might not be for you.

Whether you’re a family or a young professional, having good job opportunities is the key to success. Excitingly, the capital holds most of the UK’s top job opportunities in 2023. 

London is home to almost one-quarter of UK-based businesses and has seen incredible growth since the Covid-19 pandemic. In fact, while London was hit hard by Covid-19, the current number of financial job vacancies in the capital is 40% higher than in 2019.

If you’re considering your next career move or are hungry to move up in the world, London is a land of opportunity in 2023.

Getting to and from work is important, but what about the rest of London life? Whether you want to go shopping, take the kids to school, or meet up with some friends, the stress of travel can make or break a city’s living experience.

And despite the capital’s large size, getting around London is incredibly easy thanks to the world-class transport links. With London’s famed Tube covering 402km of track and the London Overground and various airports on offer, you’ll wonder how you ever lived without it.

While commercial interests are great, it’s important to find a place to live that keeps you occupied. London first time buyers will hit a gold mine in the capital, with the city having more to do than anywhere else in the UK.

Want to go sightseeing at London Bridge or Buckingham Palace? How about attending a show at the iconic West End? Or maybe you want a culture fix at London’s various art galleries and free museums? No matter your preferences, London has everything to offer.

The capital has around 67,000 amenities in total, estimated to be about 26% of the UK’s total. And if that wasn’t enough, there are also 3,000 public parks to explore, covering almost 20% of the city.

If you’re strapped for cash, the bright lights of London may not be for you. There’s simply no escaping that London can be an expensive city. In the next few chapters, we’ll go into detail about the average house prices paid by first-time buyers and the cost of living. Still, there’s no avoiding that London is pricier than other major cities.

According to the Land Registry UK House Price Index, the average property price in the London region is £529,882. While this gets cheaper depending on which area you buy in and if you’re a first-time buyer, this figure is still almost double the UK average.

The cost of living can also be challenging for homeowners, estimated to be 30% higher than in Birmingham, according to Numbeo.

The fast-paced lifestyle of London may not be for everyone. From busy streets to packed out Tube carriages, living in London can be a frantic experience.

While this is true for most big cities during rush hour, London likely takes it to a different level. Some people thrive in busy environments like this. But if this is the first time you’ve moved to a big city, you may be in for quite a culture shock.

Does this busy lifestyle mean you can’t find quiet in London? Not at all! There are plenty of residential retreats on the outskirts of the city. And the city is blessed with some great green spaces for reconnecting with mother nature.

But if you need to travel into the inner city for work or leisure, you should prepare yourself for a lively commute.

Chapter 2: London House Prices For First Time Buyers

Before you start your London house hunting journey, it’s good to get familiar with the house prices you’ll come to expect.

There’s no escaping that London is expensive. Infamously so. With average house prices in the region far above anywhere else in the UK.

As of February 2023, the average house price paid by first time buyers in the capital was £458,863 – an eye-watering 86.98% MORE than the UK average.

But while you may think this is a price too far beyond the realms of affordability, there can be considerable fluctuations in prices depending on where you buy.

House Prices in London Areas

For first-time buyers strapped for cash, you’ll likely want to avoid Central London.

The capital’s beating heart is currently London’s most expensive region, with average prices of £1.5 million.

On the flip side, the most affordable region is East London, which features average prices of £511,689.

Source: Land Registry

Of course, these prices can also change based on the specific borough you invest in.

The most affordable London borough is Barking and Dagenham in East London. The average price by first-time buyers in the area is only £322,588 – surprisingly affordable given London’s reputation.

The same can’t be said for Kensington and Chelsea. As a first-time buyer, London’s most affluent borough will set you back an eye-watering £1,193,472.

But you shouldn’t let some of these prices scare you away. Out of London’s 33 areas (32 boroughs and the City of London), 12 see house prices below £400,000, with a further 14 under £600k.

This means 26 London boroughs feature house prices eligible for the Help to Buy scheme (but more on that in Chapter 5).

How (and Why) Are House Prices Growing in London?

Over the last year, house prices across London have increased by £30,767 between January 2021 and February 2023. Prices for first-time buyers saw an almost identical growth trend (as you can see from the graph) and saw home values rise by £24,673.

These rates surpass the national average, which saw prices rise by £29,300 over the same period. But why are London prices rising higher than other locations in the UK?

The biggest contributor to rising house prices in the capital has been surging demand levels. British households have more cash in their pockets following lockdown, with limited spending opportunities leading to the second-highest level of savings on record.

Plus, a combination of low-interest rates and the stamp duty holiday has meant that the Covid-19 pandemic has spurred on price growth, especially in the capital, which has always seen the most buyer demand.

Source: Land Registry UK House Price Index

Will Prices in London Rise In 2023?

The question is: Should you buy a house in London now or wait to see if prices drop?

Unfortunately for home buyers, it looks like prices will continue to grow in the capital for the foreseeable future.

Predictions from JLL and Oxford Economics suggest that prices in Greater London will see an annual average price increase of 4.7% between now and 2026, with a 6% growth in 2023 alone.

Meanwhile, Prime Central London buyers expect house prices to grow by 4.0% annually over the same period and a 7.5% hike in 2023.

This growth comes as no surprise, with buyer demand forcing prices higher amid a low housing supply. New homes in London are far below pre-pandemic levels and are set to continue to fall below the 52,000 annual target set by the Greater London Authority.

In fact, this buyer demand is so substantial that 2021 saw almost 12,000 more property transactions than 2019 – despite the Covid-19 pandemic.

While this level of demand is unlikely to continue in 2023, house prices will remain high and growing in the capital. Of course, there’s no way to guarantee this, but if you’re looking to get London homes for as cheap as possible, it’s likely worth buying now if you can afford it.

Should You Buy a New Build or an Existing Property in 2023?

If you’re like many other first-time buyers, you may have your eyes on a new build. New builds homes can be a top choice for so many reasons, with great energy efficiency, modern living, and developer incentives just some examples.

And, due to several first-time buyer schemes only available for new builds, it may be the only way for some to get on the property ladder.

But, and it’s a big but, new build homes can be incredibly expensive. Despite generally lacking the space of older properties, the so-called new build premium means you could be paying tens of thousands extra for the privilege.

However, there is good news – London’s new build premium isn’t as overwhelming as other places in the UK.

Currently, the average price paid for a new build home in the capital is £538,154 – £20k more than existing properties. Compare this to the UK average, though, which commands a price tag of £352,909 – a staggering £86k more than existing homes.

So, although house prices are clearly higher in the capital, you won’t be overly punished for opting for a new build property.

Interested in London property investment? View our complete guide.

 

Download London First Time Buyers Guide

Chapter 3: The Cost Of Living In London

We’ve established that London house prices can be quite expensive for first time buyers. But affording (and buying) a home is just one part of the London equation – you’ll also need to think about the cost of living.

Cost of Living website Numbeo has found that the cost of living for a family of four is £3,151, while prices for a single person are around £908.

These are high figures and are a considerable distance away from other big UK cities. For instance, London’s consumer prices are almost 30% higher than Birmingham – the UK’s second city.

While it’s worth acknowledging that London wages are higher due to this cost of living, you’ll need around £5,000 in London to have the same standard of living you’d have with £3,400 in Birmingham.

Transport Costs

With congestion charges, difficult parking, and busy and complicated roads, most Londoners opt for the city’s world-class public transport systems.

From the iconic Tube to the London Overground, trains are by far the cheapest way to get around the capital, with over 272 stations handling up to five million passenger journeys a day.

Unfortunately, taking advantage of this best-in-class infrastructure can be pricey, with another additional cost you’ll need to consider.

Prices can change drastically depending on what zone you’re travelling to and from, with the capital split into six zones.

For a travel card, you could be spending up to £2,812 annually, or £270 per month. Weekly pay as you go tickets can be up to £70.30 per day.

Council Tax

Due to London split into 32 borough councils and the city of London, council taxes can heavily changes depending on which area you’re living in.

Council tax is an annual fee paid to your local council and is based on your personal circumstances, your tax band based on the valuation of your property, and how much the council needs to generate.

Tax bands range from A to H (A being the cheapest) and they’re based on the market price of the property on April 1st, 1991.

This can create some odd quirks in the system, with some expensive areas in 2022 having far lower council tax than more affordable areas.

For example, Barking and Dagenham, the cheapest area for first time buyers in London, can cost H band property owners up to £3,569.66. Meanwhile, Kensington and Chelsea H band properties cost £2,728.94 in council tax – an odd quirk of the London market due to the incredible level of growth in certain areas of the capital.

Chapter 4: Mortgages

Is a Mortgage Right for You (And Are You Ready to Buy)?

Back in the day, mortgages were aplenty. Homebuyers could borrow whatever they wanted, but the credit crunch has changed things completely.

Fast forward to the modern day and it can be a battle to secure a mortgage. Not only do you need a sizeable deposit for the best deals – a goliath challenge given the current house price crisis – but you need to jump through several hoops to make yourself seem attractive to lenders.

And this rat race for good mortgage deals and the thirst for owning a home can spread many people financially (and emotionally) thin. Yes, owning a home is great. But if you end up getting repossessed, it will be all for nought.

There’s no rush in getting on the property ladder. House prices can, and do, change, and waiting a few months to ensure you’re in the right financial situation could help you save thousands.

So many people want to leave the renting life behind. But as money saving expert Martin Lewis puts it: “Renting isn’t a dirty word.” It’s great to own a home but you should only do so when you’re ready.

However, if you’re in the right financial situation and are completely ready for a London house purchase, keep reading to learn more about the basics of mortgages.

How Much Can You Borrow?

Generally, lenders will typically lend up to four times your salary (or joint salary if you’re buying with a partner). However, it can be more complicated than this with lenders conducting several checks outside your income.

Lenders will scrutinise all your finances and debts. They’ll compare the money you earn and compare it to your outgoings to identify how much NET cash you have.

And after this, lenders may even require you to have MORE money if mortgage rates rise. To do this, they can stress test you by putting you on a higher mortgage rate to see just how much you can afford.

How Much Deposit Do You Need?

As a rule of thumb, most borrowers will usually need a minimum deposit of 10% to get a good choice of mortgages. There are some mortgages available with a 5% deposit (referred to as 95% LTV, more on that next) but these tend to have far higher interest costs every month.

If you can, 20% and even 40% deposits can get you the absolute cream of the crop mortgage deals, but with London prices so high, this can be a near impossible task to do.

In a nutshell, the higher your deposit, the cheaper the mortgage. And this can be quite dramatic when you compare prices.

Based on a two-year fixed rate mortgage for a first-time buyer on a £200,000 house, a 40% deposit mortgage will see you spend just £13,314 in mortgage repayments over two years (according to MoneySavingExpert.com)

In comparison, a 10% mortgage deposit would see you spend £21,500 over the same period.

Source: MoneySavingExpert, 2023

What’s LTV?

You’re going to be seeing the term “LTV” a lot. But does it mean?

LTV, or loan-to-value ratio, is the percentage of a property value that’s loaned to you as a mortgage. Essentially, the LTV shows how much deposit you’ll need to pay.

For example, a 90% LTV mortgage equals a deposit of 10%. So, if you’re buying a house worth £100k and put down a £10k deposit, you’d require an LTV of 90%.

Unfortunately, it isn’t just as simple as needing 10% of the property’s purchase price. Mortgage lenders will assess the value of your home before lending and will base the LTV calculation on this assessment.

The value of your home could be worth less than what you want to pay for it. And because they’ll only lend 90% of this value, you could need a bigger deposit to cover the full purchase price.

What are Mortgage Brokers, and Should You Use One?

Finding mortgage deals can be a hassle, especially as a beginner. But getting the right deal can pay dividends in the long run and could result in £100s saved per month.

And while you can certainly do the process of searching yourself, one popular way of finding mortgage deals and discounts is with a mortgage broker.

Mortgage brokers search the market on your behalf to find the very best deals. They can act as an advisor and help you with government mortgage schemes and could even increase your chances of being accepted for an offer.

For beginners, mortgage brokers are well-recommended by popular finance sites, so you should definitely consider using their services. Just keep in mind that they could charge you a fee, typically no more than 1% of the mortgage value.

Top Tips for Getting a Mortgage

Affording a mortgage deposit is a big step in the home buying journey, but it’s not the final hurdle. With stringent credit checks on the horizon, you may need to do some grafting to make yourself as attractive as possible to lenders.

Here are some top tips to keep in mind before getting a mortgage.

1)      Boost your credit score

Boosting your credit score in an essential tip and you should start doing this well in advance of your application. You can do this by getting a credit card and spending it each month to show you can borrow responsibly. Just make sure you always repay on time.

2)      Don’t withdraw cash on a credit card

Having a credit card is great, but you shouldn’t withdraw cash with your credit card as it can look like you’re desperate for cash.

3)      Stay out of your overdraft

Overdrafts can be a brilliant safety curtain, but it’ll show lenders that you can’t live within your means. Some lenders may even outright refuse a mortgage if you’ve been in your overdraft in the prior three months.

4)      Every little helps

Mortgage lenders love higher deposits as it reduces their risk. By putting down just £100 more than the minimum deposit you could speed the process up or even boost your chances of being accepted.

5)     Say no to payday loans

Life can get expensive and sometimes people use payday loans to cover the costs. But this can massively impact your chances of being accepted, with some mortgage lenders refusing anyone with a current loan. So, if you can, avoid payday loans like the plague.

Types of Mortgages

Our final stop in this chapter is exploring what mortgage is right for you. There are essentially two types of mortgages, repayment and interest-only.

Repayment mortgages are the most common type for residential buyers and involves paying monthly payments that chip away the overall debt of your loan.

As the name suggests, interest-only mortgages mean you just pay the interest of your loan without touching the overall debt. Come the end of your mortgage deal, you’ll still need to pay the total loan back.

Interest-only tends to have much lower repayment costs each month, but you’ll still owe hundreds of thousands come the end of your agreement. While you may be confused why you’d opt for this, you’ll usually not need to worry as most lenders will not lend on an interest-only basis due to the risks of no repayment.

There are two types of repayment mortgages, fixed rate and variable rate mortgages, with the latter having several sub types.

Fixed-rate mortgages

The interest rate of your loan won’t change during the agreed upon time.

Pros

  •         You’ll know what costs to expect.
  •         Payments won’t rise if interest rates skyrocket.

Cons

  •         Starting rates are higher in fixed-rate mortgages.
  •         Your payments won’t drop if interest rates fall.
  •         Leaving your fixed-rate mortgage can incur high fees.

Variable rate mortgages

Trackers

The interest rate changes in line with a fixed economic indicator, which is usually the Bank of England base rate. If the Bank of England’s base rate rises by 1%, your mortgage payments will do the same.

However, some trackers only last for a set number of years and will then go to a standard variable rate.

Pros

  •         Only economic changes will impact your rate, rather than the commercial desires of your lender.

Cons

  •         Uncertainty as to how rates will change.
  •         If rates rise, you’ll be spending more.

Standard Variable Rate (SVR)

Set by the lender, a standard variable rate tends to follow the Bank of England base rate but has a few quirks.

Namely, since the lender is in charge, they usually won’t drop the interest rates by too much if the Base Rate drops. On the other hand, if the Base Rate rises, they’ll usually increase rates by the full amount to benefit them in both ways.

For example, if the Base Rate were to drop by 0.25%, they may only reduce the SVR by 0.2%.

Pros

  •         If the Base Rate drops, your rates will most likely drop too.
  •         There are usually no early repayment charges.

Cons

  •         Uncertainty as to how rates will change.
  •         SVRs can get expensive.

Discount Rate

As the name suggests, Discount rates offer a discount on a standard variable rate mortgage for a short period of time.

Pros

  •         Cheaper than the standard variable rate.
  •         If the Base Rate drops, your rates will most likely drop too.

Cons

  •         Uncertainty as to how rates will change.

 

Download Your First Time Buyers Guide

Chapter 5: First Time Buyer Schemes

With all this doom and gloom about high house prices, you may think that London’s property market is unattainable. And while buying a home, like anywhere in the UK in 2023, can be tough, the capital actually has an ace up its sleeve.

You see, London has access to some exclusive first-time buyer schemes designed to help young people get on the London property ladder, as long as you want a new build.

In Chapter 5, we’ll show you the various housing schemes available in the capital, with insight into some exclusive criteria you won’t find anywhere else.

Help to Buy London

Likely the most popular housing scheme for first time buyers in London is Help to Buy. This government loan allows buyers to get a loan to help towards the cost of buying a new-build home as a first-time buyer.

You’ll need to be 18 or over to apply for the loan and will need first-time buyer status and the ability to cover interest payments. If you’re eligible, you can then borrow up to 40% of the property’s value, which can be £600,000 or less.

The home needs to be a new-build and has to be sold by a Help to Buy registered homebuilder. Yet, a Help to Buy equity loan is by far the most affordable way of buying new homes in London. With 40% of the price covered, you’ll need a minimum 5% deposit with the remaining 55% covered with a mortgage.

Of course, like any loan, you’ll need to pay it back. But you don’t pay any interest for the five years, with an interest rate of 1.75% applied in the sixth year based on the amount you originally borrowed. The interest is spread across the year in monthly payments. It then increases every year by adding the Consumer Price Index plus 2%.

Mortgage Guarantee Scheme

The Covid-19 pandemic essentially wiped out 95% LTV mortgages, but the mortgage guarantee scheme has helped open these opportunities back up on the market. The scheme was launched in April 2021, and helps buyers get a new build property worth up to £600,000.

The mortgage you’re applying for will need to be between 91% and 95% LTV to be eligible for the scheme, and you’ll need to act in 2022 as the scheme is set to end in December 2022 (although there is potential it’ll be extended).

Shared Ownership

Getting all the way to the total price of a property can be tough. But what if you didn’t have to cover the full price? With the shared ownership scheme this is now possible. Buyers in London can now buy between 25% to 75% of a property with the help of a mortgage.

Ideal if you don’t have the cash required to get a 90% or 95% LTV mortgage, you can buy properties from a housing association and increase the share as time goes on. However, there are some caveats to this.

As you’ll be buying the home with a mortgage, you’ll be paying monthly mortgage repayments. But you’ll also be paying rent to the housing association, which is typically charged at 2.75% of the remaining price not paid for.

Naturally, this can make it incredibly difficult to save enough money to buy the rest of the property. Be sure to crunch the numbers beforehand to ensure this investment is affordable for you.

London Living Rent

Renting while trying to save up enough money for a mortgage can seem like an herculean task. But the London Living Rent can help you bridge the gap between being a tenant and being a homeowner.

Through the scheme, London renters with a household income of up to £60,000 will get below market rent rates to help build up a cash deposit. Your tenancy will be available for at least three years, and you’ll be given the opportunity to buy the home via the shared ownership scheme after this period.

There’s currently funding to build homes specifically for the London Living Rent scheme, which will be built between now and 2026.

Want to learn the best areas to live in London? View our complete guide.

 

Chapter 6: Additional Costs Of Buying A London Home

Unfortunately, the costs of buying a home don’t end at a mortgage deposit. There are plenty of hoops you still need to jump through before you can sit back and relax in your new London home. It’s a good idea to factor all these costs into your calculations to ensure you can afford a London property.

Stamp Duty

Stamp Duty Land Tax is a progressive tax paid on the purchase price of property in England and Northern Ireland.

Most homebuyers will start paying tax on properties worth over £125,000 but first-time buyers in London will get access to tax relief. This means you won’t pay any stamp duty on any properties worth up to £300,000, with discounted rates available up to £500,000.

However, if your property is worth more than £500,000, you won’t get ANY first-time buyer relief and will return to normal rates.

So, if you’re buying a home worth £400,000, a first-time buyer will pay £5,000 – 0% on the first £300,000 and 5% on the remaining £100,000. Meanwhile, someone buying their next home will pay £10,000. 0% on the first £125,000, 2% on the next £125,000, and 5% on the remaining £150,000.

Purchase price of property Rate of Stamp Duty
£0 – £300,000 0%
£300,001 – £925,000 5%
£925,001 – £1,500,000 10%
Over £1.5 million 12%

 

Surveyor’s fee

Before you buy a London home, it’s a smart idea to get a surveyor in to check if there any potential costly issues.

Paying for a good survey can save you thousands in the long run, with survey costs ranging from £250 to over £600 depending on how thorough the survey is.

Legal fees

Typically, you’ll need a solicitor or conveyancer to carry out all the legal work. This can set you back up to £1,500.

Chapter 7: Top Tips And Tricks For Saving

As you can see, there are a lot of expensive costs to cover when buying a home in London. And although this may be cheaper for first-time buyers than those moving to a second home, there’s no escaping the fact that you’re going to need a lot of money.

So, how on Earth can you get the money required? Unfortunately, not everyone has big inheritance or the Bank of Mum or Dad to help. But there are ways to get to the golden number required to buy a home, it’s just going to take a lot of time, knowledge, and saving.

How much do you need to save?

Before you embark on your saving journey, you need to have a target in mind of how much you’re going to save. The average age of first-time buyers in the UK is 32, which means you’ll need to start saving as soon as possible.

So, let’s say you start saving at 22 – that gives you 10 years of saving. In London, the average wage for those aged between 22 and 29 is £30,092. Since the current average price paid by first time buyers in the capital is £458,863, you’ll need a minimum 10% deposit of £45,886.

If you want to meet this average first-time buyer age and you start saving at 22, you’ll need to save £4,588 per year or £382 per month. As you’ll be taking home around £2,508 after taxes, you’ll need to save 15% of your monthly income.

That’s a lot of money, especially when we haven’t even factored in rent, student loans, and living costs, but it’s not impossible. With a bit of budgeting, utilising first time buyer schemes, and using savings account, you can get to this magic number. Here’s how:

How to Save

1)      Use a Lifetime ISA

Your first essential step is to open a lifetime ISA. Lifetime ISAs are a type of savings account that pay interest on your savings, but you can only pay £4,000 per year into the account.

So, why are LISA’s essential? Well, while interest rates aren’t special, for every £1 you put into a Lifetime ISA, the government will give you a free 25% bonus. This means if you save your total £4,000, you’ll get an additional £1,000 per year.

Think about that. While our target was £4,588, using a lifetime ISA means that you don’t necessarily need that extra £588 for savings. As such, you’ll need to save £333 per month instead of £382.

2)      Plan out your finances

You’ll likely need to cut costs to save up the required cash. From Netflix to switching to cheaper mobile and broadband deals, there are plenty of opportunities to reduce your monthly outgoings.

But pinpointing these opportunities can be difficult, which is why planning out your finances and outgoings can be a neat trick. Using spreadsheets to manage your monthly spending can be a great way to track your money.

It’s also a smart idea to set up direct debits to your savings so the cash can come out automatically and stop you from impulse buying (we all do it).

3)      Consider buying with a partner

Finding the love of your life is easier said than done. But if you are fortunate to find your husband or wife by 32, buying with a partner can make saving up and buying a home far easier.

Not only can you extend the amount of cash you can borrow (four times your total salaries combined), but you’ll only need to save half as much as an individual.

4)      Take advantage of government schemes

The handful of government schemes available to first time buyers can make securing your first London home far more achievable.

London’s Help to Buy scheme, for instance, let’s you get a loan worth 40% of the price of a new build if you have a 5% deposit.

This will drastically reduce the amount of money you’ll need to save per month, with just a 5% deposit now required.

5)      Think about investing (If it’s right for you)

Spending money to earn more may seem counter intuitive, especially when you’re actively trying to save up your cash for a house. But investing in the stock market, NFT’s, or cryptocurrency, can be an incredible way to grow your finances.

For example, the stock market index S&P 500 delivered an average annual return of 13.95% over the last decade. Using these figures, if you put £500 into this index and contributed £500 each year, you’d end up with around £10,472.

Of course, it very rarely turns out like this, with the stock market known to rise and drop at a moments notice. But it can, and does, deliver great returns to buyers.

Just remember that all investments pose risks, and you could make a loss. You should only invest if it’s right for you and your finances.

Chapter 8: Best Areas For First Time Buyers In London

With 32 boroughs and the city of London, the capital is a diverse place to live. From rural hotspots to inner-city hubs, London has an area for every taste. But it also an area for every budget, with average house prices in the capital drastically changing depending on where you buy.

These first-time buyer havens can be super affordable (by London’s standards) with 26 boroughs priced below £600k, meaning you’ll be eligible for London’s Help to Buy scheme. But which areas are the cream of the crop for first-time buyers? Where are the most affordable places in London?

Barking and Dagenham

Found in the East London region on the capital’s outskirts, Barking and Dagenham is the most affordable place for first-time buyers. The average price paid by first time buyers in the area was £322,588 in Q1 2022, almost £50k below the price paid by non-first-time buyers.

Although the area has a reputation as one of London’s poorer areas, the borough is rising with a new Overground station opening in 2021. This has been shown in the house price growth stats, with a considerable 8.22% rise in prices paid by first-time buyers over the last 12 months.

Croydon

The southernmost of London’s 32 boroughs, Croydon boasts a lively living experience with pubs, restaurants, and cocktail bars in abundance. The average price for first time buyers falls at just under £340,000 – 4.97% more than 12 months ago.

This makes the South London borough a popular spot for young professionals, with 50 million passengers using Croydon’s railway stations each year.

Bexley

Travel to South East London, and you’ll find this surprisingly affordable leafy suburb. A popular spot for families and retirees, Bexley forms part of Outer London and is home to around 250,000 people.

The borough is currently the third-best area for first-time buyers, with an average price of just £345,962. This price may come as a shock, given Bexley’s reputation as a great place to live. In fact, it was named one of the UK’s best places to live back in 2012.

Borough Average price paid by first-time buyers Yearly Increase
Barking and Dagenham £322,588 8.22%
Croydon £338,036 4.97%
Bexley £345,962 8.41%
Havering £348,056 7.46%
Sutton £355,470 7.14%
Hillingdon £373,890 4.95%
Lewisham £377,256 -2.39%
Enfield £379,354 3.06%
Greenwich £381,651 4.60%
Bromley £382,942 7.14%
Hounslow £396,722 4.89%

 

 

Chapter 9: London’s Best Commuter Towns And City

London can be an affordable place depending on where you buy. But if you’re looking for even lower prices, then you could be suited to one of London’s many great commuter towns and cities.

The outskirts of the UK capital can be a gold mine for first-time buyers, with great transport links putting several top places within just a 30-minute commute of central London. And while these towns are close the capital, they’re by no means in its shadow – offering their own blends of great schools, jobs, and things to do.

So, if you want some affordable towns and cities near to London and cheaper than the city-wide average, you can find out about 10 top places in this chapter.

Just keep in mind that London’s commuter towns don’t qualify for the city’s various first-time buyer schemes, meaning they could require more expensive deposits and loan payments.

St Albans, Hertfordshire

As of 2023, London’s best commuter town is the city of St Albans in Hertfordshire. Steeped in history with its iconic cathedral and Roman amphitheatre, the city is widely considered an affluent, more rural alternative to the inner-city hubbub of London.

Thanks to its small size, you can get to everything St Albans offers within a short walk, with plenty of restaurants, shops, and great schools to explore for families. And with just a 20-minute journey from St Albans to St. Pancras International station, you can get into the heart of the capital in no time.

The only issue? Affluent Albans is expensive. First time buyers pay an average price of £432,749 in St Albans, a costly fee but still cheaper than prices paid in the capital.

Hatfield, Hertfordshire

Hatfield hasn’t always had the best reputation. Seen as a drab and dull town, many people cited the best part of Hatfield as it’s proximity to London.

And sure, this is a fantastic benefit with Hatfield just 21 minutes from Kings Cross. But the town has also became a great place to live in its own right, with major regeneration work looking to transform the town over the next decade.

The town is also surprisingly affordable for a South England location, with the average price paid by first-time buyers around £349,987.

Reading, Berkshire

If you thought Hatfield was cheap, then you’ll be blown away by Reading in Berkshire. A premier hotspot for London commuters thanks to its affordable house prices, lower cost of living, and fantastic schools, Reading residents can get to Paddington station in just 25 minutes.

The town offers a vibrant lifestyle with excellent opportunities for retail therapy. It even has its own booming job market for those who aren’t looking to travel to the capital. 

The average price paid by Reading’s first-time buyers is only £272,857, a whopping £186,006 below the average in London.

Want to learn more about London property? View our complete guide.

 

Want To Know More On The Best Areas To Live In London?

Read our detailed guide to learn the best areas to live in London as a first time buyer.