Buying a house or flat in London: five ways to step on to the property ladder for less

Almost half of all homes sold in the capital in the past year have been to newbies on the housing ladder who are driving hard bargains or finding cheaper ways to get on the ladder.
1/21
Ruth Bloomfield2 September 2019

London's first-time buyers are facing average asking prices of more than £479,000, according to the latest data from Rightmove, so it's no surprise that many are seeking homes further afield.

The biggest hurdle is the deposit. With buyers having to find at least five per cent of the agreed sales price up front, many first-time buyers are opting for larger homes in smaller towns with a fast commute into the city centre.

But there are other options for buyers on a budget to consider.

1. Look for flats above shops

Flats over shops are traditionally cheaper than “normal” properties and, so long as you avoid takeaways or anything noisy, you won’t know the difference once you’re home.

These properties are often wider-fronted and more spacious than most period conversions.

2. Shared ownership

If you can’t afford a whole flat shared ownership could be your best option. Buy a portion of a property, usually a minimum of 25 per cent, and rent the rest from the housing association that holds the remainder.

A smaller share means a smaller deposit and a smaller mortgage, and you can buy up the rest of the property over time.

Buyers only need to raise a deposit for the share they will own, which can work out at around £6,000 for an average one-bedroom flat.

Across London, there are shared-ownership flats for sale in regeneration areas, Crossrail hotspots and buzzing east London districts.

3. Buy a doer-upper

Kerb appeal does a lot to sell houses and if you are willing to buy a dingy, run-down wreck, you could well get a great deal

A doer-upper can be a great way of buying at a rock-bottom price, cutting stamp duty costs and eventually adding value.

But first-time buyers who take on a project will need nerves of steel, a very realistic attitude about costs — clue: always more than you think — and patience.

If you buy a home that’s scruffy but structurally sound and habitable, cosmetic improvements may not need particular expertise, just plenty of elbow grease.

If you are looking at a property that needs everything doing to it, the first job will be to do the maths. Determine, as exactly as you can, how much the work you want to do is going to set you back.

4. Look for ex-local authority flats

Like flats above shops, ex-local authority flats tend to be at the cheaper end of the market. This is partly because of stigma, and partly because they may look more rundown from the outside than do private flats.

After the Grenfell disaster, it feels wrong to recommend a home in a tower block without serious thought, but London also has quality red-brick low-rise blocks which tend to offer spacious homes with great potential.

5. Micro flats

Micro flats are a controversial option for those seeking a lower-cost home. On the plus side they are proportionately cheaper than regular-sized flats, and the better examples have good built-in storage to help mitigate the lack of floorspace.

But living in a flat of 200sq ft to 400sq ft is probably not a long-term option, and there are concerns about their resale value.

One study by Which? found that micro flats in London increased in value by 11.8 per cent between 2013 and 2016, when London-wide, price growth was an average 14.5 per cent.