November 29, 2013 6:18 pm

First-time buyers in London and their fight to get on the ladder

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Three young couples discuss their struggle to buy a property in the UK capital

Following on from John Kay’s eloquent view of London’s property market, the Financial Times spoke to some young Britons about their struggles to buy a property in the UK capital.

London's property ladder

London's property ladder
The average house price paid by first-time buyers in the UK capital is about £264,000

Savills estimates the average house price paid by first-time buyers in London is about £264,000, with the average deposit at £66,000. With average salaries for first-time buyer households in London at about £53,000 a year, young British professionals are finding it tough to buy.

“There are plenty of young professionals in London earning good salaries who still can’t afford to buy their own homes,” says Susan Emmett of Savills. “Many simply can’t save enough of a deposit to satisfy mortgage lender’s criteria, especially when they are having to spend about a quarter of their income on rent.”

Those who decide to buy outside London and commute face high train fares – latest prices from Network Rail show an annual season ticket to central London costs £3,960 from Reading; £4,400 from Cambridge; and £4,556 from Colchester.

Here are the stories of three young British couples who have had a difficult time trying to get a foot on the capital’s property ladder.

1) Clapham Park

Paul Oesten Creasey, 28, and Enas Refaei, 27

Total combined income: £50,000 – £60,000

Budget: £250,000

Bought for: £215,000

Paul Oesten Creasey, 28, and Enas Refaei, 27©Rick Pushinsky

Paul and Enas first started looking to buy a flat in Brixton, south London, in April this year, but found that their budget wouldn’t stretch that far. “We started looking in Tulse Hill and Streatham Hill once Brixton seemed too expensive,” says Enas. The couple finally found a two-bedroom flat in Clapham Park for £215,000, paying a £30,000 deposit and opting for a five-year fixed rate mortgage with Santander. But, as with many of their generation, Enas says the only reason that buying became an option for them was when Paul inherited £40,000 from his grandparents.

“We found saving for a deposit in London practically impossible,” says Enas. “With house prices being on the steady rise, we didn’t want to get kicked out of London.”

Paul and Enas say they are coping well with their mortgage repayments so far. “It’s only early days yet,” says Enas. But if things don’t go to plan longer term, they have a contingency: “If times get too tough, there is a spare room for a lodger,” she says.

. . .

2) London Fields

Sarah Waterson, 27, and Stuart Lerman, 30

Total combined income: £90,000 – £100,000

Budget: £355,000

Bought for: £353,000

Sarah Waterson, 27, and Stuart Lurman, 30©Rick Pushinsky

Having rented in east London for several years, Sarah and Stuart began looking locally to buy their own flat in 2012. “We really wanted a two-bed flat near London Fields, but found that on every property we put an offer on, we were outbid – people were bidding at least 10 per cent over the asking price,” says Sarah.

After looking for more than a year, they found the cost of a two-bedroom flat in the area they wanted had increased so much it was now out of their reach. “We started looking in north London and the southeast but just couldn’t find what we were looking for,” she says. “The options were either a large one-bedroom flat or a smaller two bedroom flat. In the end we settled for a one-bedroom flat in the area we wanted to stay in.”

Earlier this year, Sarah and Stuart bought a one-bedroom garden flat near London Fields for £353,000, using a 15 per cent deposit and a mortgage from Santander.

Despite the difficulties they faced in finding somewhere to buy, the couple say they never considered moving to somewhere outside the capital. “It’s great to be close to work and the cost of commuting from outside of London is also huge,” says Sarah. “We also felt that property prices in London would be more secure than outside, which is a big factor. Being first-time buyers, we felt security for our money and location were more important than size.”

. . .

3) Stoke Newington

Alex Unitt, 27, and Rebecca Drewry, 27

Total combined income: £100,000+

Budget: £475,000 – £500,000

Alex Unitt, 27, and Rebecca Drewry, 27©Rick Pushinsky

After renting in Finsbury Park, north London, Alex and Rebecca started looking to buy a property in the summer of this year, hoping ideally to find a two-bedroom flat in neighbouring Stoke Newington with some outside space. However, having put offers in for three different places – all above the asking price – they are yet to secure a sale.

Rebecca says buying in the capital has been much harder than she anticipated. “As buyers you think you’re unique until you come across your carbon copy; they have the same budget, but actually more deposit, so they outbid you.” she says.

Their plight has not been aided by some of the estate agents they have used. “They haven’t really done us any favours,” says Rebecca. Alex agrees: “One guy sat on a radiator in an open-neck denim shirt for the whole time we were there – he didn’t have a care in the world.”

Alex and Rebecca are still keen to buy because they think signing up for a mortgage will actually reduce their outgoings. “The irony is that when we do [get a mortgage], we expect it will be the same as our rent, which is a real driver for why we want to make sure we secure somewhere quickly,” says Rebecca.

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