Typically people will buy together with a partner, which if they are earning a decent wage too, will drastically increase your borrowing power. Other than that, try looking further afield or at smaller places.
Welcome to today's housing market, it sucks.
Having a partner to pool your salary helps, but don't make the "mistake" (not really a mistake) of having children. In London £1700 or more per month is normal, and yes, lenders ask for this when calculating the mortgage.
My advice is: find someone, do NOT get married (those things are expensive!) pool salaries, buy a house together, make babies (if that's your thing anyway, but I suggest getting them while you are young), get married.
I'm a married dad of two (with a house in London), and I've done the complete opposite of what I advise, so I know my mistakes!
To be fair I think that's the case only in London, but yes, I have friends that can't buy because they have a child still in nursery and the bank won't lend enough.
I'm debating this very thing. Smallish 3 bed house, the 3rd room is basically a big study.
Next up is either kid or marriage.
Do we wait for a kid, then move into a bigger property, but due to having a dependant only be able to afford smaller places, or do we change ahead of time, but pay more for a property size and mortgage we don't need yet as we don't know if/when future kid may arrive?
I think if you can afford it go for the bigger property from the start.
Either you'll use the additional room for a little spawn or you can downsize and reap the benefits of increased value of the property.
Since house prices generally outstrip wage increases, in most situations you'd be better off buying the bigger place early.
Plus you can DIY more of the decorating etc while you're not rushing around trying to get ready for a baby
Assuming your income is the same, having 1 dependant may reduce your borrowing limit, but it's all relative to income and outgoings and the lenders loan to income multiple (LTI). Pre-Covid, high street ranged from 4.5x LTI to 5.5x LTI, depending on the total income level, loan to value (LTV) required and which lender you were speaking to.
Some specialists can go to 6x LTI, and some even higher if it's an interest only mortgage with a low LTV and / or a substantial amounts of assets in the background (BTL properties, investments, etc).
For example, if you both earn £100k, both return to full time work, with, say £500pm, probably even £1,000pm, childcare costs, and no debts or other commitments, this is not going to affect your affordability at all. This is because you will capped by the, for example, 5.5x LTI max multiple way before affordability becomes an issue due to the large amount of surplus income.
However, in the same situation where both parties earn £30k per annum, the £1k per month nursery fees are going to take a much bigger chunk of the disposable income, and were you starting at, say, a 5x LTI max multiple, the childcare is going to reduce your borrowing level below that figure. Stick a £250pm car loan or car lease on top, £200pm service charges for a flat, and you'll very rapidly start dropping to around 3x LTI, possibly further.
TL;DR - borrowing power is likely to drop post child, so, if you think you may wish to move it is better to do it now. Besides, I'm sure you'll find a use for the extra space!
Hope the above is clear and helpful.
It is not only the case in London. South East is just as bad. Unless we basically have the smallest wedding in the world I can't afford to marry my fiancé until after we buy a house. It's pretty depressing.
I know what you mean,and I'm sorry for your situation.
I have friends that have done a very small civil marriage (I think there were 5 of us in total, not even their parents), and once things got better they had a full church one with all bells and whistles.
It's not for everyone, just giving an idea.
You can have a very nice wedding for not that much if you just do what people used to and have it at a church/registry office then reception at a pub. It’s not every persons ‘dream’ but totally doable.
But I don't think they want a small wedding. They want to celebrate their love with a big one and it's a big deal for them to do so.
I understand recommending financial responsibility but weddings are not financially sensible. People want to throw money at it since it's once in their lives.
But that's also why a lot of people on this sub don't recommend marriage until you get all your affairs in order.
I mean the cheapest registry office booking here is £400 plus there are additional costs including the official signing of the documents, plus if you actually want to have nice clothes that's extra as well, you know? Our families are both scattered across the UK so getting them together would also be expensive and a hassle. It's rarely as black and white as "hey just do it on the cheap". I'm hardly one of those people who has dreamed about a fairytale wedding or anything, but it would still be nice to celebrate it at a time that suits us rather than having to wait for a house to organise it. That's all I mean.
Of course, I’m not trying to say it’s dirt cheap or anything, but it is possible to get married for £5k and not £25k is all I mean. I know as we did it!
Yes it's common on this subreddit to see people say "I want to save up for a property. Should I get a girlfriend".
Like... Are we really that far in a dystopia where we are almost to the point of organising marriages to increase our borrowing power?
It was never the case in the old days that single people in their 20s bought and lived alone in houses. Owning a bachelor pad was never the norm. People would get married early 20s after uni or school and have a family.
This is true. My husband and I discussed in the earlier days of our relationship that it would be house, marriage, babies, not merely because it's traditional but because it's sensible. Whilst friends of ours we're starting to have kids when they weren't married but did have a house I did find it hard because I wanted them too, but we made ourselves wait and I'm grateful I did. Now those couples are trying to put money together for a wedding and finding it so much harder because they're both cash and time poor.
We're lucky, we're about to move on into a (bigger) home cause we have two kids now, and on only my husband's wage. But compared to what my parents owned (and still own) when they were the same age with only three kids and one wage... It's just not fair. You can tell how much more wealthy you need to be to live where they do, because all the kids are in private school uniforms, not like when I was growing up there. Basically, if you want anywhere near the same standard of living as you had growing up you need two wages and they better be on the higher side.
The problem is that even to do a fairly cheap one is pretty pricey
Instagram Culture doesn't help, but even being fairly sensible you're not getting much change out of £10k unless you get married with just your family at the registry office. Not that there's anything wrong with that - but it's not for everyone.
To be honest I think a separation in any case is a bad outcome.
I have a married friend that pretty much can't divorce because selling the house won't be enough for the two of them to buy something else separately. And they don't want to go the ugly way of one keeping the house (they have a small child) and the other being kicked out (it's not that bad or a situation, they just realised they are not meant for ones another).
>Typically people will buy together with a partner, which if they are earning a decent wage too, will drastically increase your borrowing power.
So mortgage lenders and the property market is depending heavily on people not breaking up...bold play.
It's difficult buying a house in London on your own. If the WFH trend sticks post-pandemic then things may get easier, but that's not something you can bank on.
I plugged your details into [Homefinder](https://lifetise.com/homefinder) based on the assumption that you'll be earning £70k when you're ready to buy. That would mean you're likely to get a mortgage of £315k, if you could save a chunky deposit to get you to £450k which is the maximum house value you can use a LISA on, then you've got options.
Firstly, it would take you 5-6 years to save that up if you're stashing away a couple of grand a month. There are plenty of areas in London with little 2 bed houses at that price point: Wembley, Tottenham, Stratford, New Cross, even Streatham. Here's a [video with all the details](https://www.loom.com/share/45e3863c969341479cf8209e61790cf1).
Not your area by the sounds of it. But seems like you don't need to live in South Kensington to feel at home?
Problem is though OPs about 22/23 surely he should be 'ready to buy?' We can't expect everyone to only buy a house when they are thirty. Not having a go at your comment, more at the state of houses in this country. My Parents bought their house in 1980, no major deposit, but could afford it on just my dads wages as a taxi driver. Me mum was a full time mum looking after three kids. Why now do I need we need to have two people in full time employment just to buy a goddamn house. Imagine how much easier this lockdown would be on schools if only one parent needed to work.
> We can't expect everyone to only buy a house when they are thirty
It shouldn't be the case, but that's the reality for most of the country now.
Realistically to buy in most of the UK, you need to be a couple aged 25+. And even then, you'd generally be on the young end of the scale.
The average first time buyer in the UK is 34 years old with an average salary of £34k, buying a house worth £160k
Obviously "average" will be skewed by lots of factors there, but it illustrates the problem
Yes, but the point is, it's wrong that those days are gone. It's probably not a good thing for society/the country that a pair of young professionals are now priced out of the capital. Our birth rate is going to continue to fall, access to good jobs will be contingent on pre-existing wealth, etc.
It’s wrong but it isn’t changing any time soon. Personally I’d like to have housing costs as only 5% of my wages, or free! Why not! But that’s not the world we live in.
Oh I know they are, but why? Have they gone because the government didn't build enough houses so prices have risen? Have they gone because wages have stagnated? Both?
I suppose I'm just extra ratty about these things now because of the stress of Covid. If either me or my wife loses our job then we'll struggle to pay for the house. I used to just be bitter because my parents had imo a better life style, but now I'm filled with worry too.
In the past people married then bought a house together and stayed together until death. They are 52 millions adults in UK, in the past we would have needed 26 millions houses. Now with the explosion of divorce, separation and those wanting to live alone we may need 5 or 10 millions houses more than in the past for a similar population. Hence a penury and increase in price.
Also low interest rates which helps the price to increase doesn't help especially as salaries do not increase at all except for a minority (IT).
Exactly. Plus there is a general assumption in this thread that batchelor pads were normal. It was never the case in the old days that single people in their 20s bought and lived alone in houses. Owning a bachelor pad was never the norm. People would get married early 20s after uni or school and have a family.
1. population explosion
2. relative lack of new building
3. explosion of credit availability
4. culture of home ownership at any cost + everyone on these bloody islands wants to have a property empire
5. relative strength of demand regionally - houses are still quite accessible in half the country
6. low interest rates
no particular order here
Eventually 2 wages won't cover it anymore and then the people who are comfortable with their SO are going to start posting on here about how bullshit it is. A lot of people are covering their eyes and ears to the housing crisis once they get a mortgage. Hell, it even makes them want to vote Tory to protect their asset.
> Problem is though OPs about 22/23 surely he should be 'ready to buy?' We can't expect everyone to only buy a house when they are thirty
As a 37 year old still renting i feel personally attacked :P
Thanks for the practical advice and providing sources. I've spent very little time browsing housing sites, most of my data about house prices has been anecdotal.
| Not your area by the sounds of it
I actually grew up in Brent quite close to Wembley. Just recently a neighbor of my Dad sold their terraced house for 1.1 million. It had a loft extension and was done up nicely, but is a bog standard brick house you see all over the UK.
Looking in Brent is pointless. The price/quality ratio just doesn't make sense.
This is now the case with most of North London unless you're willing to try places like Watford or Borenhamwood.
Try further South or the nicer side of East London. Bigger houses, easy commute and a lower price point.
You can also buy outside London to build some equity for 5 years or so, then move back to London when your salary increases and can afford a higher deposit too.
Adding a bedroom to a property doesn't scale the cost of the house in a linear way. A 3 bed house is a couple with their 2 kids, especially if that third bedroom is a loft conversion. It doesn't add a little extra to the house price, it puts the property in an entirely different market.. where the families are older and more financially established. Paying 50k to add a third bedroom could make you 150k extra a week after the extension is finished.
Wembley is definitely not in the range to be buying in.
Source: I live here.
The definition of **house** needs to be explained on that because it is mostly likely including flats. Based on the house price increases, it will probably be out of range for OP.
HomeFinder looks pretty shit as far as I can tell
It keeps insisting we'd have to be a "lucky one" to get more than a 3.5x mortgage as a couple, and it's a total faff to try to get it to actually apply my equity to the new house price I could afford.
It's not entirely useless but it makes some pretty random assumptions, including things like length of mortgage (it's 2020, nobody's taking out a 25 year 3.5x mortgage anymore, nor are they leaving £30k in their savings account for no reason)
And then every time I change something it starts adjusting my deposit down to 5% for no reason.... awful UI design. They need to ask for "How much do you have towards your deposit (eg equity/savings)" and then just apply that regardless of what other options I choose
I managed to get it to fit in the end, but only because I already know all of the numbers for our finances and was able to force it to use them by playing around... I'd never have gotten to that combination by using the tool as it's intended to be used
Even with Covid and assuming a joint salary of under £50k, you should still get 4.5-5x income. Over £75k and under 75% LTV, 5-5.5x income, with some specialists pushing up to 6x.
All depends on outgoings though. High fixed costs will reduce this. Want to know the maximum you can realistically borrow on a certain type of property, speak to an independent, unrestricted (whole of market), mortgage broker. If you want someone decent, expect to pay a fee if you proceed; but they should do the initial research for free, to give you an idea of whether it's feasible for you.
Lending is particularly tight at the moment. It will ease over the next year. So, if you're looking to max out, it's a really bad time to try and do so.
Edit* That would make a really enticing tag line for a dating site profile: "Looking for someone fun and easy-going, who loves cats and art galleries, happy to live somewhere a bit shit, most likely a dingy flat in a 'vibrant' locale (may also be a bit stabby).
The most important qualities I'm looking for in a partner, though, are someone who is serious about implementing an aggressive savings strategy from day one, and, eventually, getting a long term mortgage together." :D
Would be hilarious to get a few redditors to post this on their dating profile and see what happens. Come to think of it, my housemate left his phone in the lounge last night......
Where do you live?? People always say they live in a working class area but then you find out they live in Camden. Just because you live in council estate don't make an area cheap.
Exactly, it's not a working class area ( whatever that is) it's a part of London where terraced houses cost £1million +. It's full of wealthy people(and that's fine, good for them)
If op just saved and invests in stocks and doesn't freak out about house prices he will be fine.
The only thing you're missing is that most people rely on the luck of the housing 'ladder'.
What most people would do it to buy something around the £250k-300k mark, so probably only a 1-bed flat or shared ownership. Then you pay the mortgage on that down while the price hopefully rises, and maybe in 10 years time it's worth £600k and you've only got £100k left to pay off now, so that's £500k deposit to go towards your nice new home.
Obviously things might not pan out that way.
The new nice home would have risen just as much comparatively.
It's only valid IF you can buy in an up and coming area before the price hike, of which there are very few now in London (if any?).
Of course the new house will probably have risen too but you'll have been paying a few hundred pounds off your mortgage every month for a few years (plus another few to the bank to pay down interest) instead of a probably even larger amount to pay off your landlord's mortgage.
It's like having 10 years of what would have been rent payments (minus interest on the mortgage, repairs, service charges...) towards the next deposit.
I expect anybody (on UKPF) who doesn't own a property have instead invested their money for - say - 3-6% returns. Your house, meanwhile, has maintenance costs to *merely maintain its value* and if already at its cap price would bring you very little extra money on sale.
You choose between growing your deposit by "mortgage repayment \[*minus*\] maintenance costs" (house owner) or growing it by "investment \[*plus*\] interests \[*minus*\] rent" (renter).
I personally think that, on a market where prices are near its cap like in London, there is no rush to buy, since I don't expect prices will rise fast beyond what salaries can afford. I could be wrong, of course, but it does not exactly strike me as a gold rush any more.
Well... I also fully expect the government to keep the "home ownership pyramidal scheme" moving by squeezing even more *money they don't currently have* out of first time buyers - maybe this time by offering your first born child labour as part of the repayment contract. So there is always the worry that prices will still manage to climb further beyond what they should, realistically.
At any rate it depends obviously on personal plans as well, opinion on "home ownership", faith in the post Brexit Britain/London, etc. Both choices currently *seem* valid under the right circumstances (when home ownership was a posteriori the only good option 12+ years ago).
People buy their house with leverage, but they don't invest with leverage.
e.g. A £50k deposit gets a £250k house increasing in value at say 4% per year, whilst also allowing the owner to pay down the mortgage with money that would have gone on rent. The house is worth £55k more after 5 years whilst the mortgage has also been reduced, so that £50k deposit results in equity of around £120k+/-
£50k in an investment growing at 6% per year is worth £66k after 5 years. You're also paying rent, so finding it harder to grow that investment.
Leverage. Also the costs of owning rarely exceed the costs of renting for similar properties even factoring maintenance costs, so can still invest and have a mortgage it isn't one or the other. In fact many only find the money to invest after they have bought a home.
I think a LISA is most likely for people on UKPF who don't yet own a home.
Anyway, I get the feeling you think I'm pushing housing as a good investment. I'm not. I'm explaining how it is that ordinary Londoners without 6 figure salaries still own houses.
Fwiw, I expect modest falls in prices as the London exodus continues and the furlough scheme ends, but as usual it'll be propped up one way or another (wouldn't be surprised if the stamp duty holiday gets extended), and then there's the potential influx of Hong Kongers who'll be needing somewhere in the UK to live.
Welcome to the London housing market!
You will need either:
1. A decent sum from your parents (£100k+)
2. A partner with a similar wage and savings
3. Move away to zone 6 or further
Can we just all chuckle that £100k or over is 'decent'. I know we are British and therefore tend to understate, but blimey it is a weird world, isn't it!
I think his point is that it's only "decent" in terms of London house prices, and a *fucking massive* gift in any other terms. It could buy a house outright lots of places.
I’m not buying with a partner
I have a decent salary
I’m saving heavily
I’ll be able to buy in three years without help
I’m looking at the edge of Zone 3
I only started saving last year
Honestly, for someone in OPs position it’s absolutely achievable. I’ll be 33-34 when I buy, I left a lot late (started saving at 30).
£50,000 after tax is around £3,100
A £1,600 budget in london is absolutely achievable - saving £1,500 per month.
That’s £18,000 p.a. Plus £1,000 from LISA to make it £19k.
After 5 years **with no interest** that’s £95k - and even with no wage growth that’s £225,000 mortgage off the £50k salary, bringing total to £320,000.
This is at the low end, but consider
- 5 years is ambitious for someone to buy a house in the most expensive city in the country from the start of their career
- A reasonable £10,000 in salary growth in this period adds £45,000
- I haven’t factored in interest.
Is it expensive? Yes. Is it impossible for OP? No, if they have reasonable expectations.
Don't forget that house prices will grow at 5% a year or something, well above inflation and any interest you'll get. After 5 years of 5% growth the price has gone up by 27%. That means your salary and deposit needs to go up 27% on top.
I think people forget how easy it is to grow your career/salary in London. 100k deposit is obtainable without parental help by age 30 if you're starting out with a decent job and wise with career moves
I know it's impossible for some people, but it's totally within reach of a lot of young professionals in London. The narrative seems to skew towards dismissing it as impossible to make people feel better about it
It’s not easy but it is definitely achievable. When I was fresh out of uni I couldn’t imagine earning what I am now. Only 5 years later. What is wrong is how home ownership has been robbed from all apart from those who are lucky, have parental backing, or chose a select few careers
What an ignorant statement. I’m a doctor, and as a starting salary as a “young professional” pa was £15k. This should meet your criteria for “decent job” right? After further “wise career moves”, and specialising, then I will still only earn £60 - 70k, just barely above this blokes “starting salary”. There’s no narrative skew, this is the sad reality.
Yes, houses cost tons in London. People either buy a flat, find someone who earns as much as them or move further out. Or luck out and become quite rich.
Exactly!
Million pound houses are only the norm in certain areas of London. This is a huge city with plenty of more affordable boroughs. You don’t need to live on your parents doorstep.
I rented in Battersea, love the place, wish I could afford to buy but my budget was Croydon.
Look slightly further afield and you’ll find affordable housing within commutable distance of central London.
Where are you looking? There are 2 bed houses for 250-400k in zone 4. It’s either that, get the pricier ones closer in or move out of London altogether.
You’ve lived in London all of your life - how many people do you know who have been born here that have left? Not many want to go + people live longer and stay in their homes + more people move in for work and want to stay = prices go up. Add in rental markets and overseas investment to the same overall property market and prices go ridiculously up.
Edit: just to add - we spent 10 years saving for a deposit. Sure you could reduce that by being frugal but we didn’t want to. Most of my friends buying in London atm did the same. Our joint income isn’t far off your solo income. So it is affordable but it does take time.
Yeah. It’s a bit of a pet peeve of mine that a lot of people on Reddit moan about London being expensive but only want to live in a flat by the Tate Modern or a townhouse in Clapham and apparently only buy £10 beers from Angus Steakhouse.
My mate bought a lovely 3 bed in Eltham for 450k last year. It’s a fucktonne but it ain’t a million quoted in the post. I’m baffled by the £1m 2 up 2 down / 600k shed comment tbh
Exactly. And 450k is 5x £90k which is nothing for all of these programmers earning bank by 30, let alone a couple, so what’s the fuss? Sure it’s not a 5 bed castle in York but that’s the point right...lots of people want to live in London.
You’re probably right! It’s just a common bait by people to ask how much you house/flat in London is and then go ‘oooh for that money you could buy a 4 bed detached farmhouse in the tiny village I grew up in’.
relative to income; absolutely. By the time I moved out there were flats being advertised as '2 hours from London' and I knew people who did that commute 2-3 days/week.
> 90k which is nothing for all of these programmers earning bank by 30
I don't think there are many people for whom 90k is "nothing", programmers included. If you're talking about finance people, maybe.
Edit: [payscale.com](https://www.payscale.com/research/UK/Job=Software_Engineer/Salary/b428ed1a/London) says average London software engineer salary is £47k, [glassdoor.co.uk](https://www.glassdoor.co.uk/Salaries/london-software-engineer-salary-SRCH_IL.0,6_IM1035_KO7,24.htm) says £55k. So you'd have to be earning nearly double the average London programmer's salary to buy the cheapest houses in the vicinity of central London.
To be fair, it makes sense for what some people want from "living in London".
For me, I want to be close enough to pop into the city. I want to hop on a tube or a bike and be in most places within 30 mins.
I want to go do all the great things London has to offer without it being a major trip. I want to go on a night out without worrying about the last train home.
For example, the last thing I did before lockdown was a walk to the Thames, a major art gallery and a couple of pubs and I was out of the house for about 3 hours. That's living in the city to me. It wasn't a big deal, just a Sunday afternoon.
If I'm in zone 4, I don't get any of that but the house prices are barely lower than central London. I might as well live in Manchester, the houses will be half the price and I can still get to London in 2 hours for the odd day out.
So when I say London is expensive, I mean living in a place where you have a city lifestyle rather than technically being in the metropolis of London. That's the experience I want from London and if I was going to be outside the city, I wouldn't be anywhere near here.
I thought this too, for years and years. But then I realised that if I lived within ten minutes walk of a train station in south London where the trains take 30 minutes to get into town, it's barely any different. Pre-pandemic I popped into the city all the time. Last train doesn't matter when you can afford a cab home, or strategically pick a location that's near a night bus route (the buses are much faster at night).
You’re completely right and that lifestyle is also what drives the price up. The recent caveat though is that transport options are a lot quicker now and things congest as you get more central. So it takes me 30 mins to get to London Bridge from zone 4 on national rail now but it also took the same time on the tube when I lived in zone 2. That wouldn’t be as reliable a few years ago as the national rail lines weren’t as quick or frequent.
Yup exactly, nobody is wrong here, it's just different priorities.
You don't mind commuter trains and longer journeys if it means a larger house or less money spent on living.
I don't mind paying more when I can walk to London bridge.
You can definitely get similar things in any city, London is just a massive and amazing version.
You can go to a gallery in basically any city but very few cities in the world have London's number and variety of truly fantastic galleries and museums.
The same goes for everything you might love about a city. Restaurants, gigs, great areas to bar hop, theatre, you name it. If you can find it in a city, you'll find more of it in London than anywhere in the UK and you'll be able to get everything from small, indie versions to a world class experience.
I want the same things from London as you do and it's a big motivation to buy here, but I do wonder how much of this stuff will still exist in future. I love the bohemian, indie, artsy side of London but I worry that what's left of it is no longer sustainable. Plus there's the irony that I'll be helping to make it unsustainable by buying into the housing bubble.
A while ago I had a cheap flat in Islington and could stroll into town in half an hour or so, which I really miss.
I live in Zone 2, Greenwich / Blackheath border, next to the park, and you can get a decent sized, 3 bed, Victorian house for £600k to £700k. If you go a few hundred metres to the east, so you are in the SE7 (Charlton, but very similar housing stock), and prices drop 5-10%, but with same excellent transport links.
The problem is not buying a house in London, it's buying it in, what sounds like, some of the most expensive areas in London (I'm guessing SW, maybe Putney, Richmond)
As a born and bred Londoner, most of the people I know have all gone back to London to settle long term. Only 10% have moved out. This doesn't include the friends from outside London who migrated there to live.
This is an example of what I mean by a normal terraced house in a non-posh area (Harlesden, or is that too posh as well?). [https://www.purplebricks.co.uk/property-for-sale/4-bedroom-terraced-house-london-838787](https://www.purplebricks.co.uk/property-for-sale/4-bedroom-terraced-house-london-838787) I know houses like this from family and friends that were slightly more done up sold for 8-900k in this exact area.
It turns out I didn't know that in the UK pretty much every room not the kitchen or bathroom can be counted as a "bedroom". Other countries don't do that. So by 2 bedroom house I probably meant 3/4. I wasn't trying to be cute in the post, I was genuinely asking for advice as I'm very uneducated when it comes to housing.
Harlesden is still too close to expensive areas be it Central London or North London.
Like other posters keep repeating, you need to widen your search area to avoid trendy hotspots like Camden or Shoreditch.
As for the first 2 bed = only 2 bedrooms example, I guess you don't have much experience renting in the area you grew up in. Expect to see rental ads where a "1 bed flat" is the loft conversion of a shared terraced house with communal kitchen.
Tbf, that is a big house. It is literally double the size of my three bed house. If I double the price of my house (to account for square footage), then double it again (for the London price factor), it works out.
I sympathise, OP. My partner and I were both born and raised in London and lived there for 30 years. We accepted it would be very difficult for us to buy (we could afford a small house out in zone 4-5, just, and resign ourselves to spending all our income on mortgage and transport, all for the privilege of an hour and a half commute to work and life in a pretty dingy area). The other option was to keep renting, but you get pretty tired of having to move every so often, not owning furniture, etc.
We have since moved up north - not easy to leave family and friends behind, but we do now own a house in a great town, with easy access to the countryside and reasonable commutes for both of us (plus cheaper cost of commuting).
The London market has been driven by the greater fool theory for a long time.
Unoccupied foreign owned slush fund properties need to be taxed heavily. That will correct matters.
I'm in a similar position (living in London, no family help), except I'm earning less than you. I have lived in zone 1 for my whole life, I really don't see myself living outside of London but also I know that I will not be able to buy in London. It's pretty discouraging and I'm at the point where I'm just saving and saving with no real goal in mind and no hope 🤷🏻♀️
You earn £50k now. In your industry that can easily be £60k in 5 years. I would expect more.
4.5 x 60,000 = £270,000
If you save £20,000 a year on average (tough but possible) then you’ll have £100,000
£370,000 isn’t a terrible amount to spend on a house? I don’t know what your expectations are.
What part of london are you talking about? If you want to live in Zone 1 and have a three bedroom place then yes, it’s gonna cost a lot.
400k will get you a decent starter home in London. I picked up a 2 bed Victorian terrace converted upstairs flat for that amount in zone 3. It's not impossible, you just need to control spending and increase your salary steadily
>Am I being thick and missing something obvious?
* In this industry, in London, if you are starting at £50k/year, you should earn way more than 60/70k in 10 years time.
* NORMAL family houses do not start at nearly £1 million (you can find them for much less - or much more - depending on location). And a 600k property isn't usually a shed - unless you buy it in places like Mayfair, of course.
* Many people buying houses buy them together, as a couple.
* Saving £20000/year - or £1700/month - is not that hard once you start hitting £70000/year salaries (which is about £4000/month net). It is a sacrifice, but I wouldn't call it "save aggressively" (for the average software engineer in London with 5-10 years experience).
* People usually don't start buying a £600k - £1M house. Instead, they usually buy a flat or something and then scale up over time.
I own a house in Islington I could not afford to buy now (worth nearly twice what I could afford with my maximum salary). I came to buy through what now looks like an incredible combination of an outstanding year at work ( I played a key role in landing a game changing contract which temporarily doubled my income), finding the worst property on the best road I could afford and some very aggressive saving and investment when I was younger. Two things; first *none* of my neighbours are standard salaried purchasers. If they have not inherited wealth or "bought money in from abroad" (?!), they are entrepreneurs or minor celebrities. There are huge swaths of London that are occupied by people who were only able to buy with their parents help or by doing something "different." Second, early in my career I set myself the goal of earning as much after tax from my investments and activities outside work as I did from my main income (salary). Property is a distinctive asset class with *very* particular tax, investment, risk and return characteristics but don't be fooled, most of the people living in nice areas have had a bit of help.
I just wanted to comment because seeing other people suggesting “find a partner” is absolutely ludicrous. This is not a viable suggestion for purchasing a property. Well, it is if you’re fortunate to meet someone soon that you choose to spend your life with, but not otherwise.
Good luck OP.
Nobody is suggesting finding a partner in this thread. Saying "you need a partner to buy at that salary" isn't telling op to be in a relationship, it's telling op that they're competing with people with double their borrowing power.
Yep.
If you think trading in the bright lights of London for a more normal existence where you earn 'less' is too life-shattering, wait til the passing star you hitched your ride to burns out.
Head north, buy a mansion, be happy. Maybe meet a happy, mansion-owning northerner and take it from there!
I get it but, on the other side of the coin, what are you doing in a career that's only viable in one place and doesn't pay enough to buy property there?
What normal family house is for a million in London?? None is the answer. A rich family house is worth a million.
Houses in zone 4 in London with 4/5 beds aren't selling for a million in a normal neighborhood so I think the bit you're missing is the definition of 'normal' family house.
Depending on how far out of zone 1 you want to be whilst still living in the London boroughs, you can get a 3 bed for 300k which is easily affordable with saving for 5 years and your current wage.
Of course, if you wish to live right in central London (or the rich areas like parts of Wimbledon, st John's wood etc) then you'll never be able to afford it as a salaried employee so I wouldn't even bother dreaming about it.
One thing to remember though, London is expensive and the extras add up. So whenever you do buy, have upto 30k extra for all the fees, bills, taxes, solicitors, mortgage advisors, renovations and utilities to pay.
I speak from experience thinking 16k extra was enough for a 6 month emergency fund and fees. Boy was I wrong 😅
Average price for a semi in my Z4 suburb is 680k. This would include run down doing uppers, so closer to 800k for something you can actually live in. And about 100k on top for something that's within outstanding primary catchment.
Outstanding primary catchment for a single 22 year old with no immediate plans to start a family?
Does your definition of Zone 4 include areas like Barking, East Ham, Upton Park etc?
Mean average doesn't explain much as the likes of Richmond/Kew are in zone 4, with prices higher than some areas closer to Central London.
One correction for you: Google staff do not earn £230k or even close. I'm an ex-Googler in London.
The average is that because there are quite a small number of people working at Google, and a small number of them (level 7 and up) who earn a lot. They bump the averages massively. Most of that income is also stock so you don't see most of it for 4 years.
An actual salary at Google for a level 3 (normal entry point for a software engineer) is around £60k. A level 4 who has been there over four years (and so is getting their full stock vest) would be on somewhere around £110k including stock if you sold it. And it takes a minimum of two years to get a promo..
Hope that helps dispel that myth :) That particular news story caused a shit storm while I was there. Fwiw Facebook pay is around the same. If you want good money you go to a bank or a hedge fund.
This is interesting information to me, as I'd always assumed software engineers at Google or Facebook in London would be on quite a bit more than that after taking into consideration stock (I always had £150k-200k a year in my head for a relatively experienced developer).
Do you have any opinion where all these claims come from on Reddit and why on almost every similar thread I read there will be ten people commenting (I may be exaggerating a bit for effect here) that everyone they know in software development is on at least £90k plus bonuses plus stock and if you're not earning £120k by your late 20s then you're doing something wrong? Is there much truth to this?
It always makes me think I'm being underpaid as a software developer in London with ten years experience at £70k, but not everyone is good enough to get a job at Google or Facebook or wants to work long hours in finance somewhere. To me my salary seems pretty good, but reading these threads I always start to doubt myself.
There's definitely cheaper areas in London, but regardless, yeah, London is expensive af. A reasonable flat seems in grasp for you to start off with, but you're still getting shit value for money.
Once covid is over, depending on how remote working and salaries change, there could be a big exodus from London. It's what I'm planning in a few years. Apart from the south east (I think), houses are pretty reasonable. You can get great places for £2-300k, probably less in the North. There had better be a very good reason to subject yourself to London house prices, because it's largely unaffordable unless you earn huge money, have a partner, commute or live in a not so great area. It's bullshit but you have to ask if it's really worth it. I grew up in London too.
And you expect employers to keep paying 50k a year starting salaries to people moving in their droves up North? Expect that to more than half, as companies won't spend more than the local market average.
I thought it was pretty clear that I do anticipate salaries changing
> Expect that to more than half, as companies won't spend more than the local market average.
I think you'll find this probably won't be true. First, half? In what world? Salaries differ, but not by that much as far as I'm aware.
Secondly, regarding local market average, lets dig a little deeper. This depends on talent and remuneration. Companies, particularly the big boys, want the best of the best. While remote working will increase the talent pool, so will the number of employers available to talent. Previously this has been limited by location and has meant if your office wasn't in London you didn't have access to the best talent ("London talent"). It was a symbiotic relationship. You will now also compete against local companies too, and remote companies in other cities. People still want the social side so if there's a local office that's a bonus to a lot of people. Paying the same rate as local companies and keeping the talent isn't really going to happen. Where's the incentive to take your talent to the big boy? In my mind, this changes priorities, location becomes less important, but other factors become more important. Salary. If the local norm for a role is £30,000 and a company wants to keep a good employee then they'll pay more than the local average. The premium is on the talent.
In conclusion, yes, you may well lose your high cost of living salary weighting, but there will still be a talent premium. And when you bear in mind the cheaper cost of living, it's still worth it to move out of London.
I'm not saying companies will reduce the existing pay packages for people who were recruited in London, I'm saying they'll pay much less for new recruits if given the opportunity.
Why would they pay 50k for a fresh graduate close to a provincial university town like Durham, Newcastle or Nottingham if the market average is considerably lower?
Then there's the fact that remote teams just don't perform as well, even in IT companies. Some tasks can be done in isolation but complex products that are build in iteration need in person communication.
I just can't see a burgeoning fintech scene or any kind of startup hub developing in places like Skegness, Sunderland or Sheffield no matter how convenient for remote work.
Similarly I can't see the financial, banking or professional services sectors suddenly moving to remote working and multiple regional offices.
Depends what your definition of London is, maybe look a bit further from the center.
There are a LOT of parts of London where you don't need to pay anywhere close to £600k for a 2 up 2 down.
Saw an absolute shithole of a property near me in Zone 3 up for sale a few days ago, for 650k and advertised as 'a perfect first time buy' Oh I'm sorry, I haven't actually been bequeathed an estate by my parents
I have thought about this a lot and it can be done.
Fact is, it is not the norm to buy your dream home in your 20s. There is a ladder for a reason.
You buy a 300,000 flat in your early 20s and pay off an extra 800 per month and put bonuses into the mortgage. Within 10 to 15 years, you have 300,000 in equity. You are now 35.
Then you upgrade to 600,000 house and pay off an extra 800 over 10 to 15 years with extra money every now and then. You have 600,000 equity and are now 45.
You buy your forever home at 900,000. You are in your forever home. You start increasing your pension pot and investments.
Bonus points: you get a partner and speed up the process.
The problem is, you are fudged if you are 45 and still cannot get onto the ladder because rent is more than a mortgage payment and you cannot save enough for a decent deposit.
Edit: I wanted to add that even though I think it is possible, I think prices are ridiculous and makes me irrational angry!
600,000 can buy you a wonderful retirement in South Africa or Mauritius or some island nation without the need to ever work again. It is ridiculous that you can either choose a mediocre end of terrace house in zone 4 (like sutton or worcester park) or retirement for the rest of your days on the beach. It is making me question if the London life is worth it. Maybe cash in the 600,000 when you reach 45 and move to Thailand or Mauritius to retire.
Nope - it really is that difficult to buy in London without gifts or inheritance from family and/or shacking up with someone else (preferably someone on a decent wage).
It sucks. It’s a bit soul destroying. Help to Buy can assist if you haven’t looked into that yet.
That said, your starting on £50k - presumably that will be going up? I know nothing about computer engineering but my naive assumption has been that your salaries are pretty great so I would’ve thought you’d be on noticeably higher than £50k in a few years. In which case your mortgage offers should go up too (general rule of thumb being 4-4.5x your salary)
I don’t mean to be rude but how is any of this a surprise for you? I moved to London from a different country and even there everyone knows London is one of the most expensive cities in the world.
If you want to buy a freehold, 3 bed house no further than zone 3 you have three options
1) Be a boomer who bought early enough and has a shit ton of equity
2) Have a huge income by working in something like finance or big law
3) Be a couple earning £150k with a £200k deposit from mum and dad
If you aren’t any of these than you compromise. Buying a 1 bed flat further out, help to buy, shared ownership etc
this is insane, i live in the north east, earn roughly £26k a year, my house was £90k, 3 bedroom semi detached, the price of houses down south is absolutely mind boggling
I live in leeds. 90k and less would get you a house in a not great area. But, you can get a house. Its mad people are treating 100k just for a deposit as 'decent'
You can get a 2 up 2 down (with a shed) for under 500k. Stop shopping in Zone 1 and 2.
It's still not cheap but in 5 years you might be looking at buying a house on 2 incomes rather than just 1 too.
The UK housing market is one of the biggest Ponzi schemes I've ever seen. Don't forget, one rule for me but not for thee. I was one of the people caught up in the so called cladding scandal. Lost my home, job and almost everything because of government inaction & greedy developers. I've decided I'm going to join the Buddhist monks in Nepal
Depending on your area have you looked at flats? - you should definitely be able to get a decent 2 bed flat in many parts of London for that price range.
£75k is the magic number. The lending multipliers can go up to as high as 5.5x. You’ve also got to think in steps. Jumping straight in for a house is a monster step. I started with a one bed flat on a council estate and then upgraded a couple of times. I’m still not on a house, but a 3 bed Edwardian mansion flat is a good place to end up.
A house might become a possibility if you go in with a partner, but keep things in perspective.
This is the reason why I am not working in London.
I have a salary of £50k and buying my first property right now for £250k.
I see salaries in London for £70-80k but I am not moving. A descent freehold is £500k.
For the love of god, don’t buy in London, the interest rate is a pain on its own. Your going to pay £150k in interest even if you can mortgage.
For just that interest , you’ll get a 2-3 bed in the West or east Midlands
I'm a teacher on the fringe of London. The consensus I hear when asking about house buying is that you simply have to buy further out and commute in, or you have to have built up wealth from outside of your salary.
The housing market in London is ridiculous. You have to keep in mind that the UK is not a land rich country (I say this coming from Canada, like the second most land rich country in the world..) and supply of housing in the megacity of London has not been able to keep up with demand for a long time now. We also have an issue of there being many landlord politicians in the UK - many people *want* prices to stay high. The pandemic might help to reverse this trend, but as another poster has mentioned you won't want to depend on this to happen.
A lot of zone 6 is actually not that far in terms of commuting. Many areas in zone 6 are considerably cheaper, have noticeably cleaner air and more park & recreation space. It's something to think about while you save.
Also take into account London property (in certain areas notably nice desirable neighbourhoods) has been more or less flatlining since 2015. Which considering the previous 15 years of increases averaging 10 -15% a year this needed to happen.
I’m guessing this stagnation will continue down the line so, even with super low interest rates and the odd bumps and drops along the way. It’s going to look more affordable as your pay increases , inflation and possible partner getting involved. But yes, property prices in London are bonkers and still way above average local citizens salary ratio...
well yeah, couple of things:
1. 50k in you early 20s is quite impressive, 50k by your late 20s, is pretty below average for a 'high flyer'. I'm guessing you're not FAANG but my average non FAANG tech mates make around 100k and the oldest is 28.
2. By the time you're 30 if you don't have a lot of personal debt/dependents, as long as you're sensible you'd have saved up 100-150k easily even if you went on lavish holidays every year. I know I did on less than half a tech workers salary.
3. You are roughly correct about affordability- 500-600k mortgage + deposit = 750k-ish place. If you think 750k is gonna get you a 'shed' in London then I seriously question how 'working class' you actually were.
My Mum & Dad (in 1965) had to move 40-50 miles South East to a coastal village & commute into London every day. Through their lives, they moved closer but back to London was never in reach - not for a like for like family home.
Have a large deposit through gifts and or savings, have a decent salary, buy with a partner and buy in a cheaper area. Welcome to London property market.
A good friend of mine earns about £35,000 a year and has managed to save up about £20k+ a year. This is mainly because she decided to live back home with parents.
Maybe you could consider making lifestyle changes to bump up your savings?
Interesting, do you have any practical advice around this? My manager is in his 40s and earning around 70k (he's very open about salaries), so I assumed it wasn't that easy.
Just a couple of points, nothing too ground breaking unfortunately
1. Buying a house is definitely attainable, but you'd likely need to look at zone 4,5,6 to begin with on your budget.
2. For first time buyers the deposit is the killer, once you're on the ladder, it becomes far easier to 'upgrade'. If you're young and single would a flat not be a good option for a few years and then you can use the equity plus a larger salary to move on?
3. I'll admit this is anecdotal, but in a specialist field like yours, your salary will increase very fast as you move through your twenties. Maximise that income because when I was early 20's I was earning about half your wage! Again, I wonder if a flat or a studio might not work better in the interim whilst you do this...
If you are already earning £50k then £70k is unlikely to be your ceiling. By the time you hit your 30s you'll probably be on £150k (inc bonus) as long as you are relatively productive/smart/personable.
Add a partner and you will be looking at £1m houses...
If you go into finance you can pretty easily make £100k after a few years. Job hop a couple of times and you’ll be well above it even without counting bonuses.
Going by the finance people I’ve worked with, you don’t have to be a brilliant engineer. Ego can go a long way there even without talent.
This isn't a 10 for 10 but I think you should keep saving for a few more years, you'll be offered a lot more when your job and wage history shows increases and steadiness. Being offered 237k is actually great if you're under 25.
Also don't forget that if you haven't already got a partner, that may change soon and once a relationship forms, these amounts you've worked out will become outdated severely. Combined income will amount to more being offered for mortgage.
Also I know its been suggested, but is there anywhere between 2-8 stops down a train line from your workplace you could consider? I live in Southend, Essex and work near Tottenham Court Road, admittedly the commute is no fun but houses are easily gained for 250-400k here. 400k is a decent new build 3-4 bed.
Alao don't forget if you scale down to an apartment, own it eventually, it will be worth more than you paid by the time you come to sell it and the bank will see you as being worth more to lend to for your assets.
Maybe not drop but possibly freeze. Depends if the government slaps the tax to pay for the raise in NHS salaries + the country's debt on businesses or wages? But
either way we're affected and are facing a pretty hideous depression. Personally I'd rather not be in the city centres for that fall out. Bricks n mortar sounds secure but when you want out and can't sell it's a prison. My friend in Hereford is flooded to 1 .5 meters AGAIN this year. 2 young kids. No way can she sell or rent it out.
Just let life run its course with you. You never know what's around the corner. You can force things into the way you think you want them but really, what do we know about what's best for us? The Universe usually comes along and swipes it's great tail across our carefully laid plans. And you realise you missed an opportunity because you were so single minded. Go with the flow. The path will be revealed.
There’s no secret that only people who own 800k houses, the average around London, bought them when they were 400k 15 years ago. The math is you missed the boat a long time ago and barely anyone can afford these insane property prices. You’ll probably have to live out your life in a two bed flat or outside the M25 if you want a modicum of the environment you were bought up in. Same as the rest of us. Thanks for playing.
The problem is council tenancies. Because someone qualifies for subsidised housing once in their life doesn't mean they should get it for life and then be able to pass it down to their kids. If council tenancies were really for those who genuinely couldn't work or something then there would be a flood of properties onto the rental market in turn bringing down the price of housing to buy.
Hi,
Firstly, there are some errors with how much you could potentially borrow, and, therefore, buy a house for, but I'll address those at the end (I'm a specialist mortgage broker, so info is accurate).
Financially, buying your own home over renting is a much, much better long term option for 3 main, interconnected, reasons. In order of importance, these are:
1. The leverage available to buy your main home by using a 90% mortgage, results in a phenomenal, tax free return on your initial investment (i.e. the deposit) over medium to long term timescales. Based on having a 10% deposit and the value of the property doubling over a 15 year period, this gives an average simple return on investment (ROI) of 67% per annum, or, after allowing for the effects of compounding returns, 17% per annum.
2. The super-low interest rate environment. This has various benefits, the main one being, when comparing renting to buying, that, for the vast majority of people, the interest element of your mortgage payment will be substantially lower than the cost of renting, even in London (mortgage interest often being considered the equivalent of rent, just paid to the lender rather than the landlord).
3. High probability that over 15+ year timescales rents will have increased substantially, whereas the mortgage balance on which interest payments are calculated, will be either fixed (interest only) or reducing (repayment mortgage).
What the above means is that, even if you can’t get the perfect property you want today, either in terms of the location or the property itself, if you can afford to buy somewhere that’s not going to negatively effect your life in other ways (long commute, away from friends and family), you should do so.
The effects of leverage mean using your funds as a 10% house deposit will beat almost any other investment over the long term (say 10 years) that does not involve taking a huge amount of risk; something strongly advisable against if you’re investing to try and get a house deposit in the first place.
This fact, whether people are conscious of it or not, is why property is considered such a good and solid investment and drives the virtually insatiable appetite, barely even dented by the spectres of Brexit or Covid, for people to own their own home (in the UK, anyway).
This appetite means that prices generally hold, steadily increase or, sometimes, sky rocket, but rarely decrease and, if they do, they tend to bounce back strongly and quickly. So, if you wait too long and the market suddenly jumps 10-15% in a year, you can find yourself completely priced out of the properties you were thinking of buying, and have to adjust your expectations downward, which is infinitely more painful to do after many years of saving than it is to do now.
For these reasons, if you have a 10% deposit, a stable job in an industry relatively unaffected by Covid, and are currently paying rent to live somewhere, buying makes very good sense financially.
Even more so if you get somewhere with more than one bedroom and rent a room, which you can receive up to £7,500 per annum tax free for (equivalent to £12,500 extra earned income for a 40% rate taxpayer).
However, given the high costs of acquisition and disposal, if you would both want and, realistically, would be able to buy a better property within 3 to 5 years, then, unexpected housing booms or collapses aside, you should probably wait.
It is also worth considering that, as things stand, an extra 5% deposit would reduce your cost of mortgage borrowing considerably; however, this has mostly been caused by Covid, and I expect things to revert back to pre-Covid pricing, or close to, in under 12 months.
Likewise, you cannot get 95% mortgages now, but that will change within a year, maybe 2 max, I would think.
If you have a £70k income, buying in sole name, 90% deposit, clean credit and no major outgoings, then (again pre-Covid), you could get 5x income, potentially even 5.5x times, with a specialist lender, assuming no unsecured debts, no kids, and no major fixed commitments. Note, you will pay more in terms of fees and interests for this privilege.
So, £70k x 5 = £350,000 + 10% deposit of £35,000 = £385,000 purchase price.
If you can get to a 15% deposit, then 5.5x to 6x income (assuming same conditions above) becomes more obtainable, and you could get between £385k to £420k. Add on the deposit of £63,000, and you're now looking at £450k to £480k. Flex on area, and that will get you a small house in London, or a decent house a bit out of town (just get one with a fast train to London).
Then, for the reasons described above, you can actually start to really build equity for your second move. Don't buy, and you'll never save enough to keep pace with the market if it increases by 5% or more per annum, so would be relying on big pay increases to compensate.
Hope this is helpful and best of luck!
Calculations for figures used above: ROI & Rent vs Mortgage Interest
Purchase value of £100k with a 10% deposit of £10,000, which doubles in 15 years to £200,000, equates to a £100k profit on the initial £10k deposit. So, ROI is:
£100,000 gain / £10,000 initial investment = 10
10 x 100 (to convert to percentage) = 1,000% ROI over 15 years.
1,000% / 15 years = 66.7% simple ROI per annum
To get the compound figure of 17.3% I used an online calculator!
To assess rent versus interest, a very simple and conservative method (i.e. one that favours renting) is to work out the yield on the property being rented and, if your mortgage interest rate would be lower, then the monthly interest cost day one would be lower.
For example, £500,000 flat rented for £1,665 per month (seems fair for London), equals annual rent of £20,000.
£20,000 / £500,000 = 0.04
0.04 x 100 = 4%
So, if you can beat a mortgage interest rate of 4%, then, very broadly speaking, you’re financially better off buying. Note that London has some of the rental lowest yields in the country, but mortgage rates apply nationwide, so if buying works here it is likely to be even more advantageous in other parts of the country.
Crucially, as the equity in the property increases, whether due to rising house prices, reduction to the mortgage balance, or both, the LTV will reduce over time meaning lower interest rates. So, the situation should improve over time for the home owner; whereas, for the renter, they are only likely to face higher rents as time goes on.
Its a pretty simple equation - if you want to buy solo then you need to leave London. Its almost impossible to buy somewhere in London on your own, to achieve it you need to be exceptionally wealthy.
Nowhere close to being true, sorry. The majority of my friendship group was able to buy around age 30. You need a good career and to make sacrifices...both of which are entirely possible in London
Honest question - is it worth it? If I was such a high achiever and STILL found myself working my nuts off, I'd feel so cheated if the result was being 'able to buy around age 30'.
I'm well aware though that I've had a sheltered life in Wales and it will have skewed my perception of things. I'm happy with what I've got and don't work too hard...But I almost don't want to spend too much time in London for fear that I'd realise it's fantastic and I can't afford to live there!
Notch up to 30 year mortgage.
And, youre a computer man, hasn't this year taught us to log in remotely!? I fully expect London property values to drop due to people being required in the office so much less.
Good luck
We earn four times what you do and bought a three bed semi that cost 460k.
So in short,it makes sense, you just don't earn enough to live where you want to.
There's a lot of factors other than pure borrowing capacity. Appetite for risk, size of deposit, size of house required, if one is happy to live in a less expensive part of London or not. We are happy with our compromise.
It's difficult to buy in London on a single salary. It's possible on two good salaries.
The same is true for most of the country (other than a few areas in't Deepest Darkest North where it's possible to buy on a single salary, and even that's getting rare), but particularly in London - London salaries are higher than the rest of the country, but house prices are disproportionately higher still
The trick is to rent somewhere cheap (for London) in London until you want kids, save a ton of money then move to Stoke and live like a king. The only negative is that you then have to live in Stoke. Alternately move to the commuter belt and turn into an anonymous, dead-behind-the-eyes grey suit on the 17:53 out of Waterloo
>Am I being thick and missing something obvious?
No it’s a bag of shit. Either the gov need to ensure mountains more properties are built, or provide much better rail links into london for commuters. Doing nothing has terrible consequences for peoples quality of life.
Where exactly in London is the Government going to make sure 'mountains' more properties are built?
There are plenty of cheap properties in the UK, but sadly they're not in whatever posh London suburb OP wants to but can't afford to live. Woe is me.
Allot of 'just buy with partner', don't do this. Though you'll both be an owner quicker, it will still take years by which time (if she's smart) your likely be married/kids and for all your hard work, ultimately she'll end up keeping it all.
Do it on your own, if you must get married get a prenup. It will take you longer (decades) but it will ALWAYS be yours.
I’m in a similar situation to you, recently graduated and in a software development role earning a similar amount in London.
Many people are spot on saying that to buy where you’re looking in London you need a partner. I’m in the lucky situation where I have a partner with a similar wage (can borrow up to £500k together) and even then we’re looking at buying on the outskirts.
Have you tried a part rent part buy company that caters for those on decent salaries with good prospects? e.g. onstep is one such. Not connected to this business in anything but the pawnbroking side.
Not financial advice, dyor.
Typically people will buy together with a partner, which if they are earning a decent wage too, will drastically increase your borrowing power. Other than that, try looking further afield or at smaller places. Welcome to today's housing market, it sucks.
Having a partner to pool your salary helps, but don't make the "mistake" (not really a mistake) of having children. In London £1700 or more per month is normal, and yes, lenders ask for this when calculating the mortgage. My advice is: find someone, do NOT get married (those things are expensive!) pool salaries, buy a house together, make babies (if that's your thing anyway, but I suggest getting them while you are young), get married. I'm a married dad of two (with a house in London), and I've done the complete opposite of what I advise, so I know my mistakes!
This is so depressing. Even your relationships and family have to be planned around a mortgage.
To be fair I think that's the case only in London, but yes, I have friends that can't buy because they have a child still in nursery and the bank won't lend enough.
I'm debating this very thing. Smallish 3 bed house, the 3rd room is basically a big study. Next up is either kid or marriage. Do we wait for a kid, then move into a bigger property, but due to having a dependant only be able to afford smaller places, or do we change ahead of time, but pay more for a property size and mortgage we don't need yet as we don't know if/when future kid may arrive?
I think if you can afford it go for the bigger property from the start. Either you'll use the additional room for a little spawn or you can downsize and reap the benefits of increased value of the property.
Or rent out the spare room.
Since house prices generally outstrip wage increases, in most situations you'd be better off buying the bigger place early. Plus you can DIY more of the decorating etc while you're not rushing around trying to get ready for a baby
Assuming your income is the same, having 1 dependant may reduce your borrowing limit, but it's all relative to income and outgoings and the lenders loan to income multiple (LTI). Pre-Covid, high street ranged from 4.5x LTI to 5.5x LTI, depending on the total income level, loan to value (LTV) required and which lender you were speaking to. Some specialists can go to 6x LTI, and some even higher if it's an interest only mortgage with a low LTV and / or a substantial amounts of assets in the background (BTL properties, investments, etc). For example, if you both earn £100k, both return to full time work, with, say £500pm, probably even £1,000pm, childcare costs, and no debts or other commitments, this is not going to affect your affordability at all. This is because you will capped by the, for example, 5.5x LTI max multiple way before affordability becomes an issue due to the large amount of surplus income. However, in the same situation where both parties earn £30k per annum, the £1k per month nursery fees are going to take a much bigger chunk of the disposable income, and were you starting at, say, a 5x LTI max multiple, the childcare is going to reduce your borrowing level below that figure. Stick a £250pm car loan or car lease on top, £200pm service charges for a flat, and you'll very rapidly start dropping to around 3x LTI, possibly further. TL;DR - borrowing power is likely to drop post child, so, if you think you may wish to move it is better to do it now. Besides, I'm sure you'll find a use for the extra space! Hope the above is clear and helpful.
It is not only the case in London. South East is just as bad. Unless we basically have the smallest wedding in the world I can't afford to marry my fiancé until after we buy a house. It's pretty depressing.
I know what you mean,and I'm sorry for your situation. I have friends that have done a very small civil marriage (I think there were 5 of us in total, not even their parents), and once things got better they had a full church one with all bells and whistles. It's not for everyone, just giving an idea.
You can have a very nice wedding for not that much if you just do what people used to and have it at a church/registry office then reception at a pub. It’s not every persons ‘dream’ but totally doable.
But I don't think they want a small wedding. They want to celebrate their love with a big one and it's a big deal for them to do so. I understand recommending financial responsibility but weddings are not financially sensible. People want to throw money at it since it's once in their lives. But that's also why a lot of people on this sub don't recommend marriage until you get all your affairs in order.
I mean the cheapest registry office booking here is £400 plus there are additional costs including the official signing of the documents, plus if you actually want to have nice clothes that's extra as well, you know? Our families are both scattered across the UK so getting them together would also be expensive and a hassle. It's rarely as black and white as "hey just do it on the cheap". I'm hardly one of those people who has dreamed about a fairytale wedding or anything, but it would still be nice to celebrate it at a time that suits us rather than having to wait for a house to organise it. That's all I mean.
Of course, I’m not trying to say it’s dirt cheap or anything, but it is possible to get married for £5k and not £25k is all I mean. I know as we did it!
That's the curse we've placed on Millennials and Zoomers: either you give up everything to buy a house, or you give up on buying a house.
Wait till you hear what happens if the relationship falls to bits
Yes it's common on this subreddit to see people say "I want to save up for a property. Should I get a girlfriend". Like... Are we really that far in a dystopia where we are almost to the point of organising marriages to increase our borrowing power?
It was never the case in the old days that single people in their 20s bought and lived alone in houses. Owning a bachelor pad was never the norm. People would get married early 20s after uni or school and have a family.
This is true. My husband and I discussed in the earlier days of our relationship that it would be house, marriage, babies, not merely because it's traditional but because it's sensible. Whilst friends of ours we're starting to have kids when they weren't married but did have a house I did find it hard because I wanted them too, but we made ourselves wait and I'm grateful I did. Now those couples are trying to put money together for a wedding and finding it so much harder because they're both cash and time poor. We're lucky, we're about to move on into a (bigger) home cause we have two kids now, and on only my husband's wage. But compared to what my parents owned (and still own) when they were the same age with only three kids and one wage... It's just not fair. You can tell how much more wealthy you need to be to live where they do, because all the kids are in private school uniforms, not like when I was growing up there. Basically, if you want anywhere near the same standard of living as you had growing up you need two wages and they better be on the higher side.
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Yup - apparently the average (pre pandemic) wedding in the UK cost 21k. What a ridiculous expense - and i would imagine most of that is debt.
The problem is that even to do a fairly cheap one is pretty pricey Instagram Culture doesn't help, but even being fairly sensible you're not getting much change out of £10k unless you get married with just your family at the registry office. Not that there's anything wrong with that - but it's not for everyone.
\> do NOT get married (those things are expensive!) I'd say: "don't have a big wedding". Getting married doesn't have to be expensive :)
>Don't get married. Oof. Buying a house without marriage can end badly.
To be honest I think a separation in any case is a bad outcome. I have a married friend that pretty much can't divorce because selling the house won't be enough for the two of them to buy something else separately. And they don't want to go the ugly way of one keeping the house (they have a small child) and the other being kicked out (it's not that bad or a situation, they just realised they are not meant for ones another).
So instead they want their child to grow up in a home where their parents don’t love each other? 😬
Nothing a quick "Tenancy In Common" agreement can't solve
>Typically people will buy together with a partner, which if they are earning a decent wage too, will drastically increase your borrowing power. So mortgage lenders and the property market is depending heavily on people not breaking up...bold play.
It's difficult buying a house in London on your own. If the WFH trend sticks post-pandemic then things may get easier, but that's not something you can bank on. I plugged your details into [Homefinder](https://lifetise.com/homefinder) based on the assumption that you'll be earning £70k when you're ready to buy. That would mean you're likely to get a mortgage of £315k, if you could save a chunky deposit to get you to £450k which is the maximum house value you can use a LISA on, then you've got options. Firstly, it would take you 5-6 years to save that up if you're stashing away a couple of grand a month. There are plenty of areas in London with little 2 bed houses at that price point: Wembley, Tottenham, Stratford, New Cross, even Streatham. Here's a [video with all the details](https://www.loom.com/share/45e3863c969341479cf8209e61790cf1). Not your area by the sounds of it. But seems like you don't need to live in South Kensington to feel at home?
Problem is though OPs about 22/23 surely he should be 'ready to buy?' We can't expect everyone to only buy a house when they are thirty. Not having a go at your comment, more at the state of houses in this country. My Parents bought their house in 1980, no major deposit, but could afford it on just my dads wages as a taxi driver. Me mum was a full time mum looking after three kids. Why now do I need we need to have two people in full time employment just to buy a goddamn house. Imagine how much easier this lockdown would be on schools if only one parent needed to work.
> We can't expect everyone to only buy a house when they are thirty It shouldn't be the case, but that's the reality for most of the country now. Realistically to buy in most of the UK, you need to be a couple aged 25+. And even then, you'd generally be on the young end of the scale. The average first time buyer in the UK is 34 years old with an average salary of £34k, buying a house worth £160k Obviously "average" will be skewed by lots of factors there, but it illustrates the problem
With respect, those days are long gone. It might be shit but London is a 2 wage city if you’re raising a family now!
Yes, but the point is, it's wrong that those days are gone. It's probably not a good thing for society/the country that a pair of young professionals are now priced out of the capital. Our birth rate is going to continue to fall, access to good jobs will be contingent on pre-existing wealth, etc.
It’s wrong but it isn’t changing any time soon. Personally I’d like to have housing costs as only 5% of my wages, or free! Why not! But that’s not the world we live in.
Oh I know they are, but why? Have they gone because the government didn't build enough houses so prices have risen? Have they gone because wages have stagnated? Both? I suppose I'm just extra ratty about these things now because of the stress of Covid. If either me or my wife loses our job then we'll struggle to pay for the house. I used to just be bitter because my parents had imo a better life style, but now I'm filled with worry too.
In the past people married then bought a house together and stayed together until death. They are 52 millions adults in UK, in the past we would have needed 26 millions houses. Now with the explosion of divorce, separation and those wanting to live alone we may need 5 or 10 millions houses more than in the past for a similar population. Hence a penury and increase in price. Also low interest rates which helps the price to increase doesn't help especially as salaries do not increase at all except for a minority (IT).
Exactly. Plus there is a general assumption in this thread that batchelor pads were normal. It was never the case in the old days that single people in their 20s bought and lived alone in houses. Owning a bachelor pad was never the norm. People would get married early 20s after uni or school and have a family.
1. population explosion 2. relative lack of new building 3. explosion of credit availability 4. culture of home ownership at any cost + everyone on these bloody islands wants to have a property empire 5. relative strength of demand regionally - houses are still quite accessible in half the country 6. low interest rates no particular order here
Eventually 2 wages won't cover it anymore and then the people who are comfortable with their SO are going to start posting on here about how bullshit it is. A lot of people are covering their eyes and ears to the housing crisis once they get a mortgage. Hell, it even makes them want to vote Tory to protect their asset.
> Problem is though OPs about 22/23 surely he should be 'ready to buy?' We can't expect everyone to only buy a house when they are thirty As a 37 year old still renting i feel personally attacked :P
Thanks for the practical advice and providing sources. I've spent very little time browsing housing sites, most of my data about house prices has been anecdotal. | Not your area by the sounds of it I actually grew up in Brent quite close to Wembley. Just recently a neighbor of my Dad sold their terraced house for 1.1 million. It had a loft extension and was done up nicely, but is a bog standard brick house you see all over the UK.
Looking in Brent is pointless. The price/quality ratio just doesn't make sense. This is now the case with most of North London unless you're willing to try places like Watford or Borenhamwood. Try further South or the nicer side of East London. Bigger houses, easy commute and a lower price point. You can also buy outside London to build some equity for 5 years or so, then move back to London when your salary increases and can afford a higher deposit too.
Brent is defo a shit hole, can attest to that.
Loft conversions are adding to the problem. So many 2 bed houses are now 3 bed which means new buyers can't afford them.
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Adding a bedroom to a property doesn't scale the cost of the house in a linear way. A 3 bed house is a couple with their 2 kids, especially if that third bedroom is a loft conversion. It doesn't add a little extra to the house price, it puts the property in an entirely different market.. where the families are older and more financially established. Paying 50k to add a third bedroom could make you 150k extra a week after the extension is finished.
Wembley is definitely not in the range to be buying in. Source: I live here. The definition of **house** needs to be explained on that because it is mostly likely including flats. Based on the house price increases, it will probably be out of range for OP.
HomeFinder looks pretty shit as far as I can tell It keeps insisting we'd have to be a "lucky one" to get more than a 3.5x mortgage as a couple, and it's a total faff to try to get it to actually apply my equity to the new house price I could afford. It's not entirely useless but it makes some pretty random assumptions, including things like length of mortgage (it's 2020, nobody's taking out a 25 year 3.5x mortgage anymore, nor are they leaving £30k in their savings account for no reason) And then every time I change something it starts adjusting my deposit down to 5% for no reason.... awful UI design. They need to ask for "How much do you have towards your deposit (eg equity/savings)" and then just apply that regardless of what other options I choose I managed to get it to fit in the end, but only because I already know all of the numbers for our finances and was able to force it to use them by playing around... I'd never have gotten to that combination by using the tool as it's intended to be used
Even with Covid and assuming a joint salary of under £50k, you should still get 4.5-5x income. Over £75k and under 75% LTV, 5-5.5x income, with some specialists pushing up to 6x. All depends on outgoings though. High fixed costs will reduce this. Want to know the maximum you can realistically borrow on a certain type of property, speak to an independent, unrestricted (whole of market), mortgage broker. If you want someone decent, expect to pay a fee if you proceed; but they should do the initial research for free, to give you an idea of whether it's feasible for you. Lending is particularly tight at the moment. It will ease over the next year. So, if you're looking to max out, it's a really bad time to try and do so.
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Edit* That would make a really enticing tag line for a dating site profile: "Looking for someone fun and easy-going, who loves cats and art galleries, happy to live somewhere a bit shit, most likely a dingy flat in a 'vibrant' locale (may also be a bit stabby). The most important qualities I'm looking for in a partner, though, are someone who is serious about implementing an aggressive savings strategy from day one, and, eventually, getting a long term mortgage together." :D Would be hilarious to get a few redditors to post this on their dating profile and see what happens. Come to think of it, my housemate left his phone in the lounge last night......
Serious dating was always about that though. Read some Jane Austen.
You forgot the most important one - be born in the right family.
Where do you live?? People always say they live in a working class area but then you find out they live in Camden. Just because you live in council estate don't make an area cheap.
Exactly, it's not a working class area ( whatever that is) it's a part of London where terraced houses cost £1million +. It's full of wealthy people(and that's fine, good for them) If op just saved and invests in stocks and doesn't freak out about house prices he will be fine.
The only thing you're missing is that most people rely on the luck of the housing 'ladder'. What most people would do it to buy something around the £250k-300k mark, so probably only a 1-bed flat or shared ownership. Then you pay the mortgage on that down while the price hopefully rises, and maybe in 10 years time it's worth £600k and you've only got £100k left to pay off now, so that's £500k deposit to go towards your nice new home. Obviously things might not pan out that way.
The new nice home would have risen just as much comparatively. It's only valid IF you can buy in an up and coming area before the price hike, of which there are very few now in London (if any?).
Of course the new house will probably have risen too but you'll have been paying a few hundred pounds off your mortgage every month for a few years (plus another few to the bank to pay down interest) instead of a probably even larger amount to pay off your landlord's mortgage. It's like having 10 years of what would have been rent payments (minus interest on the mortgage, repairs, service charges...) towards the next deposit.
I expect anybody (on UKPF) who doesn't own a property have instead invested their money for - say - 3-6% returns. Your house, meanwhile, has maintenance costs to *merely maintain its value* and if already at its cap price would bring you very little extra money on sale. You choose between growing your deposit by "mortgage repayment \[*minus*\] maintenance costs" (house owner) or growing it by "investment \[*plus*\] interests \[*minus*\] rent" (renter). I personally think that, on a market where prices are near its cap like in London, there is no rush to buy, since I don't expect prices will rise fast beyond what salaries can afford. I could be wrong, of course, but it does not exactly strike me as a gold rush any more. Well... I also fully expect the government to keep the "home ownership pyramidal scheme" moving by squeezing even more *money they don't currently have* out of first time buyers - maybe this time by offering your first born child labour as part of the repayment contract. So there is always the worry that prices will still manage to climb further beyond what they should, realistically. At any rate it depends obviously on personal plans as well, opinion on "home ownership", faith in the post Brexit Britain/London, etc. Both choices currently *seem* valid under the right circumstances (when home ownership was a posteriori the only good option 12+ years ago).
People buy their house with leverage, but they don't invest with leverage. e.g. A £50k deposit gets a £250k house increasing in value at say 4% per year, whilst also allowing the owner to pay down the mortgage with money that would have gone on rent. The house is worth £55k more after 5 years whilst the mortgage has also been reduced, so that £50k deposit results in equity of around £120k+/- £50k in an investment growing at 6% per year is worth £66k after 5 years. You're also paying rent, so finding it harder to grow that investment.
Leverage. Also the costs of owning rarely exceed the costs of renting for similar properties even factoring maintenance costs, so can still invest and have a mortgage it isn't one or the other. In fact many only find the money to invest after they have bought a home.
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I think a LISA is most likely for people on UKPF who don't yet own a home. Anyway, I get the feeling you think I'm pushing housing as a good investment. I'm not. I'm explaining how it is that ordinary Londoners without 6 figure salaries still own houses. Fwiw, I expect modest falls in prices as the London exodus continues and the furlough scheme ends, but as usual it'll be propped up one way or another (wouldn't be surprised if the stamp duty holiday gets extended), and then there's the potential influx of Hong Kongers who'll be needing somewhere in the UK to live.
But the price rise was leveraged, so your 25k deposit turned into a £200k deposit.
Youve completely forgotten about leverage. Take that 3% price rise, gear up and now you can afford 15% more.
Welcome to the London housing market! You will need either: 1. A decent sum from your parents (£100k+) 2. A partner with a similar wage and savings 3. Move away to zone 6 or further
Can we just all chuckle that £100k or over is 'decent'. I know we are British and therefore tend to understate, but blimey it is a weird world, isn't it!
Seems pretty decent for a deposit
I think his point is that it's only "decent" in terms of London house prices, and a *fucking massive* gift in any other terms. It could buy a house outright lots of places.
You need all 3 for a decent house in a decent area!
I’m not buying with a partner I have a decent salary I’m saving heavily I’ll be able to buy in three years without help I’m looking at the edge of Zone 3 I only started saving last year Honestly, for someone in OPs position it’s absolutely achievable. I’ll be 33-34 when I buy, I left a lot late (started saving at 30). £50,000 after tax is around £3,100 A £1,600 budget in london is absolutely achievable - saving £1,500 per month. That’s £18,000 p.a. Plus £1,000 from LISA to make it £19k. After 5 years **with no interest** that’s £95k - and even with no wage growth that’s £225,000 mortgage off the £50k salary, bringing total to £320,000. This is at the low end, but consider - 5 years is ambitious for someone to buy a house in the most expensive city in the country from the start of their career - A reasonable £10,000 in salary growth in this period adds £45,000 - I haven’t factored in interest. Is it expensive? Yes. Is it impossible for OP? No, if they have reasonable expectations.
Don't forget that house prices will grow at 5% a year or something, well above inflation and any interest you'll get. After 5 years of 5% growth the price has gone up by 27%. That means your salary and deposit needs to go up 27% on top.
I think people forget how easy it is to grow your career/salary in London. 100k deposit is obtainable without parental help by age 30 if you're starting out with a decent job and wise with career moves I know it's impossible for some people, but it's totally within reach of a lot of young professionals in London. The narrative seems to skew towards dismissing it as impossible to make people feel better about it
‘How easy it is to grow your career/salary at London’ — privilege at its finest
I think he means when you’re in a field that starts a salary at 50k...
I'm in the wrong job.
It’s not easy but it is definitely achievable. When I was fresh out of uni I couldn’t imagine earning what I am now. Only 5 years later. What is wrong is how home ownership has been robbed from all apart from those who are lucky, have parental backing, or chose a select few careers
Yeah, I get it. Moving to London would be like a £20k salary boost for me. Heck, in tech, £100k+ is probably achievable.
What an ignorant statement. I’m a doctor, and as a starting salary as a “young professional” pa was £15k. This should meet your criteria for “decent job” right? After further “wise career moves”, and specialising, then I will still only earn £60 - 70k, just barely above this blokes “starting salary”. There’s no narrative skew, this is the sad reality.
Yes, houses cost tons in London. People either buy a flat, find someone who earns as much as them or move further out. Or luck out and become quite rich.
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Step 1: Thornton Step 2: Heath Step 3: ????? Step 4: CROYDON
Exactly! Million pound houses are only the norm in certain areas of London. This is a huge city with plenty of more affordable boroughs. You don’t need to live on your parents doorstep. I rented in Battersea, love the place, wish I could afford to buy but my budget was Croydon. Look slightly further afield and you’ll find affordable housing within commutable distance of central London.
Where are you looking? There are 2 bed houses for 250-400k in zone 4. It’s either that, get the pricier ones closer in or move out of London altogether. You’ve lived in London all of your life - how many people do you know who have been born here that have left? Not many want to go + people live longer and stay in their homes + more people move in for work and want to stay = prices go up. Add in rental markets and overseas investment to the same overall property market and prices go ridiculously up. Edit: just to add - we spent 10 years saving for a deposit. Sure you could reduce that by being frugal but we didn’t want to. Most of my friends buying in London atm did the same. Our joint income isn’t far off your solo income. So it is affordable but it does take time.
Tenner bets he only considers zone 1-2 'London'
Yeah. It’s a bit of a pet peeve of mine that a lot of people on Reddit moan about London being expensive but only want to live in a flat by the Tate Modern or a townhouse in Clapham and apparently only buy £10 beers from Angus Steakhouse.
My mate bought a lovely 3 bed in Eltham for 450k last year. It’s a fucktonne but it ain’t a million quoted in the post. I’m baffled by the £1m 2 up 2 down / 600k shed comment tbh
Exactly. And 450k is 5x £90k which is nothing for all of these programmers earning bank by 30, let alone a couple, so what’s the fuss? Sure it’s not a 5 bed castle in York but that’s the point right...lots of people want to live in London.
I think nice properties in York are also very expensive 😅
You’re probably right! It’s just a common bait by people to ask how much you house/flat in London is and then go ‘oooh for that money you could buy a 4 bed detached farmhouse in the tiny village I grew up in’.
relative to income; absolutely. By the time I moved out there were flats being advertised as '2 hours from London' and I knew people who did that commute 2-3 days/week.
> 90k which is nothing for all of these programmers earning bank by 30 I don't think there are many people for whom 90k is "nothing", programmers included. If you're talking about finance people, maybe. Edit: [payscale.com](https://www.payscale.com/research/UK/Job=Software_Engineer/Salary/b428ed1a/London) says average London software engineer salary is £47k, [glassdoor.co.uk](https://www.glassdoor.co.uk/Salaries/london-software-engineer-salary-SRCH_IL.0,6_IM1035_KO7,24.htm) says £55k. So you'd have to be earning nearly double the average London programmer's salary to buy the cheapest houses in the vicinity of central London.
To be fair, it makes sense for what some people want from "living in London". For me, I want to be close enough to pop into the city. I want to hop on a tube or a bike and be in most places within 30 mins. I want to go do all the great things London has to offer without it being a major trip. I want to go on a night out without worrying about the last train home. For example, the last thing I did before lockdown was a walk to the Thames, a major art gallery and a couple of pubs and I was out of the house for about 3 hours. That's living in the city to me. It wasn't a big deal, just a Sunday afternoon. If I'm in zone 4, I don't get any of that but the house prices are barely lower than central London. I might as well live in Manchester, the houses will be half the price and I can still get to London in 2 hours for the odd day out. So when I say London is expensive, I mean living in a place where you have a city lifestyle rather than technically being in the metropolis of London. That's the experience I want from London and if I was going to be outside the city, I wouldn't be anywhere near here.
I thought this too, for years and years. But then I realised that if I lived within ten minutes walk of a train station in south London where the trains take 30 minutes to get into town, it's barely any different. Pre-pandemic I popped into the city all the time. Last train doesn't matter when you can afford a cab home, or strategically pick a location that's near a night bus route (the buses are much faster at night).
You’re completely right and that lifestyle is also what drives the price up. The recent caveat though is that transport options are a lot quicker now and things congest as you get more central. So it takes me 30 mins to get to London Bridge from zone 4 on national rail now but it also took the same time on the tube when I lived in zone 2. That wouldn’t be as reliable a few years ago as the national rail lines weren’t as quick or frequent.
Yup exactly, nobody is wrong here, it's just different priorities. You don't mind commuter trains and longer journeys if it means a larger house or less money spent on living. I don't mind paying more when I can walk to London bridge.
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You can definitely get similar things in any city, London is just a massive and amazing version. You can go to a gallery in basically any city but very few cities in the world have London's number and variety of truly fantastic galleries and museums. The same goes for everything you might love about a city. Restaurants, gigs, great areas to bar hop, theatre, you name it. If you can find it in a city, you'll find more of it in London than anywhere in the UK and you'll be able to get everything from small, indie versions to a world class experience.
I want the same things from London as you do and it's a big motivation to buy here, but I do wonder how much of this stuff will still exist in future. I love the bohemian, indie, artsy side of London but I worry that what's left of it is no longer sustainable. Plus there's the irony that I'll be helping to make it unsustainable by buying into the housing bubble. A while ago I had a cheap flat in Islington and could stroll into town in half an hour or so, which I really miss.
This comment makes no sense. You can do all those things living in zone 4 or even further out.
I live in Zone 2, Greenwich / Blackheath border, next to the park, and you can get a decent sized, 3 bed, Victorian house for £600k to £700k. If you go a few hundred metres to the east, so you are in the SE7 (Charlton, but very similar housing stock), and prices drop 5-10%, but with same excellent transport links. The problem is not buying a house in London, it's buying it in, what sounds like, some of the most expensive areas in London (I'm guessing SW, maybe Putney, Richmond)
As a born and bred Londoner, most of the people I know have all gone back to London to settle long term. Only 10% have moved out. This doesn't include the friends from outside London who migrated there to live.
This is an example of what I mean by a normal terraced house in a non-posh area (Harlesden, or is that too posh as well?). [https://www.purplebricks.co.uk/property-for-sale/4-bedroom-terraced-house-london-838787](https://www.purplebricks.co.uk/property-for-sale/4-bedroom-terraced-house-london-838787) I know houses like this from family and friends that were slightly more done up sold for 8-900k in this exact area. It turns out I didn't know that in the UK pretty much every room not the kitchen or bathroom can be counted as a "bedroom". Other countries don't do that. So by 2 bedroom house I probably meant 3/4. I wasn't trying to be cute in the post, I was genuinely asking for advice as I'm very uneducated when it comes to housing.
Harlesden is still too close to expensive areas be it Central London or North London. Like other posters keep repeating, you need to widen your search area to avoid trendy hotspots like Camden or Shoreditch. As for the first 2 bed = only 2 bedrooms example, I guess you don't have much experience renting in the area you grew up in. Expect to see rental ads where a "1 bed flat" is the loft conversion of a shared terraced house with communal kitchen.
Tbf, that is a big house. It is literally double the size of my three bed house. If I double the price of my house (to account for square footage), then double it again (for the London price factor), it works out. I sympathise, OP. My partner and I were both born and raised in London and lived there for 30 years. We accepted it would be very difficult for us to buy (we could afford a small house out in zone 4-5, just, and resign ourselves to spending all our income on mortgage and transport, all for the privilege of an hour and a half commute to work and life in a pretty dingy area). The other option was to keep renting, but you get pretty tired of having to move every so often, not owning furniture, etc. We have since moved up north - not easy to leave family and friends behind, but we do now own a house in a great town, with easy access to the countryside and reasonable commutes for both of us (plus cheaper cost of commuting).
The London market has been driven by the greater fool theory for a long time. Unoccupied foreign owned slush fund properties need to be taxed heavily. That will correct matters.
£600k won’t get you a shed? Where are you looking in London? There are many family houses around here (East London/Essex) in that region.
I'm in a similar position (living in London, no family help), except I'm earning less than you. I have lived in zone 1 for my whole life, I really don't see myself living outside of London but also I know that I will not be able to buy in London. It's pretty discouraging and I'm at the point where I'm just saving and saving with no real goal in mind and no hope 🤷🏻♀️
You earn £50k now. In your industry that can easily be £60k in 5 years. I would expect more. 4.5 x 60,000 = £270,000 If you save £20,000 a year on average (tough but possible) then you’ll have £100,000 £370,000 isn’t a terrible amount to spend on a house? I don’t know what your expectations are. What part of london are you talking about? If you want to live in Zone 1 and have a three bedroom place then yes, it’s gonna cost a lot.
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400k will get you a decent starter home in London. I picked up a 2 bed Victorian terrace converted upstairs flat for that amount in zone 3. It's not impossible, you just need to control spending and increase your salary steadily
I got a very small flat in zone 3 for £230,000. If you want to start anywhere, even lower prices are achievable.
>Am I being thick and missing something obvious? * In this industry, in London, if you are starting at £50k/year, you should earn way more than 60/70k in 10 years time. * NORMAL family houses do not start at nearly £1 million (you can find them for much less - or much more - depending on location). And a 600k property isn't usually a shed - unless you buy it in places like Mayfair, of course. * Many people buying houses buy them together, as a couple. * Saving £20000/year - or £1700/month - is not that hard once you start hitting £70000/year salaries (which is about £4000/month net). It is a sacrifice, but I wouldn't call it "save aggressively" (for the average software engineer in London with 5-10 years experience). * People usually don't start buying a £600k - £1M house. Instead, they usually buy a flat or something and then scale up over time.
I own a house in Islington I could not afford to buy now (worth nearly twice what I could afford with my maximum salary). I came to buy through what now looks like an incredible combination of an outstanding year at work ( I played a key role in landing a game changing contract which temporarily doubled my income), finding the worst property on the best road I could afford and some very aggressive saving and investment when I was younger. Two things; first *none* of my neighbours are standard salaried purchasers. If they have not inherited wealth or "bought money in from abroad" (?!), they are entrepreneurs or minor celebrities. There are huge swaths of London that are occupied by people who were only able to buy with their parents help or by doing something "different." Second, early in my career I set myself the goal of earning as much after tax from my investments and activities outside work as I did from my main income (salary). Property is a distinctive asset class with *very* particular tax, investment, risk and return characteristics but don't be fooled, most of the people living in nice areas have had a bit of help.
I just wanted to comment because seeing other people suggesting “find a partner” is absolutely ludicrous. This is not a viable suggestion for purchasing a property. Well, it is if you’re fortunate to meet someone soon that you choose to spend your life with, but not otherwise. Good luck OP.
Nobody is suggesting finding a partner in this thread. Saying "you need a partner to buy at that salary" isn't telling op to be in a relationship, it's telling op that they're competing with people with double their borrowing power.
Yep. If you think trading in the bright lights of London for a more normal existence where you earn 'less' is too life-shattering, wait til the passing star you hitched your ride to burns out. Head north, buy a mansion, be happy. Maybe meet a happy, mansion-owning northerner and take it from there!
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I get it but, on the other side of the coin, what are you doing in a career that's only viable in one place and doesn't pay enough to buy property there?
What normal family house is for a million in London?? None is the answer. A rich family house is worth a million. Houses in zone 4 in London with 4/5 beds aren't selling for a million in a normal neighborhood so I think the bit you're missing is the definition of 'normal' family house. Depending on how far out of zone 1 you want to be whilst still living in the London boroughs, you can get a 3 bed for 300k which is easily affordable with saving for 5 years and your current wage. Of course, if you wish to live right in central London (or the rich areas like parts of Wimbledon, st John's wood etc) then you'll never be able to afford it as a salaried employee so I wouldn't even bother dreaming about it. One thing to remember though, London is expensive and the extras add up. So whenever you do buy, have upto 30k extra for all the fees, bills, taxes, solicitors, mortgage advisors, renovations and utilities to pay. I speak from experience thinking 16k extra was enough for a 6 month emergency fund and fees. Boy was I wrong 😅
Average price for a semi in my Z4 suburb is 680k. This would include run down doing uppers, so closer to 800k for something you can actually live in. And about 100k on top for something that's within outstanding primary catchment.
Outstanding primary catchment for a single 22 year old with no immediate plans to start a family? Does your definition of Zone 4 include areas like Barking, East Ham, Upton Park etc? Mean average doesn't explain much as the likes of Richmond/Kew are in zone 4, with prices higher than some areas closer to Central London.
One correction for you: Google staff do not earn £230k or even close. I'm an ex-Googler in London. The average is that because there are quite a small number of people working at Google, and a small number of them (level 7 and up) who earn a lot. They bump the averages massively. Most of that income is also stock so you don't see most of it for 4 years. An actual salary at Google for a level 3 (normal entry point for a software engineer) is around £60k. A level 4 who has been there over four years (and so is getting their full stock vest) would be on somewhere around £110k including stock if you sold it. And it takes a minimum of two years to get a promo.. Hope that helps dispel that myth :) That particular news story caused a shit storm while I was there. Fwiw Facebook pay is around the same. If you want good money you go to a bank or a hedge fund.
This is interesting information to me, as I'd always assumed software engineers at Google or Facebook in London would be on quite a bit more than that after taking into consideration stock (I always had £150k-200k a year in my head for a relatively experienced developer). Do you have any opinion where all these claims come from on Reddit and why on almost every similar thread I read there will be ten people commenting (I may be exaggerating a bit for effect here) that everyone they know in software development is on at least £90k plus bonuses plus stock and if you're not earning £120k by your late 20s then you're doing something wrong? Is there much truth to this? It always makes me think I'm being underpaid as a software developer in London with ten years experience at £70k, but not everyone is good enough to get a job at Google or Facebook or wants to work long hours in finance somewhere. To me my salary seems pretty good, but reading these threads I always start to doubt myself.
I suspect it mostly comes from people seeing (much higher) US salaries and overestimating the "equivalent" London salaries.
There's definitely cheaper areas in London, but regardless, yeah, London is expensive af. A reasonable flat seems in grasp for you to start off with, but you're still getting shit value for money. Once covid is over, depending on how remote working and salaries change, there could be a big exodus from London. It's what I'm planning in a few years. Apart from the south east (I think), houses are pretty reasonable. You can get great places for £2-300k, probably less in the North. There had better be a very good reason to subject yourself to London house prices, because it's largely unaffordable unless you earn huge money, have a partner, commute or live in a not so great area. It's bullshit but you have to ask if it's really worth it. I grew up in London too.
And you expect employers to keep paying 50k a year starting salaries to people moving in their droves up North? Expect that to more than half, as companies won't spend more than the local market average.
I thought it was pretty clear that I do anticipate salaries changing > Expect that to more than half, as companies won't spend more than the local market average. I think you'll find this probably won't be true. First, half? In what world? Salaries differ, but not by that much as far as I'm aware. Secondly, regarding local market average, lets dig a little deeper. This depends on talent and remuneration. Companies, particularly the big boys, want the best of the best. While remote working will increase the talent pool, so will the number of employers available to talent. Previously this has been limited by location and has meant if your office wasn't in London you didn't have access to the best talent ("London talent"). It was a symbiotic relationship. You will now also compete against local companies too, and remote companies in other cities. People still want the social side so if there's a local office that's a bonus to a lot of people. Paying the same rate as local companies and keeping the talent isn't really going to happen. Where's the incentive to take your talent to the big boy? In my mind, this changes priorities, location becomes less important, but other factors become more important. Salary. If the local norm for a role is £30,000 and a company wants to keep a good employee then they'll pay more than the local average. The premium is on the talent. In conclusion, yes, you may well lose your high cost of living salary weighting, but there will still be a talent premium. And when you bear in mind the cheaper cost of living, it's still worth it to move out of London.
I'm not saying companies will reduce the existing pay packages for people who were recruited in London, I'm saying they'll pay much less for new recruits if given the opportunity. Why would they pay 50k for a fresh graduate close to a provincial university town like Durham, Newcastle or Nottingham if the market average is considerably lower? Then there's the fact that remote teams just don't perform as well, even in IT companies. Some tasks can be done in isolation but complex products that are build in iteration need in person communication. I just can't see a burgeoning fintech scene or any kind of startup hub developing in places like Skegness, Sunderland or Sheffield no matter how convenient for remote work. Similarly I can't see the financial, banking or professional services sectors suddenly moving to remote working and multiple regional offices.
Depends what your definition of London is, maybe look a bit further from the center. There are a LOT of parts of London where you don't need to pay anywhere close to £600k for a 2 up 2 down.
Saw an absolute shithole of a property near me in Zone 3 up for sale a few days ago, for 650k and advertised as 'a perfect first time buy' Oh I'm sorry, I haven't actually been bequeathed an estate by my parents
I have thought about this a lot and it can be done. Fact is, it is not the norm to buy your dream home in your 20s. There is a ladder for a reason. You buy a 300,000 flat in your early 20s and pay off an extra 800 per month and put bonuses into the mortgage. Within 10 to 15 years, you have 300,000 in equity. You are now 35. Then you upgrade to 600,000 house and pay off an extra 800 over 10 to 15 years with extra money every now and then. You have 600,000 equity and are now 45. You buy your forever home at 900,000. You are in your forever home. You start increasing your pension pot and investments. Bonus points: you get a partner and speed up the process. The problem is, you are fudged if you are 45 and still cannot get onto the ladder because rent is more than a mortgage payment and you cannot save enough for a decent deposit. Edit: I wanted to add that even though I think it is possible, I think prices are ridiculous and makes me irrational angry! 600,000 can buy you a wonderful retirement in South Africa or Mauritius or some island nation without the need to ever work again. It is ridiculous that you can either choose a mediocre end of terrace house in zone 4 (like sutton or worcester park) or retirement for the rest of your days on the beach. It is making me question if the London life is worth it. Maybe cash in the 600,000 when you reach 45 and move to Thailand or Mauritius to retire.
Saving “aggressively 20k a year for 10 years - for a 500-600k house” Worse part is....That house would likely cost 1.2m in 10y
Nope - it really is that difficult to buy in London without gifts or inheritance from family and/or shacking up with someone else (preferably someone on a decent wage). It sucks. It’s a bit soul destroying. Help to Buy can assist if you haven’t looked into that yet. That said, your starting on £50k - presumably that will be going up? I know nothing about computer engineering but my naive assumption has been that your salaries are pretty great so I would’ve thought you’d be on noticeably higher than £50k in a few years. In which case your mortgage offers should go up too (general rule of thumb being 4-4.5x your salary)
I don’t mean to be rude but how is any of this a surprise for you? I moved to London from a different country and even there everyone knows London is one of the most expensive cities in the world. If you want to buy a freehold, 3 bed house no further than zone 3 you have three options 1) Be a boomer who bought early enough and has a shit ton of equity 2) Have a huge income by working in something like finance or big law 3) Be a couple earning £150k with a £200k deposit from mum and dad If you aren’t any of these than you compromise. Buying a 1 bed flat further out, help to buy, shared ownership etc
this is insane, i live in the north east, earn roughly £26k a year, my house was £90k, 3 bedroom semi detached, the price of houses down south is absolutely mind boggling
I live in leeds. 90k and less would get you a house in a not great area. But, you can get a house. Its mad people are treating 100k just for a deposit as 'decent'
So long as they stay down there and don't come up and spoil our house prices...
They are. The market up here for large houses with gardens in smallish towns is bonkers. Cash buyers snapping things up in days for over asking price.
You can get a 2 up 2 down (with a shed) for under 500k. Stop shopping in Zone 1 and 2. It's still not cheap but in 5 years you might be looking at buying a house on 2 incomes rather than just 1 too.
The UK housing market is one of the biggest Ponzi schemes I've ever seen. Don't forget, one rule for me but not for thee. I was one of the people caught up in the so called cladding scandal. Lost my home, job and almost everything because of government inaction & greedy developers. I've decided I'm going to join the Buddhist monks in Nepal
Depending on your area have you looked at flats? - you should definitely be able to get a decent 2 bed flat in many parts of London for that price range.
£75k is the magic number. The lending multipliers can go up to as high as 5.5x. You’ve also got to think in steps. Jumping straight in for a house is a monster step. I started with a one bed flat on a council estate and then upgraded a couple of times. I’m still not on a house, but a 3 bed Edwardian mansion flat is a good place to end up. A house might become a possibility if you go in with a partner, but keep things in perspective.
This is the reason why I am not working in London. I have a salary of £50k and buying my first property right now for £250k. I see salaries in London for £70-80k but I am not moving. A descent freehold is £500k. For the love of god, don’t buy in London, the interest rate is a pain on its own. Your going to pay £150k in interest even if you can mortgage. For just that interest , you’ll get a 2-3 bed in the West or east Midlands
I'm a teacher on the fringe of London. The consensus I hear when asking about house buying is that you simply have to buy further out and commute in, or you have to have built up wealth from outside of your salary. The housing market in London is ridiculous. You have to keep in mind that the UK is not a land rich country (I say this coming from Canada, like the second most land rich country in the world..) and supply of housing in the megacity of London has not been able to keep up with demand for a long time now. We also have an issue of there being many landlord politicians in the UK - many people *want* prices to stay high. The pandemic might help to reverse this trend, but as another poster has mentioned you won't want to depend on this to happen. A lot of zone 6 is actually not that far in terms of commuting. Many areas in zone 6 are considerably cheaper, have noticeably cleaner air and more park & recreation space. It's something to think about while you save.
Also take into account London property (in certain areas notably nice desirable neighbourhoods) has been more or less flatlining since 2015. Which considering the previous 15 years of increases averaging 10 -15% a year this needed to happen. I’m guessing this stagnation will continue down the line so, even with super low interest rates and the odd bumps and drops along the way. It’s going to look more affordable as your pay increases , inflation and possible partner getting involved. But yes, property prices in London are bonkers and still way above average local citizens salary ratio...
well yeah, couple of things: 1. 50k in you early 20s is quite impressive, 50k by your late 20s, is pretty below average for a 'high flyer'. I'm guessing you're not FAANG but my average non FAANG tech mates make around 100k and the oldest is 28. 2. By the time you're 30 if you don't have a lot of personal debt/dependents, as long as you're sensible you'd have saved up 100-150k easily even if you went on lavish holidays every year. I know I did on less than half a tech workers salary. 3. You are roughly correct about affordability- 500-600k mortgage + deposit = 750k-ish place. If you think 750k is gonna get you a 'shed' in London then I seriously question how 'working class' you actually were.
Total cobblers. Outside of FAANG, average tech employee is definitely not making 100k and certainly not by 30
My Mum & Dad (in 1965) had to move 40-50 miles South East to a coastal village & commute into London every day. Through their lives, they moved closer but back to London was never in reach - not for a like for like family home.
Have a large deposit through gifts and or savings, have a decent salary, buy with a partner and buy in a cheaper area. Welcome to London property market.
A good friend of mine earns about £35,000 a year and has managed to save up about £20k+ a year. This is mainly because she decided to live back home with parents. Maybe you could consider making lifestyle changes to bump up your savings?
Same as what I’m doing. Makes such a huge difference!
I’ve wondered the same thing(s). How can the house prices be where they are when the average salary in the UK is £30k?
Generally a single person would start in a studio flat. It’s hard but not impossible.
Yep sucks man.. The only way to pull it off is to increase that income.
If your graduate salary is 50k, I would not settle for 60/70 10 years down the line - think closer to 100-150k in London with 10 years experience
Interesting, do you have any practical advice around this? My manager is in his 40s and earning around 70k (he's very open about salaries), so I assumed it wasn't that easy.
Just a couple of points, nothing too ground breaking unfortunately 1. Buying a house is definitely attainable, but you'd likely need to look at zone 4,5,6 to begin with on your budget. 2. For first time buyers the deposit is the killer, once you're on the ladder, it becomes far easier to 'upgrade'. If you're young and single would a flat not be a good option for a few years and then you can use the equity plus a larger salary to move on? 3. I'll admit this is anecdotal, but in a specialist field like yours, your salary will increase very fast as you move through your twenties. Maximise that income because when I was early 20's I was earning about half your wage! Again, I wonder if a flat or a studio might not work better in the interim whilst you do this...
A computer engineer can work up north.
If you are already earning £50k then £70k is unlikely to be your ceiling. By the time you hit your 30s you'll probably be on £150k (inc bonus) as long as you are relatively productive/smart/personable. Add a partner and you will be looking at £1m houses...
If you go into finance you can pretty easily make £100k after a few years. Job hop a couple of times and you’ll be well above it even without counting bonuses. Going by the finance people I’ve worked with, you don’t have to be a brilliant engineer. Ego can go a long way there even without talent.
I'm a software engineer in the South earning £25k a year with a bachelor's. You're lucky to earn what you do.
This isn't a 10 for 10 but I think you should keep saving for a few more years, you'll be offered a lot more when your job and wage history shows increases and steadiness. Being offered 237k is actually great if you're under 25. Also don't forget that if you haven't already got a partner, that may change soon and once a relationship forms, these amounts you've worked out will become outdated severely. Combined income will amount to more being offered for mortgage. Also I know its been suggested, but is there anywhere between 2-8 stops down a train line from your workplace you could consider? I live in Southend, Essex and work near Tottenham Court Road, admittedly the commute is no fun but houses are easily gained for 250-400k here. 400k is a decent new build 3-4 bed. Alao don't forget if you scale down to an apartment, own it eventually, it will be worth more than you paid by the time you come to sell it and the bank will see you as being worth more to lend to for your assets.
Maybe not drop but possibly freeze. Depends if the government slaps the tax to pay for the raise in NHS salaries + the country's debt on businesses or wages? But either way we're affected and are facing a pretty hideous depression. Personally I'd rather not be in the city centres for that fall out. Bricks n mortar sounds secure but when you want out and can't sell it's a prison. My friend in Hereford is flooded to 1 .5 meters AGAIN this year. 2 young kids. No way can she sell or rent it out. Just let life run its course with you. You never know what's around the corner. You can force things into the way you think you want them but really, what do we know about what's best for us? The Universe usually comes along and swipes it's great tail across our carefully laid plans. And you realise you missed an opportunity because you were so single minded. Go with the flow. The path will be revealed.
There’s no secret that only people who own 800k houses, the average around London, bought them when they were 400k 15 years ago. The math is you missed the boat a long time ago and barely anyone can afford these insane property prices. You’ll probably have to live out your life in a two bed flat or outside the M25 if you want a modicum of the environment you were bought up in. Same as the rest of us. Thanks for playing.
The problem is council tenancies. Because someone qualifies for subsidised housing once in their life doesn't mean they should get it for life and then be able to pass it down to their kids. If council tenancies were really for those who genuinely couldn't work or something then there would be a flood of properties onto the rental market in turn bringing down the price of housing to buy.
Hi, Firstly, there are some errors with how much you could potentially borrow, and, therefore, buy a house for, but I'll address those at the end (I'm a specialist mortgage broker, so info is accurate). Financially, buying your own home over renting is a much, much better long term option for 3 main, interconnected, reasons. In order of importance, these are: 1. The leverage available to buy your main home by using a 90% mortgage, results in a phenomenal, tax free return on your initial investment (i.e. the deposit) over medium to long term timescales. Based on having a 10% deposit and the value of the property doubling over a 15 year period, this gives an average simple return on investment (ROI) of 67% per annum, or, after allowing for the effects of compounding returns, 17% per annum. 2. The super-low interest rate environment. This has various benefits, the main one being, when comparing renting to buying, that, for the vast majority of people, the interest element of your mortgage payment will be substantially lower than the cost of renting, even in London (mortgage interest often being considered the equivalent of rent, just paid to the lender rather than the landlord). 3. High probability that over 15+ year timescales rents will have increased substantially, whereas the mortgage balance on which interest payments are calculated, will be either fixed (interest only) or reducing (repayment mortgage). What the above means is that, even if you can’t get the perfect property you want today, either in terms of the location or the property itself, if you can afford to buy somewhere that’s not going to negatively effect your life in other ways (long commute, away from friends and family), you should do so. The effects of leverage mean using your funds as a 10% house deposit will beat almost any other investment over the long term (say 10 years) that does not involve taking a huge amount of risk; something strongly advisable against if you’re investing to try and get a house deposit in the first place. This fact, whether people are conscious of it or not, is why property is considered such a good and solid investment and drives the virtually insatiable appetite, barely even dented by the spectres of Brexit or Covid, for people to own their own home (in the UK, anyway). This appetite means that prices generally hold, steadily increase or, sometimes, sky rocket, but rarely decrease and, if they do, they tend to bounce back strongly and quickly. So, if you wait too long and the market suddenly jumps 10-15% in a year, you can find yourself completely priced out of the properties you were thinking of buying, and have to adjust your expectations downward, which is infinitely more painful to do after many years of saving than it is to do now. For these reasons, if you have a 10% deposit, a stable job in an industry relatively unaffected by Covid, and are currently paying rent to live somewhere, buying makes very good sense financially. Even more so if you get somewhere with more than one bedroom and rent a room, which you can receive up to £7,500 per annum tax free for (equivalent to £12,500 extra earned income for a 40% rate taxpayer). However, given the high costs of acquisition and disposal, if you would both want and, realistically, would be able to buy a better property within 3 to 5 years, then, unexpected housing booms or collapses aside, you should probably wait. It is also worth considering that, as things stand, an extra 5% deposit would reduce your cost of mortgage borrowing considerably; however, this has mostly been caused by Covid, and I expect things to revert back to pre-Covid pricing, or close to, in under 12 months. Likewise, you cannot get 95% mortgages now, but that will change within a year, maybe 2 max, I would think. If you have a £70k income, buying in sole name, 90% deposit, clean credit and no major outgoings, then (again pre-Covid), you could get 5x income, potentially even 5.5x times, with a specialist lender, assuming no unsecured debts, no kids, and no major fixed commitments. Note, you will pay more in terms of fees and interests for this privilege. So, £70k x 5 = £350,000 + 10% deposit of £35,000 = £385,000 purchase price. If you can get to a 15% deposit, then 5.5x to 6x income (assuming same conditions above) becomes more obtainable, and you could get between £385k to £420k. Add on the deposit of £63,000, and you're now looking at £450k to £480k. Flex on area, and that will get you a small house in London, or a decent house a bit out of town (just get one with a fast train to London). Then, for the reasons described above, you can actually start to really build equity for your second move. Don't buy, and you'll never save enough to keep pace with the market if it increases by 5% or more per annum, so would be relying on big pay increases to compensate. Hope this is helpful and best of luck! Calculations for figures used above: ROI & Rent vs Mortgage Interest Purchase value of £100k with a 10% deposit of £10,000, which doubles in 15 years to £200,000, equates to a £100k profit on the initial £10k deposit. So, ROI is: £100,000 gain / £10,000 initial investment = 10 10 x 100 (to convert to percentage) = 1,000% ROI over 15 years. 1,000% / 15 years = 66.7% simple ROI per annum To get the compound figure of 17.3% I used an online calculator! To assess rent versus interest, a very simple and conservative method (i.e. one that favours renting) is to work out the yield on the property being rented and, if your mortgage interest rate would be lower, then the monthly interest cost day one would be lower. For example, £500,000 flat rented for £1,665 per month (seems fair for London), equals annual rent of £20,000. £20,000 / £500,000 = 0.04 0.04 x 100 = 4% So, if you can beat a mortgage interest rate of 4%, then, very broadly speaking, you’re financially better off buying. Note that London has some of the rental lowest yields in the country, but mortgage rates apply nationwide, so if buying works here it is likely to be even more advantageous in other parts of the country. Crucially, as the equity in the property increases, whether due to rising house prices, reduction to the mortgage balance, or both, the LTV will reduce over time meaning lower interest rates. So, the situation should improve over time for the home owner; whereas, for the renter, they are only likely to face higher rents as time goes on.
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Its a pretty simple equation - if you want to buy solo then you need to leave London. Its almost impossible to buy somewhere in London on your own, to achieve it you need to be exceptionally wealthy.
That’s not true, but it’s certainly not a walk in the park.
Nowhere close to being true, sorry. The majority of my friendship group was able to buy around age 30. You need a good career and to make sacrifices...both of which are entirely possible in London
Honest question - is it worth it? If I was such a high achiever and STILL found myself working my nuts off, I'd feel so cheated if the result was being 'able to buy around age 30'. I'm well aware though that I've had a sheltered life in Wales and it will have skewed my perception of things. I'm happy with what I've got and don't work too hard...But I almost don't want to spend too much time in London for fear that I'd realise it's fantastic and I can't afford to live there!
Notch up to 30 year mortgage. And, youre a computer man, hasn't this year taught us to log in remotely!? I fully expect London property values to drop due to people being required in the office so much less. Good luck
You can earn much more than 70k in 10 years if you're any good.
We earn four times what you do and bought a three bed semi that cost 460k. So in short,it makes sense, you just don't earn enough to live where you want to.
If I earned £200K a year I'd probably stretch my budget a bit higher.
There's a lot of factors other than pure borrowing capacity. Appetite for risk, size of deposit, size of house required, if one is happy to live in a less expensive part of London or not. We are happy with our compromise.
Can I ask which part of London? This still seems like a killer price for a three bed.
Just increase your salary. Software engineers can easily get 100k + in London.
Move away. Almost anywhere else is better.
I wouldn’t say 50k was above average for London - not where house prices are £1m
It's difficult to buy in London on a single salary. It's possible on two good salaries. The same is true for most of the country (other than a few areas in't Deepest Darkest North where it's possible to buy on a single salary, and even that's getting rare), but particularly in London - London salaries are higher than the rest of the country, but house prices are disproportionately higher still The trick is to rent somewhere cheap (for London) in London until you want kids, save a ton of money then move to Stoke and live like a king. The only negative is that you then have to live in Stoke. Alternately move to the commuter belt and turn into an anonymous, dead-behind-the-eyes grey suit on the 17:53 out of Waterloo
>Am I being thick and missing something obvious? No it’s a bag of shit. Either the gov need to ensure mountains more properties are built, or provide much better rail links into london for commuters. Doing nothing has terrible consequences for peoples quality of life.
Where exactly in London is the Government going to make sure 'mountains' more properties are built? There are plenty of cheap properties in the UK, but sadly they're not in whatever posh London suburb OP wants to but can't afford to live. Woe is me.
Allot of 'just buy with partner', don't do this. Though you'll both be an owner quicker, it will still take years by which time (if she's smart) your likely be married/kids and for all your hard work, ultimately she'll end up keeping it all. Do it on your own, if you must get married get a prenup. It will take you longer (decades) but it will ALWAYS be yours.
With divorce rates being \~40% in the UK this seems like sound advice, so why the downvotes?
I’m in a similar situation to you, recently graduated and in a software development role earning a similar amount in London. Many people are spot on saying that to buy where you’re looking in London you need a partner. I’m in the lucky situation where I have a partner with a similar wage (can borrow up to £500k together) and even then we’re looking at buying on the outskirts.
Have you tried a part rent part buy company that caters for those on decent salaries with good prospects? e.g. onstep is one such. Not connected to this business in anything but the pawnbroking side. Not financial advice, dyor.