How to Buy a House in London: A Step-by-Step Process

London, a global city, presents a unique and competitive property market. Acquiring a home in the capital is a significant undertaking, differing considerably from property purchases in other regions. Understanding the distinct stages and associated financial considerations is paramount for anyone contemplating a move into London’s housing landscape.

Financial Planning

Thorough financial preparation is essential for purchasing a London home. Buyers should establish a realistic budget, factoring in the property’s purchase price and various associated costs. A substantial deposit is typically required, often 10% to 20% of the property’s value. For first-time buyers in London, the average deposit can be significantly higher, sometimes exceeding £115,000 to £144,500, or around 24% to 34% of the purchase price. Saving diligently for this upfront capital is a primary step.

Beyond the deposit, buyers must account for Stamp Duty Land Tax (SDLT), a tiered tax on property purchases in England and Northern Ireland. As of April 1, 2025, for a main residence, the nil-rate threshold is £125,000. For properties exceeding this, a 2% rate applies to the portion between £125,001 and £250,000, followed by 5% on £250,001 to £925,000, 10% on £925,001 to £1.5 million, and 12% on any amount over £1.5 million. First-time buyers receive relief, paying no SDLT on properties up to £300,000 and 5% on the portion between £300,001 and £500,000, but this relief does not apply if the purchase price exceeds £500,000.

Other significant costs include legal fees for conveyancing, typically £800 to £1,500, including disbursements for property searches and Land Registry fees. Survey fees are also a consideration, with a Home Survey Level 1 costing £300-£900, a Home Survey Level 2 (Homebuyer Report) around £400-£1,000, and a Building Survey (Level 3) ranging from £630 to £1,500 or more. Mortgage arrangement fees, charged by lenders, can vary from £999 to £2,000, though some products may offer no arrangement fee.

Before making an offer, securing a mortgage Agreement in Principle (AIP), also known as a Decision in Principle (DIP), is advisable. This document, valid for around 90 days, provides an estimate of how much a lender is willing to lend based on an initial financial assessment and a soft credit check, which does not impact your credit score. An AIP demonstrates financial credibility to estate agents and sellers, streamlining the property search and offer process. An AIP is not a formal mortgage offer; a full application will involve more detailed checks.

Property Search and Offer

Once financial planning is in place, property searching begins. Popular online property portals, such as Rightmove and Zoopla, serve as primary resources for identifying available homes across London. Engaging with local estate agents is also beneficial, as they often have insights into properties not yet widely advertised and can guide buyers through the local market nuances. Viewing properties systematically allows buyers to assess condition, location, and suitability.

After finding a suitable property, make an offer. Offers are typically submitted verbally through the estate agent, followed by written confirmation. The offer may include contingencies, such as being subject to a satisfactory survey or mortgage approval, which provide safeguards for the buyer. Negotiation on the price can occur, and once an offer is accepted by the seller, the property is usually marked as “Sold Subject to Contract” (SSTC).

Being marked SSTC signifies an informal agreement between the buyer and seller, and the property is effectively taken off the market. However, the sale is not yet legally binding, and either party can still withdraw without penalty. This period allows both sides to undertake necessary due diligence before committing fully to the transaction. While the property is SSTC, it is still possible for other buyers to make offers, a practice known as gazumping, though this is less common once an agreement has been reached.

Legal and Survey Due Diligence

Following an accepted offer and the property being marked SSTC, legal and survey due diligence commences. Appointing a solicitor or licensed conveyancer is a primary step, as they handle all legal aspects of the property transfer. The solicitor’s role includes drafting contracts, conducting property searches, and liaising with the seller’s legal team. Selecting a solicitor with strong communication skills and local expertise can help navigate the complexities of London property transactions.

Simultaneously, arranging property surveys is important to assess the property’s structural integrity and condition. A RICS Home Survey Level 2 (HomeBuyer Report) is a common choice for conventional homes in good condition, identifying significant defects and providing advice on repairs. For older, larger, or more complex properties, a RICS Home Survey Level 3 (Building Survey) offers a more exhaustive inspection and detailed report on structural issues. These surveys are distinct from the mortgage lender’s valuation survey, which primarily assesses the property’s value for lending purposes and is conducted on behalf of the lender.

The solicitor undertakes various property searches to uncover information not immediately apparent from physical inspection. Local authority searches reveal planning permissions, building control issues, and road schemes affecting the property. Environmental searches identify potential risks like contamination, flooding, or ground stability. Water and drainage searches confirm connections to public sewers and water mains. These searches protect the buyer from unforeseen liabilities and provide a comprehensive understanding of the property and its surroundings.

Throughout this period, solicitors from both sides engage in raising and responding to enquiries, clarifying details about the property, its boundaries, and any legal covenants. They review the draft contract and other legal documents, ensuring all terms are accurate and acceptable to their respective clients. This process ensures that all potential issues are identified and addressed before the transaction becomes legally binding, protecting the buyer’s investment.

Exchange and Completion

The property buying process involves two pivotal stages: exchange of contracts and completion. Exchange of contracts is the point at which the agreement between the buyer and seller becomes legally binding. Both parties sign identical contracts, which are then physically or electronically exchanged by their solicitors. At this juncture, the buyer typically pays a deposit, usually 10% of the purchase price, to their solicitor, which is then transferred to the seller’s solicitor.

Once contracts are exchanged, neither the buyer nor the seller can withdraw from the sale without facing significant financial penalties, including forfeiture of the deposit for the buyer. The buyer becomes responsible for insuring the property, making it imperative to have building insurance in place. A specific completion date is agreed upon, which can range from a few days to several weeks after exchange, depending on the circumstances and any property chain involved.

Completion day marks the official transfer of ownership. On this date, the remaining funds from the buyer, including the mortgage funds, are transferred from the buyer’s solicitor to the seller’s solicitor. Once funds are confirmed as received, the seller’s solicitor authorizes the release of the keys, and ownership of the property officially passes to the buyer. This is the day the buyer can collect the keys and move into their new London home.

Following completion, the solicitor handles essential post-completion steps. This includes paying any outstanding Stamp Duty Land Tax to HM Revenue & Customs on the buyer’s behalf. The solicitor registers the new ownership with HM Land Registry, a government department responsible for maintaining a register of land and property ownership in England and Wales. Registration is compulsory for most property transactions and provides legal proof of ownership, offering protection against ownership disputes.