The grass may not be greener: why first-time buyers might be worse off moving to the commuter belt than living in London
Young couples are moving out of the unaffordable capital in droves, but does a move to the commuter belt really save money?
A recent study suggests not — unless you move to Basildon.
The average price of a starter home in London has hit £420,000, which means that — assuming buyers can scrape together a 10 per cent deposit — they face monthly mortgage repayments of £1,600.33.
Two monthly travel cards (Zones 1 to 4) will add another £376.40 to their outgoings, bringing their spending to a grand monthly total of £1,976.73.
Research by Which? and Lloyds Bank looks at similar costs in the commuter belt and finds that Basildon, Essex, is the nearest to an affordable option.
An average property in the land of reality TV’s The Only Way Is Essex costs £271,567. Mortgage repayments of £1,100 a month, plus two travelcards, brings the total monthly costs to £1,879.
This represents a monthly first-time buyer saving of £97.73 — just enough for a daily coffee on the train during the 40-minute commute.
The study shows that first-time buyers would actually be worse off if they bought an average home in a string of other “affordable” commuter towns, including Luton, Rochester and Harlow.
However, commuting should not be completely written off as a first-time option.
Lower entry prices mean first-time buyers in the commuter belt can take advantage of the Government’s stamp duty amnesty on properties priced less than £300,000.
Additionally, what today’s study does not take into account is the probability of interest rate rises, which would hit London homeowners harder than those with more affordable homes elsewhere.
And while a budget of £420,000 would buy a one- or two-bedroom flat beyond Zone 2, in the commuter belt that average London starter home price would buy a modest family home.
By the same calculation, another money-saving option is Dartford, also in Kent, where monthly costs come in at £1,920, leaving first time buyers £56.73 better off per month — or £1.86 per day — than they would be in London.