A new campaign is being launched by business bosses worried that the high cost of housing in London is not only wrecking the local economy, but holding back the whole national economy.
They say that high rents and house prices in the capital are robbing the UK economy of over £1bn a year.
High housing costs are also making it difficult to recruit and retain staff, with talent increasingly being driven outside London.
The Fifty Thousand Homes campaign – whose name reflects the number of homes that backers say needs to be built each year across London – comes as new research shows just how unaffordable renting privately has become for many workers.
According to the Centre for Economics and Business Research, Londoners who work in the food and drink industries would have to spend more on rent than they earn – 112% of their pre-tax salary.
Care workers would have to spend 99% and teachers 58%.
Those working in the creative and science sectors would have to spend 57% and 48% respectively.
Even lawyers and accountants would have to spend 40% of their gross pay.
Jo Valentine, chief executive of London First, said that in a functioning housing market, the cost of renting or servicing a mortgage ought to be no more than a third of income.
She said: “This is all causing a staff retention problem for companies based in the capital, because we’re seeing employees just get fed up with the costs and the lack of pounds in their pockets, and move out of town.”
The CEBR report also says that £2.7bn could have been spent elsewhere this year had London house prices stayed in line with inflation over the past ten years.
The study said that this amount of extra consumer spending could have created 11,000 jobs and boosted the national economy by at least £1bn.
* In separate research, Countrywide says that over half of tenants who go on to buy a home can only afford to do so outside the town or city where they are renting.
In London, 36% of former tenants buy their first homes outside the M25.
Comments (2)
Appreciate that rising rents etc are difficult for people but if there is such a problem, why are people queuing out of the door to rent? Rent arrears haven’t spiralled out of control and people on the whole can still afford the rents.
For those that can’t there are options, but there are not enough options. Build more houses, yes that’s one, but how about changing the thresholds for eligibility to help those deemed not poor enough for help.
Local councils and government can solve the problem, but they are too worried about finding a reason not to house people because they haven’t got the stock or the resources.
I don’t want to get too bogged down in the workings of the benefit system, but it comes to something when a lady of 50 who was evicted, not unfairly, who was on benefits, seeks help from the local council, but they refuse as she didn’t meet criteria? Even though clearly she had some firm of mental illness. This lady with nowhere to go, was physically locked out of the housing office by security. No doubt she walked the streets that night with a warm glow knowing that people less deserving where being housed right in front of her very eyes!
This is stuff goes on every day, but it’s easier to blame agents, the rising costs of housing etc rather than the ineptness of local government.
Going back to rising costs, where will the campaigners be when interest rates go up a couple of % and it starts going sideways for a lot of people that are on the edge mortgage wise and there are a lot of people not too far away from real trouble.
Let market forces do their job and whether you like it or not, we live in a society with a system in place to help those that cannot afford to live, so make sure that system is fit for purpose and things will be fine. If it’s not, you wind up in this situation.
Allow more homes to be built, build more affordable home and change the criteria for selection. Job done.
So let the market forces work. I had the same problem in the early 1980’s and mortgage rates were at 15.25%!