Don’t despair though, because despite the competitive market, it is possible to own a home in London in 2025.
Our guide on how to buy a house in London will explain the buying process and fill you in on the current buying schemes in 2025.
The Home Buying Process
Buying a home in London in 2025 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 will show how much they are willing to lend in principle based on your finances and help determine what you can afford.
- 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.
- Conveyancing and legal checks: You’ll need to hire a solicitor for the legal aspects of the purchase. This includes property searches, contracts, and working with the seller’s solicitor.
- Arrange a Survey: Pay for an RICS surveyor to check the property for any potential issues, e.g., structural problems or dampness.
- Exchange Contracts: After your solicitor has completed the checks and a survey has taken place, it’s time to exchange contracts with the seller, which makes the sale legally binding.
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 10-20% 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 in London
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 government 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. Properties under London Living Rent also guarantee tenants an assured shorthold tenancy of a minimum of three years and a maximum of ten.
Key eligibility criteria:
- Have a maximum household income of £60,000
- 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 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 new-build homes at a discounted price of at least 30% off the market value.
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.
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.
Additional costs of buying a house 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 on property purchase in England. You will have to pay Stamp Duty if your home is worth more than £125,000, or £300,000 for first-time buyers.
- Legal Fees: You’ll need to hire a solicitor to handle the legal aspects of the home purchase. In London, the average fees are £1,500 to £2,500.
- Survey Fees: A home survey is needed to identify any issues with the property before purchase, costs from £300 to £1,000.
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
To buy a house in London, you'll typically need a household income of at least £50,000, though this can vary depending on the location, property size, and your deposit. 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.
