Housing in Britain: mortgage or rent, what to do with no income, and how to avoid a dishonest agent

Housing is the biggest cost for a newcomer. Here is the honest guide: what you need for a mortgage, why the familiar “instalments from the developer” barely exists here, how to rent without a UK proof of income, and how to avoid losing money to a fraud or a dishonest agent.

Mortgage: how much deposit you need

The minimum deposit is 5% of the price, but rates are noticeably better from 10% up. With the Bank of England base rate around 3.75%, mortgage rates in 2026 sit roughly in the 4.5–5.5% range. A lender approves the lower of two limits: an income multiple (usually 4–4.5× annual income) and an affordability stress test — could you cope if rates rose. Existing debts cut your borrowing the most.

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“Developer instalments”: what barely exists in Britain

If you are used to paying a developer directly in instalments, as in the CIS countries, in Britain that is rare. Homes are almost always bought with a bank mortgage. Instead of instalments, developers offer incentives: paying part of the deposit, covering stamp duty or furniture. The real low-deposit alternative is Shared Ownership: you buy a share of a home (usually 25–75%) with a mortgage and pay rent on the rest, then buy more later. The deposit and mortgage are much smaller.

Newcomers with no UK income or credit history

Honestly: with no UK residence and credit history and no provable income, a mortgage is hard. What helps: a bigger deposit, specialist newcomer/expat lenders, and above all building credit first — register on the electoral roll (if eligible), pay bills on time, use a card responsibly. For renting without income, a guarantor (someone with UK income) or a paid guarantor service (such as Housing Hand) helps. Note the new rule: from 1 May 2026 large rent in advance is banned — newcomers used to pay 6–12 months up front; now, once the tenancy is signed, the most you can be asked for is one month.

Renting: what you pay and what for

Charging tenants agency fees is banned (Tenant Fees Act): “referencing”, “admin” or renewal fees are unlawful. The deposit is capped at five weeks’ rent (six if the annual rent is £50,000+), and a holding deposit at one week. Your deposit must be placed in a government protection scheme within 30 days and the details sent to you — if not, that is a breach. Before you move in, the landlord runs a Right to Rent check on your status — usually via a share code from GOV.UK.

The new 2026 rules (Renters’ Rights Act)

The rental market has changed a lot. No-fault evictions (Section 21) are abolished: “just move out” is no longer allowed. Tenancies are now open-ended periodic ones. Rental bidding (an agent playing applicants off to push the price up) is banned, and so is large rent in advance. This protects the tenant — use it and don’t agree to “grey” terms.

How to spot a dishonest agent and a scam

When buying, the estate agent works for the seller, not you — keep that in mind. The rules are simple: never pay a deposit or “holding” fee before viewing in person and before a contract; a genuine letting agent must belong to a redress scheme and protect client money — ask for the reference. The classic scam is a fake below-market listing with a request to “transfer a deposit to hold it”. Check the person really manages the property, get everything in writing, and only pay to official account details.

Pros and cons of buying

Pros: mortgage payments build your equity, housing costs are fixed for years, and value tends to rise over the long term. Cons: a high entry barrier (deposit, stamp duty, rates), and with flats the leasehold pitfalls: service charge, ground rent and restrictions. Before buying a flat, always check the lease length and the service charges.

Useful services

Search on Rightmove and Zoopla; to rent directly from a landlord with no agent fee, try OpenRent. Right to Rent is proven with a share code on GOV.UK, and deposit protection can be checked on the TDS, DPS and MyDeposits scheme sites. We’ll add services like these to our “Technology” section with a note on why they help.

This is a reference, not legal or financial advice: rules, rates and amounts change and everyone’s circumstances differ. Check exact terms at gov.uk, shelter.org.uk and with a licensed mortgage broker.