First-Time Buyer Affordability in London 2026
How much London first-time buyers paid in early 2026, what deposit and mortgage rate that implies, and which government schemes — SDLT first-time buyer relief, the Lifetime ISA, First Homes and the Mortgage Guarantee Scheme — actually apply at London price points.
Overview
The UK House Price Index put the average London first-time buyer purchase price at £463,000 in February 2026, against an England average of £290,000. London first-time buyer prices have softened slightly year on year in line with the wider HPI trend, but remain by far the highest of any UK region.
The single biggest constraint for London first-time buyers is the gap between the sub-£500,000 SDLT first-time buyer relief ceiling and the typical sold price across most central and inner-London boroughs. Outer boroughs — Croydon, Barking & Dagenham, Bexley, Havering, Newham — keep most first-time purchases inside the relief band; central and prime boroughs do not.
Rates, fees and caps — May 2026
| Item | Value |
|---|---|
| London first-time buyer HPI average price (Feb 2026) | £463,000 |
| England HPI average price (Feb 2026) | £290,000 |
| Bank of England Bank Rate (set 30 Apr 2026) | 3.75% |
| SDLT first-time buyer 0% threshold | £300,000 |
| SDLT first-time buyer relief ceiling | £500,000 |
| Lifetime ISA maximum property price | £450,000 |
| First Homes London maximum price (after discount) | £420,000 |
| First Homes London income cap | £90,000 |
| Mortgage Guarantee Scheme maximum property price | £600,000 |
Sources: GOV.UK UK HPI England (Feb 2026); Bank of England Bank Rate; GOV.UK SDLT residential rates; GOV.UK Lifetime ISA; GOV.UK First Homes; GOV.UK Mortgage Guarantee Scheme; ONS Housing affordability in England and Wales.
Eligibility by buyer type
| Buyer type | SDLT | Lifetime ISA | First Homes | Mortgage Guarantee |
|---|---|---|---|---|
| First-time buyer (price ≤ £500k) | 0% to £300k, 5% £300k–£500k | Eligible if home ≤ £450k | Eligible if scheme home and income ≤ £90k (London) | Eligible up to £600k |
| First-time buyer (price > £500k) | Standard residential SDLT — no FTB relief | Not eligible (over £450k cap) | Not eligible (over £420k cap) | Eligible up to £600k |
| Repeat buyer / home mover | Standard residential SDLT | Not eligible | Not eligible | Eligible up to £600k |
| Buy-to-let / second home | Standard SDLT + 5% additional rate surcharge | Not eligible | Not eligible | Not eligible (owner-occupier only) |
| Non-UK resident buyer | Standard SDLT + 2% non-resident surcharge | Not eligible (UK residency required) | Not eligible | Subject to lender criteria |
Confirm current rules on GOV.UK before relying on any scheme — eligibility, caps and end dates are kept current there.
Mortgage and purchase product types
95% LTV residential mortgage
Owner-occupier mortgages with a 5% deposit, often supported by the Mortgage Guarantee Scheme. Typical lender criteria require strong income, clean credit and a property within the £600,000 cap — feasible in outer London boroughs but tight inside Zone 2.
90% LTV residential mortgage
A 10% deposit unlocks a wider product range and lower stress-tested rates. On a £463,000 London FTB average price that is a £46,300 deposit before fees and SDLT.
85% LTV mortgage with Lifetime ISA top-up
A 15% deposit using a LISA (max £4,000/year + 25% bonus) plus other savings. The £450,000 LISA property cap binds in central London but works for many outer borough purchases.
Shared ownership
Buy 25–75% of a property and pay rent on the rest, with deposit calculated on the share rather than the full price. Useful where outright ownership in central London is unaffordable; the GOV.UK Help to Buy and shared ownership pages set out the current eligibility rules.
First Homes new-build
New-build homes discounted 30–50% to eligible local first-time buyers. London cap is £420,000 after discount and household income is capped at £90,000; supply is limited and routed through local authority eligibility.
Step-by-step process
- Check borough affordability. Compare your maximum mortgage and deposit against the borough's first-time buyer average — Croydon, Newham and Barking & Dagenham sit well below the £463,000 London FTB average; Camden, Westminster and Richmond are well above it.
- Confirm scheme eligibility. Read the eligibility table below to confirm whether SDLT first-time buyer relief, the Lifetime ISA, First Homes and the Mortgage Guarantee Scheme apply to your purchase price, deposit, income and residency status.
- Get a Decision in Principle. Apply for a Decision in Principle (DIP) from a lender or via a broker. The DIP confirms your maximum loan based on a soft credit check and is typically valid for 60–90 days.
- Budget the all-in cost. Total cost = deposit + SDLT (after any FTB relief) + legal fees (£1,500–£3,000) + survey (£400–£1,500) + mortgage product / arrangement fee. Assume 3–5% of the price for fees on top of deposit and SDLT.
- Lock the rate. Compare two- and five-year fixed rates against the Bank of England Bank Rate (3.75% as of 30 April 2026). Decide whether the certainty of a five-year fix is worth a higher headline rate against the bank's expected rate path.
- Exchange and complete. Once your conveyancer confirms searches, mortgage offer and survey, exchange contracts (paying deposit and committing to the purchase) and complete (paying the balance and SDLT, taking the keys).
Frequently Asked Questions
The UK House Price Index put the average London first-time buyer purchase price at £463,000 in February 2026, well above the £290,000 England average. Borough averages range from around £327,000 in Croydon to £635,000 in Richmond upon Thames and over £1m in central prime boroughs.
Yes, but with a ceiling. From 1 April 2025 first-time buyer SDLT relief in England and Northern Ireland charges 0% on the first £300,000 and 5% from £300,001 to £500,000, and is only available where the purchase price is £500,000 or less. Above £500,000 the standard residential SDLT rates apply with no relief.
A Lifetime ISA (LISA) lets under-40s save up to £4,000 a year and receive a 25% government bonus, used for a first home worth up to £450,000. Many central London properties exceed the £450,000 cap, so LISA savers in London often need to combine the LISA with other deposit sources or buy in outer boroughs.
The Mortgage Guarantee Scheme is a government-backed scheme allowing eligible lenders to offer 91–95% loan-to-value mortgages on properties up to £600,000. The current scheme runs until June 2025 and has been extended; check the GOV.UK page linked below for the latest extension status before relying on it for a London purchase.
First Homes are new-build properties sold to eligible first-time buyers at a 30–50% discount, with a London-specific income cap of £90,000 and a £420,000 maximum purchase price after discount. Each local authority decides exact eligibility criteria, including local connection rules.
House-price values use HM Land Registry / UK HPI for February 2026; the Bank of England Bank Rate is the rate set on 30 April 2026 (3.75%); SDLT, LISA and First Homes rules reflect the current GOV.UK published positions. Always confirm current rules with GOV.UK before completing a transaction.
PropertyWiki Team
Editorial Team
Published: May 9, 2026
Updated: May 9, 2026
PropertyWiki's editorial team curates UK property data using HM Land Registry, ONS, GOV.UK and Bank of England sources.