In the last twelve months, house prices in London have risen by 7.5% compared to 12.0% across the rest of England.[1] In some boroughs, prices have even fallen. In the City of London house prices have dropped by 10.4% or £81,769 in the last year.[2]
Property prices in London have suffered due to people’s changing priorities. Working from home and the craving for open space prompted many to seek country living. However, according to Zoopla people are now beginning to return to the capital. In September 2021 demand for homes in London rose by 14%.[3]
So, if you are thinking about buying a property in London is now a good time? Lower prices combined with promising signs of recovery mean that buying property in the capital could be a wise investment.
How much do you need to save to buy property in London?
To calculate the deposit you’ll need, research property prices in your chosen borough and work out your likely monthly mortgage repayments. Find out how much properties are selling for by looking at property portals such as Zoopla, and also HM Land Registry’s paid price tool.[4]
You can buy a property with just a 5% deposit, but it is better to save more if you can. A larger deposit means better mortgage deals are available to you and so your monthly repayments will be lower.
Mortgage lenders will typically lend you 4.5 times your annual salary, so the lower your salary the larger the deposit you may need to save.[5]
What help-to-buy schemes are available in London?
For those who cannot afford to save a significant deposit, there are help-to-buy schemes available. You need to research each one carefully to find out which one suits your circumstances.
First Homes
First-time buyers and key workers who earn less than £90,000 a year in London (£80,000 outside London) may qualify for this scheme.
You can purchase a property with a minimum 5% deposit with a discount of 30% or more of the market price. Eligible properties must be sold for £420,000 or less in Greater London (£250,000 in the rest of the country).[6]
Help to Buy
This is a countrywide scheme that enables first-time buyers to purchase a new-build property of up to £600,000 with just a 5% deposit.
The government purchases an equity share in your property, which in London is 40% of the value of the property (20% in the rest of the country). You do not pay interest for the first five years you own the property. The loan must be paid back when you sell your home or after 25 years, whichever is first.
Properties that qualify for this scheme are available in all 32 London boroughs.
95% Mortgage Guarantee Scheme
This scheme, which is underwritten by the government, enables both existing homeowners and first-time buyers to purchase a property of up to £600,000 with just a 5% deposit. Many high street lenders support the scheme including Barclays, HSBC, Lloyds, Natwest and Santander.
You cannot buy a new-build property, second home or buy-to-let property nor can you apply for an interest-only mortgage.
The interest rates on this type of mortgage have risen since the beginning of the pandemic.
Shared Ownership
Shared Ownership helps first-time buyers and those who used to own a home but cannot afford to do so again to buy a property. In London, you must earn £90,000 or less to be eligible (£80,000 in the rest of the country).
You purchase a 10% – 75% share of a property and a housing association owns the rest. Rent is payable on the share you do not own. With this scheme, there is the option to buy further shares when you can afford to do so. You only need to raise a 5% – 10% deposit.
As shared ownership properties are always leasehold be aware of housing association service charges which can add significantly to your monthly repayments.
How to find the right conveyancer
Conveyancing in London needs to be speedy and efficient. The success of your property transaction relies heavily upon the quality of the conveyancing service you receive.
Here are some points to consider when you look for a conveyancer:
- Do not choose a conveyancer just because they have been recommended by your estate agent. Seek recommendations from those who have used the conveyancer in the past. This could be recommendations from family and friends, or it could be Google reviews online.
- Choose a proactive conveyancer who will work hard to push your deal through. Your conveyancer should reduce the stress of buying a house and not add to it.
- Choose a firm that gives you a named conveyancer, so you have a point of contact. Your conveyancer should communicate with you regularly, so you are never left in the dark about the progress of your transaction.
- Your conveyancer should be registered with either The Law Society or the Council for Licensed Conveyancers.
Most importantly, you do not need to choose a local solicitor for your property purchase. There is no reason to limit your choice. You can shop around to find the best service at the most competitive price.
During a typical property sale or purchase, you will never meet your solicitor so there is no reason for them to be nearby.
Why choose Insight Law residential lawyers?
If you are planning to buy a property in London, our experienced residential lawyers can help you. We have handled every type of residential conveyancing transaction and we are always on hand to answer your questions.
We offer a fixed-fee with no hidden extras, helping you to budget and ensuring there are no nasty surprises.
Our team are part of the Law Society’s Conveyancing Quality Scheme, so you can rest assured we are highly skilled and focused on client care.
Please call 02920 093600 to talk to one of our property solicitors today.
[1] Twindig, London house prices by London borough, https://www.twindig.com/market-views/london-house-prices
[2] Twindig, London house prices by London borough, https://www.twindig.com/market-views/london-house-prices
[3] Housing Today, London housing market showing signs of recovery, https://www.housingtoday.co.uk/news/london-housing-market-showing-signs-of-recovery/5113917.article
[4] HM Land Registry Open Data, https://landregistry.data.gov.uk/app/ppd/
[5] Which? 95% mortgage guarantee scheme, https://www.which.co.uk/money/mortgages-and-property/mortgages/getting-a-mortgage/95-mortgage-guarantee-scheme-awg6h3y9rcw3
[6] Gov UK, First Homes Guidance, https://www.gov.uk/guidance/first-homes