First Time Buyer in London: Costs, Schemes and Process

IMPORTANT: YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Buying a first home in London involves the same legal steps as elsewhere in England, but the sums are larger and the choice of route matters more. This guide sets out the tax relief available, the costs beyond the deposit, the government-backed routes, the documents lenders ask for and the order in which things happen. It is general information, not a personal recommendation. Eligibility, borrowing amounts and rates depend on individual circumstances and on each lender's criteria, and none of them can be assumed.

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TL;DR

First time buyers in England pay no Stamp Duty Land Tax (SDLT) up to £300,000 and 5% on the portion from £300,001 to £500,000. Above £500,000 the relief does not apply.
Budget for costs beyond the deposit: SDLT, legal fees, surveys, mortgage fees and buildings insurance from exchange of contracts.
Affordable schemes, including discounted First Homes and shared ownership, have their own eligibility rules. Check them on GOV.UK before relying on them.
Self-employed buyers, contractors and those with complex income should prepare records early, as lenders assess these cases individually.
A regulated mortgage adviser can compare lenders and manage the application. Haven Mark Advisers assigns one dedicated adviser from start to finish.

What first time buyer status means in London
Stamp Duty for first time buyers in London
The costs beyond the deposit
Saving for a deposit: the Lifetime ISA
Government-backed and affordable routes in London
How lenders assess your income
Foreign nationals buying in London
From offer to completion: the steps
Choosing between a bank, a broker and an adviser
How Haven Mark Advisers can help
Checklist before you start searching
FAQ
Sources

What first time buyer status means in London

For SDLT purposes, you are a first time buyer if you and anyone you buy with have never owned a residential property, in the UK or abroad. GOV.UK states that the discount applies only if everyone buying together is a first time buyer. If one buyer has owned a home before, the relief is not available on the purchase.

Definitions can differ between schemes. A scheme for first time buyers may use its own test, and a lender may use another. Confirm the definition in the rules of the specific product or scheme you are considering.

Stamp Duty for first time buyers in London

SDLT is the most London-specific cost to plan for, because many first purchases sit close to or above the £500,000 line. The current rules on GOV.UK are:

Purchase price	First time buyer SDLT
Up to £300,000	No SDLT
£300,001 to £500,000	5% on the portion above £300,000
Over £500,000	No relief. Standard residential rates apply to the whole price

These figures come from GOV.UK's residential rates page. A worked example using those rules: on a £450,000 flat, the taxable slice is £150,000, and 5% of that is £7,500. On a property priced at £500,001, the relief is lost and standard rates apply to the full amount, so a small difference in price can produce a large difference in tax.

The relief and its conditions are also summarised in GOV.UK's guidance on reliefs and exemptions. Rates can change, so check the page before you offer.

The costs beyond the deposit

MoneyHelper notes that the costs of moving home can be surprisingly high, and that applies strongly in London. Build a budget that covers the following:

Deposit. The amount you put in affects the range of mortgage products open to you.
SDLT. As above, where applicable.
Legal fees. Your conveyancer or solicitor handles contracts, searches and the transfer. For a leasehold flat, which is common in London, ask what extra checks apply.
Survey and valuation. The lender's valuation is for the lender. A separate survey is for you.
Mortgage costs. Product fees, adviser fees and any broker fees. Ask for these in writing.
Buildings insurance. MoneyHelper explains that cover needs to be in place from exchange of contracts, because the property becomes your legal responsibility from that point, before you move in.
Moving costs. Removals and any immediate furnishing.

Ask each provider for a quote early. Totals vary widely by property type, tenure and price, so a single figure from a general article is not a substitute for your own numbers.

Saving for a deposit: the Lifetime ISA

Some buyers use a Lifetime ISA (LISA). GOV.UK states that charge-free withdrawals are available when the funds go towards the purchase price of your first residential property in the UK, subject to conditions. Read the conditions before you plan around it. One example: from 6 April 2024, withdrawals cannot be used where the purchase is funded by a legal mortgage from a connected person, and doing so triggers a withdrawal charge, as set out on the same page.

Also check the property price limit and timing rules in the GOV.UK guidance, and confirm with your LISA provider how long a withdrawal takes. Your conveyancer will need evidence of the source of your deposit in any case.

Government-backed and affordable routes in London

London prices lead many first time buyers to look at schemes. GOV.UK's affordable home ownership page lists the main options, including a home at less than market value for first time buyers in England, shared ownership, and support for tenants saving for a deposit.

Discounted homes

First Homes are new homes sold at a discount to first time buyers who meet local eligibility rules. Price caps and income limits are set locally and can change. Check the current London figures with the Greater London Authority or the scheme page before you apply.

Shared ownership

Shared ownership lets you buy a share of a home and pay rent on the remainder. It is available across the UK and has its own income and eligibility criteria. Not every lender offers mortgages on every shared ownership property, so ask early. MoneyHelper's guidance, as reflected in our research, is that a professional adviser is often recommended for specialist schemes such as shared ownership.

Low-deposit and new build routes

If your deposit is small, read our guide to adviser-led alternatives for buying with a 5% deposit. If you are considering a new build, our article on new build purchases for first time buyers in England covers warranties and the points to check. We also provide new build mortgage advice.

None of these routes is suitable for everyone. Each one involves trade-offs in monthly cost, ownership and resale, and you should understand them before committing.

How lenders assess your income

Lenders look at income, outgoings, credit history, the deposit and the property. How income is treated depends on your employment type, and each lender sets its own criteria. No single rule applies across the market.

Employed

Expect to provide recent payslips, bank statements and identification. Bonus, commission and allowances are treated differently by different lenders. Some count a proportion, some count none, and the requirements vary.

Self-employed and company directors

MoneyHelper's guide says that self-employed applicants are typically asked for two to three years of accounts and tax returns, including SA302 forms. Lenders differ on whether they use salary and dividends, net profit or other measures for limited company directors. Keep business and personal bank statements organised, because they support the figures in your accounts. Read more on our page for mortgages for the self-employed and business owners.

Contractors

Day rate contractors may be assessed on the basis of their contract and day rate, and lender criteria differ on contract length and track record. Our page on mortgages for day rate contractors explains how we approach these cases.

Professionals in law and finance

Trainee solicitors, newly qualified lawyers and finance professionals often have a pay structure that includes a base salary plus bonus, or a step up in pay on qualification. Some lenders may take this into account and some may not. See our pages for lawyers and legal professionals and finance professionals.

Declaring changes in circumstances

If you know of a future change, such as a career break, a move to self-employment, a reduction in hours or a change in household, tell your adviser and the lender when asked. Information must be accurate and complete. Concealing a known change can lead to a declined application or a problem later.

Foreign nationals buying in London

People who are not UK citizens can buy property in the UK. Lenders' criteria on residency, visa status, length of stay and credit history vary and some lenders do not lend in certain cases. If you are new to the UK, expect to provide more evidence of immigration status and may need a larger deposit. For example, the UK Government's welcome pack for arrivals on the British National (Overseas) visa includes a section on buying or renting a home. SDLT may differ for non-UK residents, so check the current position on GOV.UK before you commit.

From offer to completion: the steps

Our separate article on the first time buyer process in England sets out a typical timeline of about five months and the key documents. In outline:

Review your finances. Check your credit file, budget and deposit.
Get advice and an agreement in principle. This indicates what a lender may be willing to lend, subject to full assessment. It is not an offer.
Find a property and make an offer. In London, speak to your adviser before offering if the price is near the £500,000 SDLT threshold.
Instruct a conveyancer and submit the full mortgage application. Provide the documents requested. MoneyHelper's page on the mortgage application process explains the stages.
Valuation, survey and searches. The lender values the property. Your survey and the legal searches follow.
Mortgage offer. Read the offer, including fees, the term and the early repayment charges.
Exchange of contracts. The purchase becomes legally binding. Buildings insurance must be in place.
Completion. Funds are transferred and you receive the keys.

Choosing between a bank, a broker and an adviser

There are three common routes to a mortgage:

Route	What it usually involves
Direct with a bank or building society	Access to that lender's products only. In-house advisers often do not charge a fee, according to MoneyHelper.
Online broker or comparison service	A product search. Check whether advice is provided and who the service is regulated by.
Independent whole-of-market or wide-panel adviser	A recommendation from a range of lenders, with fees disclosed.

For an applicant with a straightforward salary and a standard deposit, a direct approach may be adequate. For self-employed applicants, those with complex income, or those considering specialist schemes, MoneyHelper indicates that professional advice is frequently recommended. Whichever route you choose, check that the firm is authorised and regulated by the Financial Conduct Authority and ask for its fees in writing before you proceed.

How Haven Mark Advisers can help

Haven Mark Advisers provides regulated mortgage and protection advice for professionals, the self-employed, contractors, first time buyers and foreign nationals. Each client has one dedicated adviser from start to finish. Our fees are agreed upfront: the purchase mortgage service is £495 one-off, and the remortgage service is £195 one-off, as published on our fees page. We may also receive commission from lenders, and we explain this at the outset.

How Haven Mark Advisers can help — overview diagram

To see how we work with buyers in the capital, read our first time buyer mortgage page for London or the first time buyer guide. If you are preparing to make an offer, our page on how we get you ready to offer describes the preparation. We also advise on life insurance and protection, including life, income protection, family income benefit and critical illness cover. Advice does not guarantee acceptance by any lender or any particular rate.

Checklist before you start searching

Confirm whether you and any co-buyers meet the first time buyer definition for SDLT.
Calculate SDLT at your target price, and again at the top of your range.
List all costs beyond the deposit and request quotes.
Gather two to three years of accounts and tax returns if self-employed, along with bank statements.
Check your credit file and correct any errors.
Note any planned change in income or household and discuss it with your adviser.
Check any scheme's current rules on GOV.UK or with the scheme provider.

FAQ

Is there a first time buyer grant in the UK?

There is no general grant for first time buyers in England. There are schemes that can reduce the cost, such as discounted homes, shared ownership and the Lifetime ISA, and they are listed on GOV.UK. Each has its own eligibility rules, which you should check before relying on it.

Do first time buyers in London pay Stamp Duty?

Yes, in some cases. You pay no SDLT up to £300,000 and 5% on the portion from £300,001 to £500,000. Over £500,000 the relief does not apply and standard rates are charged on the whole price, as set out by GOV.UK.

Do I need a mortgage adviser to buy my first home?

No, it is not a legal requirement. Many first time buyers apply directly to a lender, and some use an adviser. Advice is often worth considering if you are self-employed, have a mixed income, are buying through a specialist scheme or have a non-UK background.

When do I need buildings insurance?

From exchange of contracts. MoneyHelper explains that the property becomes your legal responsibility at that point, even if you have not moved in. Arrange the policy before the exchange date, and tell your conveyancer.