Buying a Home in London – A Complete Step By Step Guide

Are you thinking about buying a home in London? Perhaps you’ve started the buying process and are just looking for some extra advice.

This month, the team at South London Movers is here to give you our complete guide to buying a home in London. Here is everything you need to think about before getting started:

Buying a home in London: Top 10 tips from the experts 

1. Plan your finances before you start   

The very first step in the home buying process is getting your finances in order. There are three main numbers you need to budget for before you start looking for a home. 

Mortgage

Unless you are buying without a mortgage, you will need to find a lender and find out how much they are willing to lend you. The amount a mortgage provider will lend will depend on your financial history and outlook. For example, the size of your deposit, your income, and your credit score. Make sure you are realistic about the monthly mortgage payments that you can afford. It’s best to have this number before you start house-hunting, so you don’t waste time looking at homes out of your price range. 

There are two additional fees associated with your mortgage approval. First, you may have to pay a mortgage arrangement fee. Fees typically range from about £500 to £2,000. Second, some lenders require a valuation survey. This can vary from £150 to £1,500.

Deposit

You’ll usually need to put up a deposit of at least 5% of the price of the property, although deposit requirements can go higher. It’s often worth saving more if you can wait longer, as a bigger deposit means that you can apply for mortgage deals with lower interest rates. 

Stamp Duty

If you’re buying a property for more than £125,000, you normally have to pay stamp duty land tax on its purchase price. If you’re a first-time buyer, you pay zero stamp duty on the first £300,000 of any home costing up to £500,000. 

To find out how much you will need to pay on a given property, you can visit the government of UK stamp duty land tax calculator

2. Investigate home ownership schemes

A home ownership scheme is when you receive government aid with the purchase of your home. A few such schemes are listed below. 

Mortgage guarantee scheme

Running from April 19, 2020 to December 31, 2022, this newly announced scheme allows applicants to buy their first home with just a 5% deposit. The scheme is eligible for homes up to £600,000, and is open to both first time buyers and current homeowners.

London Help to Buy

With London Help to Buy, the government will lend you up to 40% of the property’s value. You then need to put down a deposit of at least 5% and get a mortgage to cover the remaining 55% of the property price. The 40% loan will not collect interest for the first five years of you owning your home. 

Lifetime ISA

You can use a Lifetime ISA (Individual Savings Account) to buy your first home. You must be 18 or over, but under 40, to open a Lifetime ISA. You can put in up to £4,000 each year, until you’re 50, and you must make your first payment before you’re 40. The government will add a 25% bonus to your savings, up to a maximum of £1,000, per year. 

Shared ownership

If you are a first time buyer, teaming up with friends and family can help you get on the London housing ladder. Even if you don’t want to actually share a house or flat with someone, you may have a friend or family member who might like an investment opportunity. 

3. Be precise (know what you want)

Once you have your finances in order, it’s important to set out with a clear idea of what you want in a home. It’s helpful to write a list of non-negotiables, as well things you are willing to compromise on. Some things to consider are: 

  • Type of property (flat, detached, semi-detached, terraced) 
  • Number of bedrooms and bathrooms 
  • Proximity to day care, school, university or work 
  • Parks and greenspaces in the area 
  • Local crime levels 
  • Proximity to a transport hub

4. Register with an estate agent

Once you have a clear idea of where you want to live and what your non-negotiables are, it’s time to register with an estate agent. Registering is free, so feel free to connect with more than one. Keeping in touch with local estate agents can increase your chances of finding your ideal home, as agents sometimes contact registered buyers before listing a property online.

Agents work on commission and charge between one percent to three percent on the price of your house sale. Some charge a flat fee to sell your property.  If you are a first time buyer, you don’t need to worry about estate agent fees because these are paid by the seller.

Insider tip: Set up a property alert OnTheMarket.com. It features thousands of new properties each month, 24 hours or more before they are advertised on Rightmove or Zoopla.

5. Investigate and be patient

It’s important to view properties in person, as well as online. When you find somewhere you like, it’s worth viewing it more than once, and at different times of the day.

If you like a property, the next step is to investigate the area. Explore the neighbourhood, talk to the neighbours, stop by the local pub. Exploring the area around your potential new home is important and can give you important insight into the “feel” of a particular borough.  

Never rush into buying a property. If necessary, rent while you search for the right place to buy. Take your time, do your research, and while it might well be a frustrating process, the end result will be your ownership of a house or apartment in one of the most sought after cities in the world.

6. Leasehold vs freehold

A leasehold is when the property is given on lease to the lessee by the owner of the property. The lease period can vary from 30 to 999 years. Conversely, a freehold is when the owner has full ownership of the property with no restrictions on its transfer, modification or construction. 

It’s important to understand the difference between leasehold and freehold when you’re buying a property. Most frequently, buying a flat means buying a leasehold, while houses are freehold – but there is a trend for new-build houses to be sold as leasehold properties.

7. Get a surveyor / conveyancer

Property surveys help to assess the condition of the building and detect structural problems.   Although a survey is optional, it’s better to be aware of any issues before buying. Surveys range from a basic condition report, which costs around £250 to £300, to a comprehensive building survey, which could cost anywhere between £500 and £2,000. The older or more unusual the property (lighthouse, castle), the more comprehensive the survey should be.

Remember that paying for a good survey could save you money on repairs further down the line. Many people pay for surveys on purchases that fall through, so budget for two or three.

Insider tip: Don’t confuse the valuation survey conducted by your mortgage lender with a house survey. They are two different things and you should always have your own survey done independently.

8. Negotiate

Haggling is key. Just because a property is listed at a certain price, doesn’t mean that is what it is worth or that it is the lowest price the seller will accept. Do your homework as to what similar properties in the area are worth. Websites such as Zoopla and Rightmove will give you house prices, values and recently sold-for prices. 

9. After you purchase

Once the offer has been accepted, ask that the property is taken off the market. If this is refused, be very wary of spending any money on  conveyancing, as another buyer could come along and offer more. This is called gazumping. In England, an accepted offer is not legally binding until the exchange of contracts. To avoid getting gazumped, ask the estate agent (firmly and repeatedly) to take the property off the market and change the sign outside to ‘sold.’ Gazumping is deemed unethical by some agents but it is not illegal.

Home insurance

It’s vital that you have buildings insurance in place on your new home from the day you exchange contracts. Most mortgage providers make this a condition of lending.

Storage

You may be downsizing to a smaller home, or may just want to make sure that your new pad is organized and clutter-free. Storage is a great solution for keeping your belongings safe. Check out Store in London, they offer really low rates in London, and they include free packing and pick-up throughout London.

10. Removals

To make your moving day totally stress-free you’ll want to consider a removals company to help with your move. A reputable moving company will offer a free consultation so you can discuss what service is best for you. 

Here at South London Movers, we offer professional removals throughout London with our award winning service. We’re a friendly team and pride ourselves on our 100% customer satisfaction rate. For more information about the services we offer, get in touch with us today – contact our team. 

From student moves to whole house removals, piano removals and storage plans, we do it all to the highest standard.

We hope your enjoyed our guide to buying a home in London, and we hope it serves you well. Best of luck finding and securing your dream home!