Unaffordable and expensive accommodation has created an existential risk for London

The struggle to find decent accommodation in London is legendary and stressful. (REUTERS/Yann Tessier)

The struggle to find decent accommodation in London It’s legendary. It begins with a vicious cycle of searching the internet, being ignored and eventually attending auditions disguised as visits. It often concludes with the commitment to pay thousands of pounds a month to share a less than ideal apartment with strangers.

These stories will be familiar to you. millennials older and the Generation X who started their careers in London in the early 2000s, as in other major cities such as NY y Dublin.

What has changed in recent years, however, is the economic context. in which Londoners are forced to deal with this rite of passage.

Working in a big city can be difficult at the best of times. millennials and the Generation Z They are likely to sacrifice disposable income to develop their career and build their cultural capital, hoping that initial money problems will resolve themselves.

However, the promise of higher wages in London is no longer necessarily true.

Since the financial crisis Since 2007/08, wages have grown more slowly in London that the average of United Kingdombut costs have risen faster, contributing to economic pressure.

According to ONS datafull-time workers in London They earn an average of £44,370 (US$57,027) a year. As rents have risen faster than wages, it has become increasingly common for workers to spend more than half their take-home pay on rent – ​​well above the generally recommended 33%.

Landlords have been raising rents by 20% or 30% in some casesleaving current tenants with little choice but to look elsewhere. There is currently no legislation to prevent such steep increases.

According to data from SpareRoomthe average room in London now costs the tenant £983 (USD 1270) per month.

“There really aren’t any affordable places in London”said Matt Hutchinsoncommunications director of SpareRooma Fortune.

Hutchinson says the average age of people who use SpareRoomwhich connects tenants with available rooms in shared homes, is on the rise as people are sharing homes for longer periods of time in their lives.

When the group went online For the first time, it catered primarily to young professionals who were getting their first apartment after college.

Now, however, It is common for older demographics to go through major life changes. Like a breakup or moving to London for a mid-career job, share a home for the first time in their lives.

Low supply is driving affordability issues. Across the globe, United Kingdomhomes are rented eight days faster than before the pandemic, according to research by SavillsThe real estate group claims that there are 30% fewer rental homes in the United Kingdom than in 2018/19.

Wages in London have grown more slowly than the UK average since 2007/08. (REUTERS/Toby Melville)

In addition to an affordability problem, the conditions in which tenants have to live are also getting worse.

In all Englandprivately rented homes were twice as likely as average to have damp problems, according to the England Housing Survey.

A study last year by the think tank Resolution Foundation found that people living in London were twice as likely as people living elsewhere in the United Kingdom of experiencing low-quality housing.

Those who lived in poor housing were twice as likely to experience poor healthwhether physical or mental.

Dear Pacittisenior economist at the Resolution Foundationsuggests there has been an increase in cases of damp since the cost of living crisis, when rising energy prices forced people to turn down their heating in winter.

Many tenants avoid complaining about their conditions because they fear being evicted and forced to find more expensive accommodation.

Polly Neatechief executive of the housing charity Shelterhas also observed this trend.

“We regularly hear from young tenants in London that they feel powerless to complain about conditions or challenge an unfair rent increase because they know they could face a no-cause eviction the moment they do so,” he said. Nothing a Fortune.

Workers in London spend more than half their wages on rent, according to ONS data. (File)

Hutchinson of SpareRoom It is often asked at what point London becomes “a theme park for the rich and tourists,” but admits that he did not expect things to get so bad without that happening.

However, in the past year, the magnitude of the affordability problem has led some people to put off life decisions.

An investigation carried out by the rental service in February last year found that seven in ten tenants had postponed their plans to move in the previous 18 months, with budgetary issues being the main obstacle.

“People are turning down job opportunities, not because they don’t want to move“but because they don’t want to enter the market as it is now, and so people stay where they are even if they don’t really want to,” he said. Hutchinson.

“That’s really worrying for them on a personal level, but also, If we want to get out of the mess in which we are growing the economy“That people can move for those jobs is really important.”

According to data compiled by Savillsmore private investment is flowing into the build-to-rent market, which should ease supply problems over time.

Nothingof Shelterhas urged new legislation to stop no-cause evictions and limit rent increases to one per year.

Critics argue that this could exacerbate supply problems.but as young workers become increasingly disenchanted with the city, there are few answers left.

“If you are discouraging people to move to better jobs, more productive jobs, in high productivity areas, is obviously not good for your economy,” he says. Pacitti of the Resolution Foundation.

The lost of London is the profit of the rest of the United KingdomThe country’s levelling-up agenda sought to distribute wealth away from the capital, and new opportunities are beginning to emerge in second cities such as Manchester y Birmingham.

That takes time, though.and as other regions catch up, a talent drain from the country’s biggest economic engine could hit the economy hard. United Kingdom.

(c) 2024, Fortune