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London Rents Eating Up 57% of Twentysomethings’ Income
- chillydawg 10y agoProbably the only good reason for anyone to vote to leave the EU is to reduce demand on housing stock.
- matrizao 10y agotrue, but that will probably decrease wages too
- tremon 10y agoIt can be argued that the influx of "cheap" European migrants also keeps wages down. I think there's just too many variables to make an accurate prediction on housing prices or wages in either scenario.
- deviate_X 10y agoThe aim of BREXIT is to reduce immigration. _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).
- ZenoArrow 10y ago> "The aim of BREXIT is to reduce immigration." 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.
- DanBC 10y ago> I'll be voting to leave purely because I believe in democracy. Without looking them up are you able to name all your local councillors?
- ZenoArrow 10y agoNo. Your point being?
- DanBC 10y agoA lot of people talk about how important democracy is, but when given an important bit of local democracy they show they're not involved. 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.
- ZenoArrow 10y agoSo in other words you assumed that I didn't care about local democracy, and therefore implied I was a hypocrite. 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?
- throwaway049 10y agoI can't, but I did get a vote to pick them. I don't think your question speaks to the issue of the European commission being unelected.
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- retox 10y agoThis is actually touted as a positive and a negative by the respective camps.
- pmlnr 10y agoRight. Not calculating with the price rise of _everything else_, especially food.
- alphydan 10y agoAre you sure about that? What about the 1 million 'immigrants' that may all of a sudden have to leave the South of Spain, South of France, Ireland, etc. 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).
- moopling 10y agoI was talking to a Spanish friend of mine about the same thing. They thought the Spanish government would be quick to sign some kind of agreement to keep expats there, as many of them are pensioners and who function as a kind of cash injection into the Spanish economy.
- alphydan 10y agoWell, that's exactly what immigrants do in the UK (contribute more than they take by certain metrics [0]), ... but it doesn't stop the hostility in the media. 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) [0] http://www.bbc.com/news/business-29910497 http://www.bbc.com/news/business-29910497
- UVB-76 10y ago> Well, that's exactly what immigrants do in the UK (contribute more than they take by certain metrics [0]), ... but it doesn't stop the hostility in the media. 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.
- creshal 10y agoHow is that related?
- deviate_X 10y agoIf the UK leaves the EU, then it may become even an even more attractive safe haven for foreign-capital investments, given that the whole point of BREXIT is the limit the reach of the EU authorities.
- dagw 10y agoWhat it should do is give the UK government more control over if they want to make it more or less attractive. Which way they actually turn that lever if it comes down to it is very much an open question, and probably dependent on the results from the next election. Personally I'm not convinced the government would want to force out all that foreign capital and they may even be tempted to try to attract more.
- jlangenauer 10y agoUltimately, the UK economy is very dependent on the housing bubble that has built up over the last decade. 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.
- mrec 10y agoI think it's a when, not an if. The only way to avoid a housing pop is to not blow a housing bubble, and it's a little late for that. 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.
- madaxe_again 10y agoThere is a vast amount of empty housing in this country. There are places where you can still buy a street of habitable homes for under £100k. 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.
- imtringued 10y agoIf housing prices didn't rise then nobody would speculate. The foreign investments are just the symptom amplifying the original problem.
- TheOtherHobbes 10y agoHouse prices rises are engineered. The latest bubble was created by offering huge tax breaks to landlords who would take on a mortgage on buy-to-let property. 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.
- wavefunction 10y agoA house's primary purpose is to provide housing. Speculation by capital should be the lowest priority of anyone's concern while formulating a housing strategy.
- iamflimflam1 10y agoWell, house prices will go down as the economy completely tanks.
- kjjw 10y agoNo. Westminster government has been obsessed with London as a finance centre to the exclusion of the rest of the country. Leaving the EU will only make things worse in London.
- Swizec 10y agoSounds about right. Hello from San Francisco.
- ekianjo 10y agoBut if your salary is huge the 43 percent left could be very significant. Thats why you need both absolute AND relative metrics.
- pmlnr 10y agoSolution: people: get the hell out of there. companies: make more remote job positions.
- simonswords82 10y agoI think remote job positions are the way forward. However, I think we're going to need an entire generation of management to get out of the way before BigCos in the city start to take this approach mainstream.
- jon-wood 10y agoStartups are somewhat more open to remote workers, but even then I've had to be in the office anywhere from twice a week to twice a month. My aim at some point is to completely remove the commute from my life, but at this rate I'm going to have to start my own company to do so.
- rmc 10y agocompanies: if you don't want to do remote, then you have to pay more in salaries
- simonswords82 10y agoI know it's madness isn't it? That companies will pay a premium to have bums on seats in an expensive office in the middle of the most expensive cities in the world.
- lmm 10y agoMaybe it's madness. Or maybe they actually get enough value out of it to be worth what they pay.
- simonswords82 10y agoI suspect it's a little from column A and a little from column B. 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.
- lordnacho 10y agoAnd an annual season train pass into London can be £3-5K. Not cheap either, in fact several months' rent. 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.
- sensecall 10y ago... and the rest! I'm looking at commuting from the Midlands to London and the annual season ticket is pushing £8k!
- madaxe_again 10y agoI got the hell out of London ten years ago, moved to the south West, started a web development company. 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.
- intoverflow2 10y ago> now own their homes Most londoners don't consider that a plus if it's in the middle of nowhere with no culture or anything to do.
- madaxe_again 10y agoAnd most Londoners consider Bristol to be the middle of nowhere. I rest my case.
- stuaxo 10y agoWould like to move to Bristol, but doesn’t seem to be enough contracting work doing python to sustain a career.
- Shivetya 10y agoWell going solo is always more expensive so I am not really surprised or dismayed. The rapid rise is an issue but usually can be traced back to some over zealous restriction on what can be built and where. 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.
- andy_ppp 10y agoIt's only going to get worse, everything new built in London (very very small studios/1 bed flats) cost about £600k+ in the area I live in. Property developers are laughing.
- TheOtherHobbes 10y agoNot for long. There's a glut at the very high end >£1m and prices are already dropping fast. This will only get worse when the foreign money dumps all its empty "investments" on the market. 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.
- dazbradbury 10y agoCaveat: I'm the OpenRent Founder. 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 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%.
- UVB-76 10y agoI should think the vast majority of twenty-somethings in London on £30k+ salaries are repaying student loans, so you'll be taking the 54% figure.
- dazbradbury 10y agoOf course - but I'm taking the top-end / maximum eligible rent, whereas the article is talking about averages, which are unlikely to be accurate in relation to what the majority of people are paying as a % of disposable.
- UVB-76 10y agoYou are assuming, of course, that landlords stick to conservative affordability limits and turn down willing tenants who fail the test, even by a small margin. I agree this dataset is not ideal for these sort of calculations, but the figures are supported by my anecdotal experience.
- dazbradbury 10y ago