
London Rent vs. London Salaries - mthwsjc_
http://johnmathews.eu/london
======
AndrewOMartin
The article misses the point about the standard of living in London.

It might seem strange that on someone's good sounding salary they can't make
ends meet, but if you factor in all the nearby (<1hr walking or spending <£5
on public transport) stuff that's practically free and wonderful then on their
salary they're still living one of the best goddamn lives in the world.

I live in South London, not within walking distance of any tube line, but I
still have three cinemas, one major, two independent, near me. The cuisines of
a huge swathe of the world, shops for things I did not know existed, and the
world's major and up and coming acts performing in hundreds of locations that
cost me little or nothing to get to (and often little to attend, the big
museums are free, universities do tons of free stuff, the Royal Opera House
and similar have ~£15 tickets, and I can ignore the cost of traveling to
London).

This city is expensive if you look purely within the walls of your home, if
you can get out into it, it's like having a comprehensive subscription to a
better cultural network than you can imagine.

It's indeed true that prices are indeed inflated by the London-centric nature
of a lot of the culture, and purely financial investments in property.

Apologies for sentence structure and formatting, this post impulsively written
on my phone.

~~~
collyw
> they're still living one of the best goddamn lives in the world.

Thats very subjective. No easy access to mountains and proper outdoor sports.
Not very friendly people. British weather. Much of your time is spent on the
underground. So it really depends on what you value in life. (Personally I am
not a fan of London).

~~~
chrisseaton
I don't understand how you can simultaneously want to be able to access the
mountains, but also be bothered by a little drizzle.

There's nothing wrong with the weather in Britain. It's got more character
than the relentless bland sun of somewhere like California.

~~~
mino
> There's nothing wrong with the weather in Britain. Seriously? What about the
> constant grey sky?

Here a screenshot of a comparison I did some time ago to motivate ourselves to
_leave_ london: [http://imgur.com/7tdwCoD](http://imgur.com/7tdwCoD)

~~~
chrisseaton
What about it? Apart from garden parties, what does it actually stop you
doing?

~~~
mino
Vitamin D, for a start :)

~~~
chrisseaton
Well that is true. But generally it really winds me up that people moan about
the weather in the UK. You can do almost anything in drizzle that you can do
in the sun, except for maybe outdoor parties. Sun all year is boring and
texture-less.

------
SCdF
> The average cost of a flat in London is 500k

House prices are horrible in London yes, but for transparency that's _central
London_.

Prices get better (but still terrible) if you go further out. I just started
looking at houses and for 500k you cant take a 40 minute tube journey twice a
day and get a three bedroom house. With a yard.

The average room price at The Hilton is high as well. The solution isn't to
sleep on the streets, it's to stay in a cheaper hotel.

~~~
oskarth
> take a 40 minute tube journey twice a day

Having lived in London for a year and hearing daily talks about delayed and
cancelled (not to mention full) trains from coworkers, this sounds dreamily
optimistic, as if coming from a real estate agent. London property market,
central or not, is horrible.

~~~
afro88
I used to travel from Bow to Westbourne Park and it wasn't that big an issue.
Took 45-60 mins each way.

------
qznc
This "trap" is connected to the Meditations on Moloch [0] for me. Moloch is
the god of child sacrifice, the fiery furnace into which you can toss your
babies in exchange for victory in war. In this case, in exchange for "a flat
in a high income city". You do not literally sacrifice your babies, but in
exchange for living there, you must put a wish to have babies aside, because
all the double-income couples inflate the rents.

[0] [http://slatestarcodex.com/2014/07/30/meditations-on-
moloch/](http://slatestarcodex.com/2014/07/30/meditations-on-moloch/)

------
atemerev
> This requires a higher than average salary from a graduate job, (which is
> the life stage when people might reasonably start having children)...

Sorry, it worked this way in mid 20th century. Personally, I didn't even
_think_ of having a child before 32, and when it happened, it was still
financially challenging.

In Geneva, where I live, the mediab age of the first childbirth is 35.

~~~
Dangeranger
This trend leads to the inevitable question of when the age of being prepared
financially for children will cross the point of being unable to bear children
physically.

Fifty years ago it was common to have children around eighteen, thirty years
ago it was common to have children around twenty five, and now it feels like
thirty five is the normal.

This begs the question whether children will be possible before forty five
within twenty years, and at that age bearing children becomes a major risk.

Women in large Chinese cities are already feeling unable to balance the
pressure of a career and parenthood, opting to not have children at all, or
having them very late into adulthood.

~~~
atemerev
Prenatal screening, extracorporal, adoption.

------
inputcoffee
I recommend the article that made the rounds on HN a few weeks ago. It argued
that housing as an investment and affordable housing are opposing goals. You
can't have both.

If London were to make housing affordable - a worthy goal - it would no longer
be a good investment. The author seems to want both.

In other words, if you could afford the down payment, you wouldn't want to.

~~~
djhworld
People in the UK are obsessed with housing and property, it's a national
pastime.

To be fair, the housing market has been propped up by successive UK
governments for years, it's the only thing they have left and it's the only
aspiration they try to goad the population into achieving.

~~~
logarthim
> obsessed with housing and property, it's a national pastime.

Are you trying to say that the obsession with housing is some how trivial?

I would have thought the lack of land and houses probably prop up the housing
market more than the government..

~~~
djhworld
Not trivial, I'd say it in the sense that's it's fundamentally ingrained into
our culture.

Additionally renters are almost treated like second class citizens, most
rental contracts are short (12 months), real estate agent fees are exorbitant
and clauses in rental contracts are designed specifically to protect and
nurture the landlords investment, i.e. you cannot redecorate, put pictures up,
own pets etc

------
shaydoc
London is shocking price wise...I could never contemplate working there
although I once did. I work in Belfast Northern Ireland, earn approx £57k, my
spacious detached house with garden and tranquility 20 mins train commute from
the office costs around £180K... So there is no financial way I would ever go
to London...It seems crazy and illogical to me to work there.. nice place to
visit however!

~~~
shitgoose
isn't it great that we have reached the times when we can put Belfast and
tranquility in one sentence.

~~~
shaydoc
yeah, Belfast has been tranquil for a long time, some 20 years or more, the
media perception always inflated the reality even in the bad old days..

the good thing is, that in the ensuing time, the city has become alot more
vibrant, the youthful generation are now not as shackled with the past.
Belfast feels fresh, and its a town with a great industrial and innovative
past. Its about time!

------
lukasm
I'm in the exact situation as OP. As a result, I'm moving to lower cost area
and continue as a remote worker. Shameless plug: [https://github.com/lukasz-
madon/awesome-remote-job](https://github.com/lukasz-madon/awesome-remote-job)

20% down payment + stamp duty tax is roughly 130k. There is also a nonzero
risk of the property bubble. Only Hong Kong is worse in terms of property
purchasing power for average salary.

There are serval reasons for high prices:

\- Market is heavy regulated.

\- UK doesn't have any land and estate tax.

\- Developers oligopoly is hoarding the land to keep the prices.

\- Foreign investor are using properties as a insurance for rainy days.

\- Interest rates are low and inflation is high, so people are pumping money
into real estate market.

\- Councils cannot build council housing any more.

\- Bank of England schemes to buy.

It's an unfortunate situation. Extreme misallocation of capital which is bound
to cause problems in the future. Money don't flow to companies and productive
investments, hence there is no growth and the wages are stagnant. What is
more, it makes it really expensive to start a company.

What's the solution? 1% estate tax with 80% discount if you pay taxes in UK
(British Columbia passed a new property tax and it works well for them[1]).
For an average person there would be no change - they would pay estate tax
instead of council tax directly or indirectly. That would cause 25-30% price
drop in London[2]. Why government won't do it? It would piss off a lot of
powerful people which own real estate. Significant portion of the population
has bought properties to rent and that price drop could make them go bankrupt.
This is an unsolvable problem given the extreme divide in British society,
since the Brexit vote. There won't be enough political will to pass the laws.

[1] -
[https://news.ycombinator.com/item?id=12160680](https://news.ycombinator.com/item?id=12160680)
[2] - my estimation given other big cities salary to price ratio.

~~~
aries1980
> UK doesn't have any land and estate tax.

I don't know what do I pay then under the label of Council Tax. It is £800+ pa
for a one-bedroom flat.

~~~
spoonie
Council Tax is more like a property tax, it's roughly based on the value of
your property. Not your property because you're a renter? Too bad, the
property tax is charged directly to you, the occupant! ;) (Maybe it's more
like an occupancy tax that pays for some of the services your local council
provides.)

------
chvid
I am curious. Where on the planet is it currently attractive to work and
reasonable cheap to live?

London, San Francisco etc. are expensive because of the wellknown
opportunities there; are there really any places where you can have it both
ways - inexpensive and filled with well-paid jobs?

~~~
alkonaut
Yes please. Affordable living, universal healthcare, reasonable climate.
Where?

~~~
krautsourced
I wanted to say Berlin until you got to the climate part...

~~~
alkonaut
I'm in Stockholm at the moment so Berlin half-ticks my 3rd box :)

------
etamponi
None of this sounds new to me, even if I lived in London for just four months.
But the post made me curious about tax brackets in the UK.

So... perhaps this is partially OT, but: according to a couple sources [1,2],
income tax at £50k/year is just 17-18%, and National Insurance another 9%.
This makes the total "tax bracket" around 27%. Even if the author means that
50k is his _net_ salary, the same sources put the tax bracket at just 32% [3].
Why does the author say his tax bracket is around 40%? Are those sources
unreliable? Are they missing some of the taxes?

[1]: [http://www.netsalarycalculator.co.uk/50000-after-
tax/](http://www.netsalarycalculator.co.uk/50000-after-tax/)

[2]:
[https://www.incometaxcalculator.org.uk/?ingr=50000](https://www.incometaxcalculator.org.uk/?ingr=50000)

[3]: [http://www.netsalarycalculator.co.uk/74000-after-
tax/](http://www.netsalarycalculator.co.uk/74000-after-tax/)

~~~
ed_balls
If you make 50k your effective income tax + NI tax is about 33%. If you take
other taxes (council tax, VAT, stamp duty etc.) Total effective taxation is
around 50%.

Now the dividend tax is 15% (in the best case scenario you can always try
funnelling money through Man Island or other tax heaven). There is no land tax
and estate tax.

~~~
aries1980
Divident tax is after you paid 20% corporate tax. At the end you probably save
the NI, but you have many other charges (accounting, time spent on paperwork,
business rates, etc.)

------
Odenwaelder
Lesson learned: Don't get children.

~~~
simonbarker87
You're getting downvoted for being flippant but your point is valid. Turns out
this family made a big life choice that they couldn't afford and now the
reality is setting in, if you can't make ends meet on that salary your
expenses need to be reduced, so move. No one deserves to live in London, if
it's too expensive move or structure your life in a way that is affordable.
Hence why I choose to live in the North East of the UK (and before people say
"the salaries are lower" \- no they are not for engineering)

------
uiri
_Salaries and living expenses have become really disconnected._

These are inherently disconnected. Salary is related to the value of an
employee's labour. In the contemporary US, the value of a software developer
is high. In that same place, the value of unskilled or low-skilled labour is
below the federal minimum wage in a lot of cases.

Living expenses are related to the costs of real estate, food, transportation,
etc. Some of these things are highly labour intensive so their costs are
related to the cost of labour. Things which are not labour intensive have
their prices dominated by unrelated supply and demand issues. Real estate is
not labour intensive. A single landlord can probably handle dozens of
properties.

~~~
Mediterraneo10
> Real estate is not labour intensive. A single landlord can probably handle
> dozens of properties.

I can only suspect you don’t own property that you rent out. Tenants of just
one flat, if demanding and complaining enough, can easily burden a landlord
beyond any extent he considers acceptable. Any landlord whose portfolio
extends into the dozens of properties will almost certainly have contracted
all the actual work out to an agency with its own staff of multiple people.

~~~
dmurray
It's still true though: the agency with multiple full time staff members
probably handles hundreds of properties, or has other lines of business as
well.

------
drinchev
Sadly, Berlin ( although still cheap ) will match the same equation pretty
quickly.

Me & gf pay ~900 Euro for top-central ( Rosenthaler platz ) 2 rooms apartment
and that's because we took it 3 years ago. Now, since we also talk about kids,
we will probably have to pay 1.5k for 3 rooms located ~40 minutes from Mitte.
Still not bad, but that's if we hurry up. Rent increase is around 10% per
year, which does not match at all the salary increase rate.

Talking with friends, we are wondering how people such as bakery-owners, taxi-
drivers, delivery / DHL employees work it out!

------
speeq
Yeah, I've lived in London for two years now and I'm planning to move to
Birmingham with the end of my current lease. ~£600-700/mo for a nice 1 bedroom
flat:

[http://www.rightmove.co.uk/property-to-
rent/find.html?search...](http://www.rightmove.co.uk/property-to-
rent/find.html?searchType=RENT&locationIdentifier=REGION%5E94028&insId=1&radius=0.0&minPrice=&maxPrice=&minBedrooms=&maxBedrooms=1&displayPropertyType=flats&maxDaysSinceAdded=&sortByPriceDescending=&_includeLetAgreed=on&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&letType=&letFurnishType=&houseFlatShare=false)

It will cut my rent in half which would allow me to travel a lot more and save
up for a deposit as well - with an average price of £175k for a 1 bed flat in
the city centre.

Birmingham Airport is just 10mins by train from the centre and costs like
£2.50! Lots of airlines and destinations. Cheap flights within Europe with the
budget airlines or even to Asia via hubs like Dubai with Emirates.

I'm self employed, work from home and I don't have a child yet - which makes
it a lot easier to move.

Parts of London are lovely but like you said, unless you own a property or
your household income is a few times the average UK salary - it doesn't make
much financial sense to live there.

------
dblooman
A 5% deposit is not actually available from a lot of lenders. In some cases, a
new build apartment is only offered at 20%, sometimes even a 25% deposit is
needed. Even if you do get a mortgage with a 5% deposit, it will probably be
on a new build, which may have a much higher price that nearby property that
isn't.

It is true that most of the banks expect you to have a backer, parents, recent
inheritance etc. I had a mortgage advisor that was surprised that I didn't
have such a situation, which shows the state of those buying in London right
now.

Most of the people I know under 30 that have recently bought, had such a
circumstance through inheritance, with large deposits going down. A 500k, 2
bedroom flat, with a 100k deposit can have a mortgage of £1000 a month. If you
were to rent the same flat, you would most likely play £2000 a month.

The situation that a lot of people haven't talked about is single people
attempting to buy, probably because it almost never happens anymore. Even at a
modest £250k, this still will require a lot of cash in the bank and high
salary, so single people are now stuck with renting until they meet someone.

To those who are wondering why you would buy central London at all, its
definitely down to lifestyle. If you go out a lot in the city, getting a uber
home is the difference between £15 and £50. The ability to walk to work for
some people is also extremely important, as they have a feeling that when they
do marry and have kids, they will move out to the suburbs and take a 40 minute
train every day.

------
hammock
I was looking at the same thing in SF recently. Vs Chicago, cost of living is
50% higher but salaries are only 25% higher.

------
jorblumesea
London has an incredible transportation system, why buy in some central
neighborhood? Accepting a 30 minute train ride will do wonders for your buying
power, and your ability to save. It's the classic conundrum. You want a place
close in, cheap, and lots of space: choose two.

~~~
madaxe_again
Spoken like someone who has never commuted on the tube... Season tickets for
any London public transport are eyewateringly expensive, and you get to stand
in a sweat-box for the pleasure.

Folks prefer to live centrally to minimise their tube-time, although it's
always been a mystery to me as to why virtually nobody lives in the City,
apart from classic chickens and eggs arguments re: services (it's a graveyard
at night and weekend).

There is no cheap within an hour of the city. There is no space within an hour
of the city - just endless very expensive suburbia.

~~~
djhworld
The tube is a lot of money sure, but it's nothing in comparison to commuter
trains from other towns/cities.

For example a season ticket from St Albans, a 25-30 minute or so train ride
into the city costs £400+ a month

~~~
madaxe_again
Yeah, I know folks who commute in from Bath, Peterborough, etc., and it's on
the order of £30k a year for the pass.

And they wonder why the traffic is shit on the westway.

------
mafribe

       the value of the property 
       increases over time
    

Is this a law of nature?

~~~
shafiqissani
I'd rather say the value of the property is related to human population. Human
population generally keeps growing.

~~~
supernovae
As a society, we should address this. I'm more a fan of spreading ourselves
across the cosmos and stepping off the planet than say mandated controls here,
but it is something we should be discussing. There is a point in time where
there isn't enough world for all the people on the world to live a moral life.
(and its odd we seem comfortable in many ways that "War" is this answer..)

~~~
Finnucane
Virtually everyone alive now is going to die on this planet, and their
children, and their children's children. It's vaguely possible that someday we
may find a place elsewhere for future generations to destroy eventually also,
But no more than a tiny few are going to get to go; it will make no difference
to the people left behind. We will have to continue to struggle on with what
we have.

------
johnkoper
Looking on some London IT job offers in London:
[https://jobsquery.it/jobs;page=1;tags=;sortBy=publishedAt%3A...](https://jobsquery.it/jobs;page=1;tags=;sortBy=publishedAt%3Adesc;query=;location=London%2C%20UK)

Average salary is about $70k / year:

[https://jobsquery.it/map;bounds=%7B%22south%22%3A49.82321169...](https://jobsquery.it/map;bounds=%7B%22south%22%3A49.82321169878792%2C%22west%22%3A-4.042779450488297%2C%22north%22%3A52.858621861394546%2C%22east%22%3A4.614447112011703%7D)

------
jondubois
It seems that a lot of people feel essentially forced to take out a mortgage
in order to avoid the high cost of rent.

The fact that they feel forced into it worries me. Maybe the demand for London
property is partly artificial. I think that a lot of people who live in very
big cities just want to live there temporarily to earn cash and then get out
and retire somewhere else.

Personally, I don't want to take a mortgage because I'm afraid that house
prices will crash when the next financial crisis comes along.

~~~
djhworld
> It seems that a lot of people feel essentially forced to take out a mortgage
> in order to avoid the high cost of rent.

Assuming you can get a mortgage in the first place, even just for a modest
flat at £250k the banks would probably require you to have an income of
£60-£70k, or a hefty deposit

------
jannes
I had my first child in London at 26. It was very tough financially, but it is
possible renting in travelzone 3. I think I was making £40k at the time and we
were a single-income family.

Something we didn't expect was that it would be so difficult to meet other
parents our age. Most of the time we were hanging out with people 10-20 years
older than us, because those were the only other parents we could find. Not
that that was a bad thing, though. We made some lovely friends!

------
jstanley
Leave London? You said yourself that almost anywhere else would be a better
financial proposition. Why not move?

~~~
bshimmin
From his "About" page: _I’m now actively seeking opportunities to move me and
my family somewhere overseas._

~~~
rdl
I suspect he could easily double his salary in the US, and if outside SF/NYC,
would have lower cost of living. Health care and secondary education would be
increased costs, but a lot of that would be addressed by the right employer
and right location.

------
maaaats
Why is both parents working always not an option in cases like this? Here he
actually touches upon it, but dismisses it saying that it will be more
expensive that way. Are these people wanting a personal nanny for their kid or
is it really that expensive with kindergarten?

~~~
kybernetikos
Kindergarten is expensive, a pretty normal nursery that can cover working
hours will soak up pretty much all of the earning potential of the person who
is paid the least in the relationship. Nevertheless, it's something you can do
with one child, but it won't make the finances much easier. If you have two
pre-school children, you're back in the exact situation described.

The article is pretty accurate - a single earner providing for a family and
renting in London will not find it easy if they're earning less than 90k (much
over the average). On the plus side, once the children are school age, costs
go down, and it becomes more possible to be a 2 income family again. You can
think of it as 3 years of difficulty but then it'll get bearable again.

~~~
maaaats
Maybe because it's subsided by the government, but I just checked and here in
Oslo 12 months of kindergarten would be lower than the average monthly salary.
So going back to work will make economic sense after the first month.

I think it's a loss when women leave the workforce after having a baby. (Or,
that they _have to_ )

------
tonyedgecombe
When I look at the HN jobs postings every month nearly everything from the UK
is in London. I would have thought these companies could gain a recruitment
advantage by moving further out where property is cheaper.

~~~
Scoundreller
The further-out jobs probably don't have a recruiting problem. Just the
central jobs because... experienced and older folks want/have the cheaper
properties and are leaving the central jobs.

Similar problem in Toronto Canada... lots of people start out their careers in
the city, then leave with their experience to outerlying areas with more
realistic real estate (health care IT).

------
tsunamifury
The average cost of a flat in San Francisco was over $1mm so almost twice that
of London. In my.last visit I thought about moving because the deals seemed so
good compared to the Bay.

~~~
flog
Having lived in both for a few years each I can definitely say that SF is
cheaper, at least on a per-sqft basis. You also earn twice as much in SF (plus
the equity lottery).

That all said: SF certainly ain't no London. I'd still pick London any day of
the week.

~~~
baby
> That all said: SF certainly ain't no London. I'd still pick London any day
> of the week.

Why's that? I've been working in London for a month and was looking into SF
for next year. (So far I really like London.)

------
webo
Is one year paid maternity/paternal leave normal in the UK/EU?

In the US it's only a few weeks, maybe a few months if at a really good
company.

~~~
cyphunk
In DE it's something like 4+ months for each parent and one parent can gift
their time to the other. It does not depend on the insurance of the company or
some silliness like this. However, if you are self employeed you do not get
this. Also on top parents get some 100+ eu a month per child regardless of
employement, for X number of years.

Perhaps of interest:

[https://www.oecd.org/gender/data/length-of-maternity-
leave-p...](https://www.oecd.org/gender/data/length-of-maternity-leave-
parental-leave-and-paid-father-specific-leave.htm)

------
dep_b
A part of this problem is that people want to live in nice and secure
neighborhoods. If you walk around the city you see plenty of people that don't
look affluent enough to worry about 40% tax. These people either got very
lucky or live in the neighborhoods you don't want to live. Notorious for
crime, immigrants, ugly or bad housing and/or bad public schools.

You basically pay for the privilege to live with other rich people so you
don't have to deal with that. Naturally that's expensive.

~~~
chrisseaton
> bad public schools

Huh? Do you really get 'bad' public schools?

~~~
matthewmacleod
I don't think anybody outside of the UK would understand the term 'public
school' to mean anything other than a state school.

~~~
dep_b
Public versus private schools indeed. Public schools can be quite good but it
depends on the quality of the students and teachers that are willing to work
there.

------
pagnol
And yet, London has a population of over 8 million. How do they stay afloat?

~~~
agd
Firstly, most younger people do not buy property, they simply rent. Secondly,
you share with more people. In the article they reference a single bedroom
flat at min £1000 a month which is about right. But that's the most expensive
way to live. I share with 3 others and on average we pay about 500 each. This
is for a nice enough flat in zone 2 (zone 1 is generally for the very
wealthy).

------
randyrand
another good comparison would be the size of london vs the population of UK,
compared to rents

e.g supply and demand, assuming demand is linear with UK population size

------
RodericDay
Nothing soured me on "the economic establishment" more than hearing it said
over and over and over and over again that rent control is terrible and bad
and basically a way to destroy a city.

All while living in various rent-controlled apartments in Montreal, where even
people who are working modest jobs get to live happy lives.

~~~
controller
Rent control is terrible because it lowers supply. The correct solution is
increase supply by building more.

~~~
RodericDay
An "econ 101" explanation plastered all over as ultimate explainer, even in
the face of healthy, happy rent-controlled cities.

~~~
controller
Which cities would that be?

------
valuearb
40% income tax is abhorrent.

~~~
shaydoc
It's 40% on earnings above around 45K, below that it's 20%

~~~
mbell
That is still extremely high depending on where you are coming from. The US
also uses a marginal tax system and the highest bracket is 39.6% and starts at
~$425k (varies based on how you are filing). ~$38-90k bracket is 25%.

~~~
noir_lord
You don't pay any tax on the first 11500 either.

So on 44999 You'd be paying 20% of (44999 - 11500) so 6700 on 44999 (effective
rate been 14.8%).

~~~
shaydoc
exactly... its not that bad! includes free healthcare! and in northern
ireland, free prescriptions!

------
shafiqissani
To make an informed decision before getting into such situations, along with
you family, I really recommend using numbeo.com

