How to buy a flat in London?
April 21, 2014 10:54 PM   Subscribe

I would like to ask you for any advice/hints/tips for a complete beginner on buying a flat in London. This is the first time in my life when I am buying a property I am really overwhelmed by this whole thing. That's why I would appreciate any feedback and advice from you. Anything which could help me plan this whole process and do it in a proper, organized and satisfying way.

I am a foreigner who has been living in the UK since 2004 (in London since 2007). I have been working in IT all my life and I managed to save some money during all these years. This sum should be a good start to get an attractive mortgage. For a considerable future, I think I would like to stay in London. I like the cultural life here and the enormous possibilities of personal development and growth. That's why I am thinking about buying a flat for myself to live there. Even if I were to move to a different country - I think I would be happy renting this flat. What I mean is that I would not probably want to sell it within the next 2-20 years. I am single and the flat would be for myself only. I would expect this flat to be at least a good way to preserve some wealth over all these years (inflation, etc.). This is a second reason I would like to buy it.

And this is where the nightmare begins. How do I start this whole process? Do I talk to banks about the mortgage first? Do I talk to estate agents first? Do I starts going and seeing properties after sorting out the mortgage or before? If I sort out the mortgage first - then at least I know what sort of figure I am able to pay I guess? Otherwise - how could I know what mortgage I could really afford? What sort of questions would estate agents ask me? What are the "dangerous" questions I should be careful about? What are the most important bits in this whole process I have to ensure to get right? What are hidden traps in mortgages which I should be able to detect and avoid? How to compare mortgages and choose the best? Who (and how) could maybe help me with this whole process? What are the steps which I should follow to get this whole thing right? Assuming I buy a flat? What would be the full maintenance costs for a year? Would I be able to know it in advance?

I was initially thinking of a flat costing up to 300K. Is it even possible in London? If so - what do you think about it? Are there any "sensible" areas where I could find flats within this price range.
My biggest priorities are good location and good commute to the City/CanaryWharf. I don't care too much about schools but I definitely want to choose a good (and safe) area. Preferably with a good (or very good commute).

I am starting doing all the research described above and I am really overwhelmed by it. Just asking here in case you have any tips which could help me. Sometimes one piece of advice can open my eyes to something which I could have missed otherwise.

Thank you in advance for your time. Appreciate any feedback!
posted by dogbert to Home & Garden (9 answers total) 10 users marked this as a favorite
Talk to a mortgage broker/bank first - you will be able to get a thing called Agreement In Principle which gives a rough idea as to how much you can borrow. This makes you look like a better bet to an estate agent, as you can clearly proceed with buying, but you aren't committed to any particular mortgage product. You can definitely talk to estate agents and view properties without it, but in a competitive market it's good to look as though you could start the process quickly.

The MoneySavingExpert forums are a great resource for this process - I lived on them the entire time I was trying to buy my flat a couple of years ago.
posted by theseldomseenkid at 11:52 PM on April 21, 2014 [1 favorite]

You'll definitely find a flat up to £300K on an easy commute to Canary Wharf - Leytonstone for example, is on the Central Line (into Stratford, then Jubilee Line/DLR to Canary Wharf) and you'll find something within your budget there - or further out along the line in Wanstead, Snaresbrook, South Woodford. For somewhere a little edgier, there's Walthamstow, which is becoming hipsterish and is quite arty, with a good pub/restaurant scene and lots going on. Again you'll find something within your budget.

As the seldomseenkid says, get an Agreement in Principle first so you know how much you'll be able to borrow before you go looking for properties. The London property market is insane right now, so you need to have all your ducks in a row to be able to move fast when you see the property you want.

Don't be bullied by estate agents who try to insist that you have to see their in-house mortgage broker before you can see any properties. This is illegal and the in-house brokers are usually able to offer mortgages from only a small number of lenders. If you decide to see an independent mortgage broker, make sure they offer a 'whole of market' service, not just a limited number of lenders.

Stick to the big high-street lenders - HSBC has very attractive rates for customers with reasonable deposits. Nationwide (which is not a bank, but a building society- a 'mutual', similar to a savings and loan, but offering all the products a bank can offer) is also a good bet. Avoid Barclays (strange products where you have to take an offset current account with the mortgage) and Santander (customer service issues). will give you a steer on where to look for advice and the questions you need to be asking.

Be sure to factor in the costs of purchase - legal fees, land registry fees and stamp duty (which can run into several thousand pounds). The seller pays the estate agent's fee.

Remember that in the UK the estate agent is acting for the seller, not the buyer. So the estate agent is not your friend, all he wants is to sell the property for his client and earn his commission. But he'll act like he's your best friend even though very little of what he's doing is likely to be in your best interests.

Your mortgage lender will have the property valued by a surveyor, and you will pay a fee for this. This valuation is for the lender's purposes only and isn't a detailed inspection. But you can opt for a more detailed report (the Home Buyer's Report) which the surveyor will carry out for you at the same time, and which is quite detailed. For the difference in fee between the valuation and the Home Buyer's Report, it's definitely worth getting the more detailed inspection. The report should identify any structural issues with the property that might need attention.

Also, even when you've put in an offer on a property, paid your mortgage application fee and the valuation fee and instructed your solicitors, you aren't committed to the purchase until contracts are exchanged by the solicitors. So you could still be outbid (gazumped) at any time up until that point by another buyer coming in with a higher offer. On the other hand, this also means you can withdraw from the purchase at any time up until exchange of contracts.
posted by essexjan at 12:20 AM on April 22, 2014 [5 favorites]

Stamp duty on a £300k property will be £9k. Throw in legal fees, valuation / survey costs and mortgage fees and you'll be looking at at least £10k in costs. & probably closer to £11k, so knock that sum off whatever savings you have before you go looking at mortgages.
posted by pharm at 12:47 AM on April 22, 2014 [2 favorites]

Understand that many of the property listings aren't actually properties for sale. They're properties on very long-term leases. What you're buying is the leasehold, not the freehold/fee simple.

Most of the time the lease won't expire until after you're dead, so this isn't necessarily a problem, but it is definitely a thing to watch out for. A property whose lease is coming up in a few years will probably merit some extra attention.
posted by valkyryn at 2:17 AM on April 22, 2014

Oh, I found this very overwhelming too. I bought my place in London in 2007 and my situation was quite similar to yours (foreigner, housing market a mystery to me), although my budget was smaller.

A lot of people talk to estate agents first, but then they often end up getting pressured by estate agents to use their own mortgage broker. They also end up getting pressured to consider properties far above their comfort zone so that they have to take out a bigger mortgage than they might necessarily want.

If you get an Agreement in Principle first, that's good as it (1) shows the estate agent and the seller that you're serious about buying and (2) means that you can truthfully say you have your mortgage organised anytime they start trying to pressure you to consider their in-house mortgage broker. I did this both times I went through the buying process. In my experience, they did not ask me any dangerous questions.

In terms of mortgage, your broker will run through the options with you. I ended up going for a fixed-rate 5 year mortgage because I wanted the predictability.

You will certainly be able to find something good for £300,000 but I recommend that you tell estate agents your budget is lower (like £250,000) because they will inevitably show you properties toward the high end of your budget or just above it. Also, I may be stating the obvious but make sure that you budget for solicitors fees, stamp duty, any repairwork before you decide what your final property budget is.

Leases: It took me ages to sell my flat because it had a short lease (about 70 years). After that, I bought another flat with a short lease for £165K and spent another £7k on extending the lease. I wanted the property, so I did not mind and I also bought it quite cheap for what it was so it worked out for me, but that is a big expense and you need to have it budgeted for. Also, be aware that many mortgage-providers will not consider lending on properties with very short leases. A shortcut is to only consider properties with long remaining leases.

Chains: A homebuying chain is one where A's purchase of the property depends on his successful sale of his own property to B, and this depends on his buyer, B, successfully selling his OWN property in order to buy the property off A. These chains can get quite long. As essexjan pointed out, until contracts are exchanged a homebuying process can legally fall through at any point, and therefore if the homebuying chain is long there is greater chance of this happening. It's something to be aware of. Also be aware that as a first-time buyer ready to make a cash purchase you are gold dust among buyers as you do not come with a chain. So there's a good chance that sellers will be keen to work with you and accept your offer over someone else's if that other person is in a chain.

Here are some good questions to ask when viewing a property.
posted by Ziggy500 at 2:48 AM on April 22, 2014 [5 favorites]

At the risk of stating the obvious, one easy way to find what's possible is simply browsing estate agent websites. You can restrict your search to certain areas and a max of £300k and see what kind of thing is available. It's quite an interesting exercise and I've been known to do it for idle amusement even when there was no prospect of my buying (or selling).
posted by Segundus at 4:42 AM on April 22, 2014

What Segundus said - you need to actually understand the market and how much property your money will by you in a given area. Ideally before the estate agent starts to try to talk you into the property you're viewing.

The way to learn is to start browsing the ads, in specific areas you want to be in as well as some nearby that you hadn't seriously considered. Go and view some of these places as well to get a feeling for estate agent speak. Especially as a non native speaker you may need to learn what the language they use actually means.
posted by koahiatamadl at 5:54 AM on April 22, 2014

Did this same thing last year. We looked at a few flats, realised we didn't have a clue how much we could afford in reality, and then started thinking about getting a mortgage. Was a bit lost in it all to be honest until a friend recommended a mortgage broker to us, a lovely aunty-type woman who didn't mind explaining everything to us in excruciating detail like we were children.

After she had sorted us out with a couple of mortgage options we had an agreement in principle. Which meant we knew how much we had to spend and could look seriously as we knew that the bank would lend us the money to buy what we found as long as it was structurally sound.
After that we had to go through the whole horrible process of dealing with London estate agents who are as a species pretty unlikable. Had a few disappointments along the way being outbid on flats and a bit of wasted money on structural surveys. But, in the end we got a lovely little affordable flat in exactly the area we wanted to live in and I'm sitting in it happily typing this to you just now.

The woman/company as mentioned above walked us through the whole process including getting a surveyor, finding and paying a lawyer to do the last bits of paperwork. If you would like that companies details then please memail me (if I'm allowed to say that). Heartily recommend them. It cost £200 and we paid at the time of the flat purchase.
posted by stevedawg at 3:36 PM on April 22, 2014

Response by poster: Tank you very much for all your help and advice. Appreciate it very much! This has been very helpful and has given me a lot of ideas. At least I know how to start now. Thank you!
posted by dogbert at 1:25 PM on April 23, 2014

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