If you are looking to move to London from outside of the metropolitan bubble, the main question that you will be considering is if it is better to rent or buy your first property. Depending on whether you are moving purely for work or planning to move to the capital on a more long-term basis.
The average house price in London, according to latest government figures, is £488,729 with an average annual increase of 2.8%. In contrast, the average price of rent for a three bedroom house in central London is upwards of £2000, with prices falling the further out you look. If you are not in a position to buy straight away, rent is certainly an attractive option, however, renting does act as a proverbial drain on your financial incomings.
Renting in London
If you are looking to rent in London with the intent of one day looking to buy your own property, your best option is to search for either studio apartments or a small flat. In London, short-term lets are commonplace as professionals look to find their feet in the capital before finding a more permanent accommodation.
Depending on where in London you are looking, you can find studio apartments for around £800 per month which, while is still the same price as a decent sized house outside of the city, is good value. On an average London salary of £34,473, this would leave you with roughly £1400 after tax and rent per month in which to live on and put towards saving to buy a property.
Buying in London
The average age of the first-time buyer has risen to 30, as per a study compiled by Halifax, across the UK with the age rising to 34 in London areas. Based on a common 5% mortgage rate and the average price of a house in London, a deposit of £24,436.45 is required. While the actual figure could be higher or lower depending on where in London you are looking to buy, it still presents a huge financial strain on the buyer.
Based on an interest rate of 3.92% over a 25-year period, you would be looking at a monthly payment of £2430, which still falls comfortably into the higher bracket of monthly rent prices. Add to the fact that you would be responsible for any repairs to the property, whereas a landlord would otherwise cover the costs, this only adds to your financial responsibility.
There are pros and cons to both buying and renting, although the market is certainly becoming more geared to renting a property as opposed to owning it outright. If you are still unsure of what is best for you, given your own personal situation, then visit www.letsbidproperty.co.uk which is changing the landscape of how we bid for properties.
Whereas buying provides the additional security blanket of knowing that you will not be served a notice from a landlord who has decided to sell up, renting can serve as a more cost effective means of finding accommodation, although you will be paying for something that you will never own.
In London, where prices are considerably higher than the rest of the UK, you will do well to evaluate your options and decide on what is best for you. If you do not plan to stay in the city long-term, then renting a property will be the best option for you, although buying a house could see you make a profit when you do decide to sell.