Samir Salya on rising Deposits for London’s First Time Buyers

While the London property market’s future remains uncertain, the future of house deposits looks to be more certain. According to a new report by L&C Mortgages, deposits for first-time buyers will continue to increase and could rise as high as £250,000 within the next 10 years.

Deposits on the rise

Over the past 5 years, deposits for first-time buyers have risen by 62% in London.  According to L&C Mortgages report, the current deposit needed stands at around £140,000. The report goes on to note that this is expected to continually rise, seeing a 75% increase by 2027. The new expected figure for a first-time deposit could even reach an average of £250,000.

The struggle to find stamp duty exempt homes

The new stamp duty exemptions introduced in 2017 wave the tax for properties under £300,000. Although this was expected to encourage more first-time buyers in the capital, new research has shown that most homes in the centre are above this limit. Online estate agents HouseSimple show that there are just 387 homes for sale in London Travel Zones 1 and 2 that would be stamp duty exempt for first-time buyers. When Zone 3 is included in this, the number rises to only 1,235.

Prime boroughs show even fewer properties to choose from. Kensington and Chelsea offers just 6 properties under £300,000.

Speaking in the report HouseSimple Chief Executive Officer Sam Mitchell states: “The Chancellor wheeled out his big tax break offering last Autumn to help first-time buyers and attract young voters. Unfortunately for the young London buyer, the stamp duty cut, while beneficial to large swathes of the country, won’t make much of a dent in their house buying budget.”

With the high prices, the uncertainty surrounding City jobs post-Brexit and strong economic opportunities available in other major UK cities, London is becoming a less desirable location for first-time buyers.

Potential hope for the future

Although these figures are not promising for young first time buyers in the capital, there may be some hope on the horizon. Figures published by banking company Halifax at the end of 2017 suggests a fall in house prices in November, the first fall in four months. The Managing Director of Garrington Property Finders, Jonathan Hopper suggests that this could be due to property hitting a ceiling in affordability.

Talking to City AM, Hopper comments: “With wages falling in real terms and buyers wary of overpaying while the market is in flux, even the most determined buyers are willing to walk away if the price isn’t right.”

This could mark a more affordable cap on housing prices to reflect the demand from first-time buyers. However, the future of this market remains uncertain.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.