'Nobody My Age Can Afford to Stay Here Forever'
citylab.com
citylab.com
Thought of buying a 2bd flat recently, but it'll take us two years of struggling for every extra penny to just get a mortgage for a very moderate £250k place.
Income means nothing in this city. Either you got your housing issue settled 15 years ago using 'right to buy' or some other form of government housing subsidies, or you somehow generate wealth on a side (obviously, not through the salary, as even £200k/y doesn't seems to be close enough), or you are going to rent until you loose your source of income (i.e. due to old age) - and then you'd probably die on a street.
An economy of landlords drawing the money from their own kids. In a few decades all that accumulated wealth will be probably burned away on anti-cancer treatments, and then heavily taxed and rented younger generation will just quit on trying to build a welfare state, throwing their lives away only to provide a comfort living for older people. Hope our grand-kids will be at least able to start from blank.
Now I have a baby and the wife can't really have a career because a nursery would cost more than she can reasonably expect to make as a designer at this stage.
Rifkind earns £67,000 as an MP, a further £14,876 as chair of the ISC and received £270,868 in directorships and consultancies between January 2014 and January 2015. (Guardian)
Rifkind's party instituted the "bedroom tax", taking ~£25/week off many people who were living on benefits and who have now been pushed below the breadline, resulting in a number of suicides and deaths of disabled people due to malnutrition.
One one level, MPs are perhaps not paid enough to not need outside payment. On another, we're constantly told that "austerity" is so necessary that we must withdraw the tiny amount of money that is keeping many people alive.
With great typo comes great wisdom.
'Just go to Reading' was exactly my point. In order to save enough for a basic housing in London, my quality of life have to drop significantly for years to come. Yet I'm considered to be 'rich' by HMRC. (Practically, this'd mean switching schools for one of my children, and waiting forever for free timeslots in nearby nurseries for another - while saving maybe extra £5-6k/y in rent, which is peanuts when counting towards possible mortgage).
Avg. house prices in my current ward are ~$750-900k for a 3bd terrace. That's ten years of my net income - and you don't have to work for that! Just sell a house you bought 15 years ago for a fraction of this cost - and here you go. Sure, you'd have to rent - just as I do. Yet, all those people are not considered to be wealthy (and they aren't, with many of them struggling with today's job market), and not taxed on the wealth they hold.
So, for me - it's all about taxation and government imposed incentives. If they want to put a leash on a younger britons generation and then pass it to Chinese landlords - they're on the right track.
Changing taxation alone can drastically shift the power balance between landlords and tenants to ease underlying supply-demand issue.
It's similar to this ridiculous notion that expensive housing is a good thing. We give absurd tax breaks to homeowners (why can't I deduct the lost interest on my rent?), and people lament falling house prices, as though homelessness were desirable.
Couple all that with building codes that make it illegal to build modest (small with no parking) housing, and you have a situation where it's impossible for most people to live in a city.
The above issues don't apply everywhere. London, thankfully, isn't dumb enough to go for parking minimums, and doesn't offer a tax deduction on mortgage interest. The general forces at play (landed incumbents voting to screw over the young) are much the same, though.
> and you have a situation where it's impossible for most
> people to live in a city
For London in particular, the problem is that there are too many people who want to own a house there. That's why the prices are high. You can't call the place underdeveloped, it's not a lack of supply due to regulations.
If you want the prices to be lower, you need to reduce the demand.
Obviously there's the issue with green belts, but even beyond that there's massive potential for increasing the housing density of outer London. Both because of its current low density, and because a lot of the existing housing stock is made up of grey suburban estates which would be more or less unmourned if redeveloped. Look up 'densification' for more information.
Also, of course, it is important to try to reduce demand by making the Northern cities an alternative centre of gravity (HS2, HS3, new local powers for unified city mayors in Manchester and Birmingham, and so on).
[1] - https://www.gov.uk/government/uploads/system/uploads/attachm...
Much better than an interminable urban sprawl.
Perhaps your top-level comment was right: London has just reached capacity. But I'm not convinced of that, either; there are plenty of bigger megacities.
It's full of empty housing too. This happens when people try to use housing as a means to store their unimaginable wealth.
> landed incumbents voting to screw over the young
That pesky "democracy" and "giving everybody a voice" getting in the way of what I want right now.
(oh, and a small nitpick: Homeowners don't have conflict of interest, they simply have a different interest which may conflict with yours)
When you require a large number of people to adjust their behaviour to suit your interest, significant measures of patience and modesty are admirable traits.
Apparently some people are a fan of the type of democracy that limits voting rights to property owners.
Would you like to return to a time when blacks and women couldn't vote either?
Something like 40% of London residents are foreign-born. Interestingly, I'm a foreigner in Dublin, but I'm allowed to vote in local elections after living here for a year.
Can people from outside of London who want to live there vote on those issues?
But ask yourself this: Given where you live now, how do you feel about people who don't live where you do deciding what should happen where you live, because it would suit them (not you) better?
Fair enough, could be a local ordinance (I'm not from the UK).
But ask yourself this: Given where you live now, how do you feel about people who don't live where you do deciding what should happen where you live, because it would suit them (not you) better?
I think "how would you feel" arguments are generally poor - biased people make selfish choices, and I'm not immune to it.
That said, I'm not saying that outsiders should be able to choose; you made a comment about it being democratic, and I was curious if it was true. I don't consider a system where only the incumbents would be allowed to vote as "democratic" - even if I could consider it better than a democratic system.
Apparently socialist New York has a 1.8% property tax? Edit: Austin, Texas has 3% property tax! If you tried that in the UK you'd be denounced as a Communist.
For every 29-year-old graphic designer who moves to Cambridge to buy a family home, there's a 22-year-old who's just started their career who's willing to live in a bedsit in Wood Green (as, coincidentally, I did at 17, trying to break in to the big city).
You're meant to get older, and move out of the city. Circle of (urban) life. Give it 50 years, and Reading will be a suburb of London, rather than just a commuter town, CrossRail will have priced out current residents near the stations, and the city will keep trundling on.
That you see yourself as being one of the "original" residents doesn't give you some inherent right to below-market-prices in property. That the same graphic designers and digital media folk who priced families out of Brick Lane are now feeling the same effects of the gentrification cycle they were part of is not meant to be a surprise.
I hear Peckham is the up-and-coming part of town at the moment, but there's no damn way I'd live there, just like I wouldn't have lived in Brixton or Isle of Dogs 15 years ago. But give it 15 years, and you won't be able to afford in Peckham, either...
That's a problem I have with London- the constant churn. Everyone is transient. Friends you make are leaving in a year or two, maybe to go abroad or to buy a house in the suburbs. Many, many of the people living here do not consider it a 'home' but a stepping stone towards their goals, and I think this contributes to a lack of community spirit and feeling of belonging. I never felt like a 'Londoner' because there never seemed to be such a thing. On the other hand, this vast diversity and anonymity is of course one of London's great strengths.
This is the perspective of someone who moves into the city from their suburban and small town homes and families. They plan to make a lot of money, meet a partner and drink a lot, get married, get a dog, have a child, then move back to the suburbs in a senior position at a remote BigCo to a house that looks just like the one they grew up in.
Most people in the city were born there, live there all of their lives (or maybe switch cities), then die there. Those people are being displaced by what are ultimately temporary residents who can always go back home.
Are you surprised when you see older people who live in the city?
> Most people in the city were born there
You can't get figures for how many were born outside of London very easily, but glancing at my Facebook feed for the first ten people I know who live in London, only one was born there (and he's from Enfield, which might as well be Scotland). This percentage feels about what I'd expect.
It speaks volumes that you implicitly put the rights of Russian oligarchs and Arab oil barons to buy property (which they often leave empty) above those of the working and middle classes of London.
I'll come back to London when they start taxing the wealthy again. Until then I'll watch from afar as every last drip of culture and life is squeezed out of every community by rising property prices.
> It speaks volumes that you implicitly put the rights of
> Russian oligarchs and Arab oil barons to buy property
> (which they often leave empty) above those of the
> working and middle classes of London.
I'm also curious about just how many Arab Oil Barons and Russian Oligarchs you think there are, as a percentage of an 8m person city? Because right now, blaming a handful of immigrants who are buying multimillion pound properties that almost no-one else can afford smacks of racism.
Because there is no irony. I bitched about that too. I don't want ANYBODY priced out.
>I'm also curious about just how many Arab Oil Barons and Russian Oligarchs you think there are, as a percentage of an 8m person city?
One unoccupied oil baron's mansion in Central London could be demolished and replaced by affordable housing for hundreds of people.
Rich people occupy more valuable space.
>Because right now, blaming a handful of immigrants who are buying multimillion pound properties that almost no-one else can afford smacks of racism.
I think you're confusing an understanding basic physics with racism.
LOL. No.
The politics of building on the greenbelt might be thorny, but it's nothing compared for what it'd be like to suggest demolishing listed regency buildings anywhere, much less central London.
The best you can hope for is to replace the extremely wealthy absent foreigner with an extremely wealthy resident (foreigner or not).
* Not every house in London is one of those, and there are PLENTY of eyesores that could be demolished and replaced by desperately needed social housing if the politics of London weren't driven by servicing the whims of the ultra-wealthy.
Nobody's going to cry about replacing these eyesores with something affordable:
http://ee24.com/media/articles/uploads/2014/05/15/onehydepar...
Or these:
http://www.theguardian.com/society/2014/jan/31/inside-london...
It's not about putting anyone's rights "above" anyone else's -- whoever is willing to pay the most gets the property, that's all there is to it.
* Perpetual QE
* Ultra low taxes on property (council tax)
* Rules that allow foreigners to buy property and not be taxed at all if they declare themselves non-resident.
* Rules that allow tax evaders in foreign countries to stash their wealth here unimpeded.
* Lower taxes on capital (dividends, capital gains) than labour (salaries).
* A reluctance to build social housing in London.
Genuinely curious.
There is also a story about the saudi royal family buying up a strip of houses on Bishop's Avenue (the most expensive street in London, despite being somewhat suburban) sometime in the 80s or 90s as a bolt hole, but IIRC recently disposed of.
It's clear that this produces some pressure on the housing supply in London, but nowhere near enough to account for the sheer numerical pressure (some ~800k housing units required by 2021 and the rate of new builds is way, way off that target).
Unfortunately, even with the handsome salaries senior devs earn I cannot see how I could possibly pay rent and support children.
So I often wonder where all this money is coming from? If a salary many multiples the average would not cover living costs, who is pushing up prices? Who is buying these houses?
People working at Google etc think they're paid handsomely, but in reality in London they are paid a fraction compared to what you can get in the financial sector.
This article and the comments here talk about software developers and graphic designers, and the reality is there's a whole community above you earning much more. That's who's able to buy the houses.
I guess that's the point of the campaign in the linked article, but I can't see how that will change, unless the financial bubble bursts.
http://oxfordknight.co.uk/jobs/all-jobs/core-risk-and-pricin...
Many people live comfortably in London for far less than 90k gbp, it all depends on your expectations and requirements.
It's interesting that growing up in London my single-parent mother on an income between 40-50k managed to buy a house and raise two kids. We lived comfortably.
That house is now worth 6x more than the price she payed. Her salary today (she's retired) would be almost the same. That's why I can't imagine doing the same thing she did, even on a 2x salary.
I'm not complaining, just thinking out loud.
http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom#In...
It's 2007 and income distribution is probably per capita rather than average salary. In that case it's not as extreme as I've implied.
EDIT: A newspaper article from last year claims the UK average is 26k, so London is probably significantly higher. http://www.mirror.co.uk/news/uk-news/uk-average-salary-26500...
b) Landlords, who rent the houses to people who can't afford to buy, but can afford rent
There is a slight twist which enables this international "commute" however. His job has involved being on-site in with a client (in Scotland) for the last while, so even if he lived in London he would've been put up in accomodation anyway. So in reality his Spain->UK\UK->Spain round trip only happens once a week, but technically he's still doing an international commute :)
edit: Tidied up the rambling sentences
But for some context, West Hampstead is a fairly nice suburb on three different train and tube lines.
The rent for a one-bed flat is high as they are bid up by couples who are both earning. You are at a big disadvantage looking on your own. In my experience there is not much difference between prices for a one or two bed flat.
I think a big problem is the price of national rail transport into London from the commuter belt. It can easily cost £4,000 a year for a season ticket, wiping out most of the saving on rent or mortgage payments compared to living in the city.
Of course, network rail, the line operator, kicks back money for lateness but the strange rules of your franchise like paying out only on overall lateness and not considering a train that's too full for you to get on as late means they keep 90% of that back for themselves.
For most folks that's only part one of your commute, because few of us actually work where we get into the city. Typically this means getting on the underground for another 30 minutes, this time cattle is being a bit polite.
* Actually, the £4000 is what I would pay if I paid for a yearly ticket. Since I don't always work in London, I get month tickets. These cost £400 a month.
From a quick calculation my £4000 season ticket works out about £0.25/mile.
I live in a somewhat rundown area, just outside zone 1. The rent is expensive, but not unmanageable. I have flatmates; the area feels safe; its close enough to bus and tube lines that getting around is simple. I live fairly frugally otherwise. I don't at all feel like I can't afford to live in the city, and I can't imagine having the access to the range and depth of culture and social events anywhere else.
Maybe it's that I don't have any interest in buying a home, but I feel like so much of this doesn't apply to me. Maybe it's also that I moved here from Dublin, another very expensive city, that I don't feel like it's so bad.
I completely agree that property prices in London are insane, and that the political system is doing nothing to reign it in (quite the opposite, from my point of view).
But, from what I've experienced, if you don't want to buy your own property, then it's perfectly possible to live in London without earning crazy hedge fund money.
It's a good place to spend one's youth though.
During the 80s, people couldn't leave the place quick enough.
I just exchanged contracts on a 2 bed flat in zone 4 that will leave me and my gf with a 300k debt.
If it wasn't for her stable job in town I would think about going somewhere else.
And we know that we will probably never be able to upgrade to a bigger place if prices keep rising at this rate since our income will not increase at the same speed.
I wonder if London will become a boring rich people playground.
Sounds like you got lucky then.
You have a mortgage for around 1.5k for the next 25 years, shared between you and your gf for a flat with a spare bedroom close to the centre of London ?
Sounds rather affordable, what am I missing ?
So realistically you need to earn £3000 after tax to be able to afford it, which translates to a pre-tax salary of £50k.
We are lucky to earn more than that but the vast majority of people I know would not be able to do it.
We barely feel middle class here, I don't even own a car.
Source: http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom
Also, interest rates are extremely low at the moment and we will be paying only around 4%.
I prefer not to think what will happen if the BOE needs to raise interest rates.
Additionally if we want to have kids, that's another £12k per year per kid for a nursery if my gf wants to keep her job.
I never earned this much in my life and I never felt to financially insecure at the same time.
What would it take to create a a public transparency database mapping real estate investments to tax evasion tactics?
So the situation is bad yet they still haven't left? That kind of implies that there are still advantages to living there and they haven't outweighed the disadvantages. Why didn't the billboard creators just stick to people who have moved away? Their actions would speak louder than the words of those who may just like to moan!
This isn't JUST about privileged young would-be urbanites having to live a few stops further from Shoreditch. It's about having a city that isn't just a playground for the rich but that has a healthy mix of professions and lifestyles.