Don’t despair though, because despite the competitive market, it is possible to own a home in London in 2026.
Our guide on how to buy a home in London will explain the buying process and fill you in on the current buying schemes in 2026.
The Home Buying Process
Buying a home in London in 2026 requires a strategic approach with careful planning.
First of all, here is an outline of the buying process:
Assess your finances: Determine what you can afford based on your savings, income, and potential mortgage capacity. Also, account for additional costs like Stamp Duty and legal fees.
Get a mortgage in principle: Speak with a lender to get an agreement in principle. This is an estimate of how much a lender might be willing to lend. It can help you set a realistic property budget, but is not a formal mortgage offer.
Property Search: You can use property portals to find a property you like. You can browse Share to Buy and Peabody if you are looking at Shared Ownership homes.
Offer and negotiation: Submit a formal offer through an estate agent to the seller. The seller may accept it, reject it, or negotiate on the price. In England, an accepted offer is not legally binding until contracts are exchanged. For Shared Ownership, you can not negotiate the price.
Conveyancing and legal checks: You’ll need to appoint a solicitor or licensed conveyancer to handle the legal aspects. This includes reviewing the contract, arranging property searches, raising enquiries, and liaising with the seller’s solicitor or conveyancer.
Arrange a Survey: Pay for an RICS surveyor to check the property for any potential issues, e.g., structural problems or dampness.
Completion: On the agreed completion date, your solicitor or conveyancer transfers the purchase funds to the seller’s solicitor or conveyancer. You then receive the keys and become the legal owner.
Saving for a Deposit in London
The major barrier to many hoping to buy a home in London is saving enough for a deposit.
Usually, you’ll need 5-10% of the property’s value for the deposit, e.g. for a £500,000 property, a 10% deposit would be £50,000. Saving for a deposit can be challenging with London’s high rent levels.
The government offers the Lifetime ISA (or LISA), which can help you save. This is an ISA for those saving for a first home. It works by the government adding a 25% bonus to your savings, up to a maximum of £1,000 per year. You can deposit up to £4,000 a year. For more on saving, you can read our article on saving for a deposit.
How to Obtain a Mortgage in London
Securing a mortgage will involve going through the mortgage application process. It’s recommended to start by contacting your bank, a mortgage company, or a financial advisor to get a preliminary idea of how much you can borrow.
When you apply for a mortgage, the lender will conduct a thorough financial assessment of your income and outgoings. They will look at your employment and any additional income or benefits you receive. They will also check your household expenditures, including bills, living costs, and debts such as loans. This is all to calculate your capacity to manage the mortgage payments.
Lenders will also check your credit with a credit reference agency when you make a formal application. If you are interested in getting a Shared Ownership mortgage, you can see our list of Shared Ownership mortgage lenders.
Buying Schemes in London
Several Schemes are available in London to help first-time buyers climb onto the property ladder:
Buying through Shared Ownership
Shared Ownership is a more accessible path to buying a home, allowing you to purchase a share of a property, usually from 25% to 75%, while paying rent on the remaining portion.
The initial deposit will therefore be significantly lower than a standard mortgage deposit. Over time, you can ‘Staircase’ by buying more shares, gradually increasing your ownership until you own the property outright.
To be eligible for Shared Ownership in London, your household income must be under £90,000 annually, and you should not be able to afford to buy a home on the open market. You can read our eligibility page for more details.
Peabody offers a range of stylish new Shared Ownership homes across London. You can browse our developments using our home search.
London Living Rent
London Living Rent is another helpful scheme that offers a pathway towards homeownership.
The Mayor of London backed scheme is designed to help middle-income Londoners save for a deposit on a Shared Ownership home.
It provides quality rented homes with rents set at roughly a third of local average household incomes, below market rates.
London Living Rent homes are offered with tenancies lasting a minimum of three years, while providers are expected to support tenants into homeownership within ten years.
Key eligibility criteria:
Have a maximum household income of £75,000
Live or work in London
Have a formal tenancy (for example, in the private rented sector) or live in an informal arrangement with family or friends as a result of struggling with housing costs
Does not own any other residential home
Unable to currently buy a suitable home (including through Shared Ownership) in your local area
First Home Scheme in London
The First Homes Scheme allows first-time buyers in London to purchase a home at a discount of at least 30% from its market value. This includes new homes sold by a developer or a property that was bought before through the scheme and is now being resold.
You can look for new homes in your area on the scheme that are advertised by developers or estate agents. New build First Homes cannot cost more than £250,000 (or more than £420,000 in London) after the discount has been applied. Local councils also have the power to set a lower maximum price.
To qualify, you must be a first-time buyer with a combined income not more than £90,000 in London, and you must secure a mortgage for at least 50% of the discounted purchase price of the home.
Finally, the property must also be your only or main residence, and councils may apply additional local criteria, such as prioritising local residents or key workers during the first three months that a property is marketed.
Additional costs of buying a home in London
Whilst saving for a deposit is usually the largest hurdle, you also need to remember the additional costs that come with buying. The main ones are:
Stamp Duty Land Tax: A tax paid when purchasing property or land in England. Standard rates start to apply to the portion of the purchase price above £125,000. Eligible first-time buyers pay no Stamp Duty on the first £300,000 of a property costing £500,000 or less, then 5% on the portion from £300,001 to £500,000. If the property costs more than £500,000, standard rates apply to the full purchase price.
Legal Fees: You’ll need to hire a solicitor to handle the legal aspects of the home purchase. In London, the average fees are around £1,500 to £3,000.
Survey Fees: A home survey is needed to identify any issues with the property before purchase, costs from £300 to £1,000.
Leasehold considerations when buying a home in London
If you're buying a flat in London then it will usually be leasehold. This means you own the property only for the number of years that are set out in the lease. The freeholder will own the building and the land it's built on.
Before committing to a purchase, ask your solicitor or conveyancer to check the remaining lease length, as a shorter lease can affect the property’s value. They should also review the ground rent terms, including whether the charge can increase, and explain any restrictions on matters such as subletting, keeping pets, or making alterations.
When buying a new Peabody home the lease length can be between 125 and 999 years. The length of the lease varies by development and is always clearly outlined in the development brochure.
Buying a house in London through Shared Ownership with Peabody
Peabody has helped hundreds of first-time buyers get on the property ladder in London through Shared Ownership.
Peabody is one of the largest housing providers in London and the Home Counties, offering over 108,000 homes.
With a mission to help people flourish, we focus on providing quality homes in great locations and services that positively impact communities. Committed to supporting first-time buyers, we offer the opportunity to step onto the property ladder with a Shared Ownership home, starting with just a 25% share.
Frequently Asked Questions about Buying a House in London
The income required depends on the property price, the size of your deposit, your existing financial commitments and the lender’s affordability assessment. Mortgage borrowing is usually capped at around four-and-a-half times your annual household income.
With high property prices, many people are turning to Shared Ownership as an affordable option.
It allows you to buy a percentage of a property (starting at 25%) and pay rent on the remaining share, making it easier to buy a home in London with a lower income.
The best way to buy a house or flat in London often depends on your circumstances. For many first-time buyers, Shared Ownership is a more affordable route. It allows you to purchase a portion of a property, usually starting with 25%, and gradually increase your share as you can afford it. This helps to reduce the upfront cost and makes owning a home in London more accessible for those struggling with high property prices.
Typically, you'll need a deposit of at least 10% of the property's value to buy a house in London. However, with Shared Ownership, the deposit is calculated on the share you’re buying, not the entire property value. For example, if you buy a 25% share, your deposit will be much smaller, making it easier for first-time buyers to afford their first home.
