London Rents Eating Up 57% of Twentysomethings’ Income
bloomberg.com
bloomberg.com
I do wonder whether people feel trapped. You get paid a lot working in the City, but you have to spend a lot, too. You can try your luck elsewhere, but it's hard to think of where exactly, and you know for a fact there's this huge network that's the big city.
We're now 40 people and we're struggling to hire developers fast enough - we mopped up the local talent, and we're now hiring EU nationals mostly, as while we offer a relocation package etc., the cost of living here is a fraction of London - but folks coming from London usually want a London salary - and aren't willing to negotiate. So they stay in London and moan about their rent trap, while most of our employees now own their homes.
Shrug. Inertia's a bitch.
Most londoners don't consider that a plus if it's in the middle of nowhere with no culture or anything to do.
When I moved out to zone 5 from zone 2 (well technically 3, but my best route was get the bus to a zone 2 station), the combined cost of the premium on my travel card and mortgage/insurance/other costs was still lower than the 2 bedroom flat we used to rent.
The thing is, there is nowhere "cheap" in zone 1 or 2 that people with options want to live in, but once you get further out, you have a lot more choice. I certainly could end up paying more - I'm within a short bus ride from some of the most affluent areas in England (parts of South Croydon is full of large estates that are dirt cheap by London standards, yet within commutable distance to central London).
The quality living for me is far higher here, and the travel distance to central London is low enough that when I need to commute in I often had shorter commute than people who lived in zone 1 or two but happened to live on the "wrong" tube line.
Everywhere has a culture. It's more accurate to say you don't appreciate other cultures.
If you're tired of London that is because it's overcrowded, it takes forever to commute, it's noisy, it's expensive and it's required of your to get at least tipsy every Friday.
Whether they feel trapped I'm not sure but a girl I used to date worked in the city and she was definitely trapped.
She worked for a large bank in the finance sector and felt she had to play keep up with her colleagues and more importantly her managers on the social scene. This meant that she would often go out to dinner/drinks a couple of times a week. Obviously you need to dress smartly to work in the city, so had a clothes bill too. Lunches, make up, hair dos, nails, yoga and so on. It all adds up
She was probably earning somewhere in the region of £50k, which isn't bad I guess, but used credit cards and loans to keep up appearances.
I felt that she was locked in, with no choice but to continue working in London to earn the money to pay the bills she couldn't afford.
It worked. I found myself rubbing shoulders with a-listers, throwing parties for royalty, launching gallery exhibitions, renting out the likes of Chinawhite, Boujis, roof gardens, raffles, blah blah.
Then I realised my head was disappearing up my own arse, that I was always exhausted, that I wasn't actually enjoying this, that I had a cocaine problem, and I hated these shallow, boring people who I was becoming one of.
Sometimes the only way to discover the true nature of something or yourself is to take it to its absolute extreme. You can muddle along in the middle forever, until you drown or just get bored of swimming.
It's enough to live quite comfortably in a house/flat share, or if you share a single bed apartment with a partner, but if you live independently (in a studio or single bed) you're still firmly in "mere existence" territory, unlikely to be able to add much to savings each month.
If you're prepared to live South of the river (which contrary to popular belief isn't the end of the world) flat prices are in my area (SE4) around £800-1200/month which if you're sharing can still leave you over £1500/month disposable cash.
That leaves £1250pcm disposable. At least £100 will go on a Travelcard. If you're sensible, you'll be putting some money away in a pension as well. Let's say another £100 of net income.
That really doesn't leave much to lead a lifestyle commensurate with a young professional earning £50k. Yes, you can scrimp and save, but even then you're not going to be putting more than £500 away in savings each month.
At that rate, it would take you upwards of 10 years to save even a measly 10% deposit on a £600k property (which, at this rate, would get you an even worse one bed flat than the one you're renting).
http://www.rightmove.co.uk/property-to-rent/find.html?search...
Cheapest 1 bedroom I could find is 725/month.
Here's a 1 bedroom for 750/month ca. 10 minutes walk (or a choice of 3 buses) from East Croydon station, zone 5. The 50/month drop from 800 makes up for the majority of the increased cost over a zone 1 travel card:
http://www.rightmove.co.uk/property-to-rent/property-4164892...
The second, judging by the photos, is a small living room which has been converted into an 'open plan' studio. Doesn't even look like there's room for a double bed.
Both are in Croydon, so you get all the downsides of living in London, with virtually none of the upsides.
There are doubtless other catches to both properties, as decent properties never make it online.
Neither property is remotely commensurate with a young professional earning £50k.
The second one is a one bedroom flat. The last picture is the bedroom, at the back of the house. I live down the road from that row of flats. They're not fantastic, but they're proper 1 bedroom flats of perfectly adequate quality.
> Both are in Croydon, so you get all the downsides of living in London, with virtually none of the upsides.
From that flat it'd take ~25 minutes to be at London Victoria. ~25-30 minutes to be at London Bridge. ~20 minutes to Clapham Junction. Having lived about as centrally as you can in London, yes, it takes you longer to get "to the centre". But if you are going somewhere specific, it's not at all given that you won't get there in the same amount of time.
> Neither property is remotely commensurate with a young professional earning £50k.
In London, they can choose between something like that, and have money to save and invest for the future, or they can spend all their money now, and screw themselves over. A "young professional" who can't deal with living like that for a few years does not have any sympathy from me - they are spoiled.
I absolutely agree with you, but I also regularly get to hear about the pressure people are under to keep up appearances, and I'm not surprised a lot of younger people feel they can't resist it.
It's made worse by the toothless UK working time restrictions (look forward to those being gutted even more with an EU exit) that are abuse relentlessly in law and finance and result in staff that basically don't have time to recognise how messed up their lives are and/or time to find a way out. The amount of misery my ex has dealt with both personally (she is now in HR because while it's still tough, it's a walk in the park compared to her previous job as finance lawyer at one of the magic circle firms), and in her current job (including people regularly having breakdowns in the office at rates I've personally never seen anywhere I've worked) makes me totally unsurprised at younger employees at these places having problems finding ways to cope.
I assume you're referring to the EU Working Time Directive, which pretty much every major employer requires their staff to opt-out of when starting a new job?
It's a pointless EU law that just adds more paperwork to the recruitment process.
People are, by and large, aware of what they are getting into when they start a new job, and working hours are a factor in most remuneration calculations.
If the working hours are simply too much for you, then you should find a different job.
Thus, unemployment is reduced, more money is put into the economy and the full automation apocalypse is delayed for a little bit. And if another employee can't be paid, then that business is not really viable and should close.
EDIT: For my part I've never worked for anyone asking for an opt-out, and I'd never sign an opt-out, and I would sue if I suspected an employer punished me for not signing an opt-out.
EDIT2: Here's the UK government advice on the opt-out [1]. Note: "Your employer can ask you to opt out, but you can’t be sacked or treated unfairly for refusing to do so. You can opt out for a certain period or indefinitely. It must be voluntary and in writing." Additionally there are exceptions for a very small set of types of workers [2].
[1] https://www.gov.uk/maximum-weekly-working-hours/weekly-maxim...
[2] https://www.gov.uk/maximum-weekly-working-hours/overview
Most major employers include the waiver as part of their onboarding process, and if you refuse to sign, although legally they cannot do anything, in practice you're going to start off on the wrong foot with that employer.
Likewise, if you turn around to your manager and refuse to work more than 48 hours (having not signed a waiver), although legally they cannot punish you for that, it's hardly going to help your career.
Depends on what type of work you're looking for, but there's plenty of IT jobs along the M4 corridor.
https://en.wikipedia.org/wiki/M4_corridor
I'd also suggest looking into Oxford, Cambridge and Manchester.
There are huge incentives for technology workers and entrepreneurs outside of London, but those already in London are trapped within its diamond dome - I left for good a few days after realising I hadn't been outside of the m25, other than abroad, in several years.
Out of interest, what sort of employees are you looking to hire at the moment?
Techwise a little bit of a monoculture, though maybe that is the same as the rest of the UK?
Huh? Manchester, Leeds and Newcastle have plenty of work, you get paid rather less (surprisingly not much less last 5 years - but that's been London rates falling rather than north rising), but keep significantly more in your pocket. The people and beer are nicer in the grim North too.
Aside from during the peak of dot con and y2k contract rate insanity I've avoided London like the plague. It's a great place to visit for a show, but live and work?
I never understood the appeal of earning 25% more, but having 50-70% less in your pocket after housing and travel. It's the only UK city where the pollution is palpable, and constant.
When I first moved to London, I lived in Farringdon and then Marble Arch, and the first couple of years it was awesome to be able to just step outside the door and be in the centre of town (at Marble Arch I literally had two minutes walk to be on Oxford Street, or could cross the road and be in Hyde Park). But the pollution was certainly awful - it's the only place I've lived where your snot would be black at the end of the day. And then I moved to Barnes (South West London - very leafy, very affluent), but when we decided to buy it was too expensive, and we ended up moving to Croydon (zone 5, South). I don't think I'll ever move closer in towards the centre again. If I were to consider moving elsewhere, it'd be either further out, or along the edge of London somewhere along one of the major train lines.
You get the option of working in the centre when it makes sense, it's far more relaxing, greener, far less pollution, and far cheaper.
I can see the appeal of moving somewhere else entirely, but this is a decent compromise for people who want easy access to London but don't want all the downsides of the centre.
A web developer outside of London could expect 40/50K pa where as in London you could earn 600 a day contracting.
That's 2-3 times the money, plus with so many jobs you don't have to worry about becoming trapped.
A graduate developer at a finance company would earn over 40k...
You certainly can still do extremely well, but the risk is certainly there.
There's plenty of web dev contracts in the North, but rates might be 400 - 500 a day.
In permanent roles the bump, if any, seems to be around 25%. If you're more junior in PHP the perm roles are similarly salaried in London as outside it (at least going on a friend who complained about this a lot a year or two ago).
In related news, if anyone is looking for a 100% remote Ruby (and willing to learn most other things) developer, get in touch.
A large part of the issue is that younger people are chasing the top jobs in London without being willing to deal with typical London commutes. I have had plenty of co-workers who insisted on living in zone 1 or 2 because they could not bear the idea of moving out to a place like Croydon, despite knowing I was paying less on a 3 bedroom house with a garden than the typical cost of a studio in the areas they have chosen to live in.
In fact, I pay less on my mortgage now for that 3 bed house with a garden than I used to pay for one room in a flat share in zone 1 when I first moved here 14 years ago. Sure, it takes me 45 minutes to get to a central London train station. But I'm 20 minutes walk from one of the largest commercial centres in the UK (Croydon has the 3rd or 4th largest shopping area in South East England).
I have a hard time feeling sympathy for most of these people. Sure, there are lots of people that genuinely struggle in London, but the high prices in large parts of London largely reflect that people willingly put an extremely high premium of being within minutes of a central tube station.
people: get the hell out of there.
companies: make more remote job positions.
Not all employees can work remotely for sure, but I suspect if they were to audit the various teams they employ they could pick out some that can in fact work from home and save the company overhead in the process.
You want to have your cake and eat it ;)
I work with people who commute from Europe 3/4 days a week, but then they have to factor in plane tickets, a small flat or room etc
I don't really mind, there are tons of opportunities around. There are tons of companies willing to hire people remote all around EU, UK and US and the pay is basically same like London, not even factoring the living costs.
Cities have expensive housing because those who own housing either want to keep their property values up or don't want a different class of people near them. They also tend to be very good at communicating the need by misrepresenting the reasons, hide behind protecting historic area, quality of life, environment, and such.
I would dispute the research slightly, not only is CountryWide data probably not the best out there (they'll deal with higher end vs. huge non-"high street agent" market), but grouping all of London together will be massively skewed by the unbelievably high rental values in prime central london.
That's not to say London isn't expensive, and a big chunk of income goes towards it, but in terms of the actual percentages - I'd take it with a pinch of salt.
Most referencing companies will look for 2.5x rent -> gross salary. So if you earn 30k annual salary, you can afford 1k per month on rent. If you look at:
https://listentotaxman.com/30000?plan=0
You'll be taking home roughly £1,950. So that's roughly 50% of take home going on rent (54% if you're repaying student loans). Anything higher than that, and a referencing company won't pass you - so it seems odd CountryWide are suggesting their average is 57%.
I agree this dataset is not ideal for these sort of calculations, but the figures are supported by my anecdotal experience.
I kind of wish the data presented was more thorough, but that's probably because I'm too close to the industry - the headline is certainly catchy, and the comparison over time certainly more interesting, I just wanted give a heads up about the actual % figure not being representative.
The high end >£600k will follow.
I'd guess prices in the cheaper brackets will remain stable unless there's a big rate rise, because they're kept inflated by buy-to-let.
But landlords with big mortgages are in a precarious position after the tax changes, and it won't take much for them to start losing money.
The rental income on a typical BTL with an 80% mortgage used to be just £2k a year, now it's less than half that. Mortgage relief is dropping already, so expect to see some changes.
Hello from San Francisco.
_IF_ that truly happens (and i seriously doubt that the "Borrises" are actually genuine about this) then local-uk wages will increase especially for skilled labour. Low wage producer's will simply be replaced by foreign imports, increasing the deficit unless of course the UK engages in a protectionist war with EU and EVERYONE else... (which it won't do).
That's not the only aim.
The EU isn't truly democratic. The central body of power in the EU is the European Commission, and they're not democratically elected. The European Commission is the only group in the EU with the power to propose new legislation, no members of the European Parliament can do so.
I'll be voting to leave purely because I believe in democracy. I want elected representatives to have the power to represent the public, instead of being employed provide a veneer of respectability to a deeply flawed institution. I certainly won't be doing so over immigration as I believe immigration provides a net benefit to the UK.
Without looking them up are you able to name all your local councillors?
Most people don't know the differences between the town council and their local authority; they have no idea who their councillors are; they might not even know which party has control.
For what it's worth, I voted in the local elections held this year, have voted in general elections, and have even met up with my local MP to discuss financial reform.
Furthermore, the idea of a representative democracy is that you elect people to work on your behalf. You do so because it's a full time job to stay abreast about all political issues. Even if I knew the names of all my local councillors, knowing their names doesn't give me any insight into the decisions being made. Most of us have a limited range of interests, I could tell you about political activity I'm interested in, would that satisfy you that I'm paying attention?
Being interested in democracy means using your vote (or making a decision to abstain). Not bothering to vote is incompatible with the declared interest in democracy.
That's a strawman.
Plenty of people are not interested in all or part of a democratic system, but appreciate that it exists, and that it provides channels through which they can influence the way they are governed, if they deem it necessary.
And in any case a whole lot easier to fix, than to leave for. Because to be honest the EU is more democratic than Westminster. After all Farage is in the EU parliament but not the UK one.
The members of the European Commission are appointed by the heads of government from the member countries, however this matters very little when the mandate of the commissioners is clearly stated to be to represent the interests of Europe over the member countries. This isn't based on some biased media story, this comes directly from the horse's mouth. Check out this video from the European Commission's own YouTube channel...
https://www.youtube.com/watch?v=nWpgO1EPO_Y
From that video...
“The commission is a group of politicians, men and women, who meet every Wednesday in Brussels. We call them Commissioners. Together they form the government of Europe so to speak. They all have their own specific responsibilities and come from different countries. It is their role to defend the general interest of the European Union. When they take their oaths, they swear not to accept instructions from their own government.”
> "And in any case a whole lot easier to fix, than to leave for."
Perhaps I haven't made it clear. The only ones with power to reform the EU to make it more democratic are the EC, who would need to voluntarily give up their power to do so. How are you expecting that to pan out?
All they can do is say yes or no. The European Commission can keep pushing forward the same legislation until they get a yes. Even referendums aren't enough to stop the EC, look at what happened with the vote on the European Constitution:
https://en.wikipedia.org/wiki/Treaty_establishing_a_Constitu...
As you can see, the outcome of the referendums resulted in the European Constitution being rejected, so what the EC did was to take the main changes and push them through as amendments to existing agreements. This group of changes is known as the Lisbon Treaty.
> "Also the Parliament can ask the Commission to propose legislation."
That's not the same as having the power to propose legislation.
Anyone can ask the Commission to propose legislation, including lobbyists (there are over 30,000 lobbyists in Brussels, and you can be sure they're focused on influencing the ones with power to make changes https://www.theguardian.com/world/2014/may/08/lobbyists-euro... ) and the general public (through a European Citizens Initiative).
Just because you can ask for changes, doesn't mean the EC has to listen to you. As I've said in a different comment, the main priority of the EC is to work in the best interests of the EU, not the individual member countries.
The parliament has power of censure over the EC so in theory the EC could be made to listen.
I do agree with you that the EU is a democratic mess and share your concern about lobbyists.
I do however struggle to swallow Democracy as the main argument for Brexit when we have:
* a government in the UK elected by 25% of the possible electorate.
* parties gaining > 10% of the national vote having no representation in UK parliament
* an un-elected house of Lords
* a prime minister (who we technically don't elect and who can change at any time) who magically inherits powers from the queen to sign treaties and go to war
I look forward to the shining lights of the Brexit camp taking on these democratic deficits with the same enthusiasm in the future.
Could you explain further what you mean by this? I'm not familiar with the term 'power of censure'.
> "I look forward to the shining lights of the Brexit camp taking on these democratic deficits with the same enthusiasm in the future."
I don't care about what the 'shining lights' do, I know I'd gladly do so. First step in my opinion would be to renew the push towards proportional representation (and not the Alternative Vote cop out we were asked about before).
With the way the UK electoral system is currently set up, the extreme results it produces makes me very happy to have the EU to moderate things.
What the last 20 years shows us is that UK governments have systematically tried to erode workers rights, remove social safety nets and strip away human rights, and it's largely been the EU that has held it in check.
I fear what we'll see in the case of an exit, with a government no longer reigned in by the EU treaties.
As for the EU holding the UK in check, that's not quite accurate. It's true that the current Conservative government under Cameron has been damaging to public services, but that's not always been the case over the past 20 years. The Labour governments of Blair and Brown, for all their flaws, weren't pursuing the same type of wholesale undermining of public services. As an added bonus, if you want the policies of the Conservatives to stop, leaving the EU is likely to divide the Conservatives more than most parties, leading to a weaker party at the next general election.
Lastly, the EU does not always act to protect the people of the UK. As an example, take a look at what happened to the UK fishing industry.
https://en.wikipedia.org/wiki/Common_Fisheries_Policy#Critic...
It's a possibility that most of those British expats would have to come back to the UK. Most of them don't contribute much to those countries (other than spending as a pensioner, using the local health-care or having low qualified jobs).
In Spain the perception is that Brits in the south are low qualified and old and that they have driven up the price of housing with their real estate speculation. When young, they are perceived as violent and disrespectful (probably the image created by short-term young binge-drinking tourists). It's certainly prejudice and first impressions, but that's the kind of irrational reactions you could see after a UK exit if Spain is struggling with its own economy.
I had heard the opposite statement, by the way, that they took more from the healthcare than they contributed ... but my google-fu failed me. Do you have a reference? (I don't know what the answer is either way)
Counter-argument to that is that immigrants are simply crowding out British citizens (particularly young people, huge numbers of which are unemployed, or significantly underemployed) in the jobs market.
It is effectively jobs that make the contribution, whether they are filled by British citizens or EU nationals.
Governments will be forced to do everything they can to keep it inflated, as if it pops, then the damage to the UK economy will be immeasurable.
Yes, it'll cause pain. The longer they keep kicking the can down the road, the more people get sucked into buying at comically inflated prices on the assumption of ZIRP+HPI forever, the more painful it'll be. And the politics are slowly but surely changing, as the shut-out shift from an easily-ignorable minority to a near-majority.
There is even a huge amount of vacant property in London, most of it owned by large landlords who don't need the incremental income and associated hassle, as just sitting on vacant properties waiting for the market to rise is enough.
No, the problem is not migrants placing demand on housing stock - it is those that are telling you these fabrications, and the completely broken housing market that they built while you and I were still suckling our mothers' teats.
This is easy money for the banks. They get most of the rental income in mortgage payments on a secured loan, while using the landlords as agents.
Foreign investors go where the bubbles are, and leave when the bubbles pop - which the London bubble is doing now.
Anyone who got in after 2008 made out like a bandit. But the party is over now, and we could be moving into hangover territory.