The real cost of London life

Why is London So Expensive

The London skyline reflects a paradox omnipresent in our City – a City neglecting its past, failing to take consideration of its history and its characteristic nature, and a Metropolis seeking to embrace the future and nourish the notion of itself as a renowned 21st century capital. The consequence becomes a pandemic of unaffordability, as the City fails to recognise its rich diversity of humans with different circumstances, and a different sized wallet than those residing in the City of London.

London is unquestionably expensive. Rarely can anyone reside in the city and manage to evade a conversation with someone about the excessive expenses that follow the London life. We even dedicate a lot of time to complain about this fact, but at the end of the day, to live anywhere else often seems out of the question. At this point, Londoners don’t even dispute this way of living, merely accepting the realities and enduring a sense of incapability to enact change.

This reaction seems to emerge from the soil of a sombre sight of the reality. On the face of it, considering Londoners’ average income, it appears as if we are swimming in a pool of wealth. According to the data, in 2019, Londoners had an average weekly income of £589.4 – the average weekly income for the United Kingdom was £479.1.

On top of that income, various employers supplement earnings with the London Living Wage, which can increase the Londoners’ earnings to an hourly pay of £10.75. This is a high figure indeed compared to the national living wage, the statutory minimum, of £8.21 for individuals over 25 years old. However, note that the London Living Wage is optional. The fewest employers apply the supplement, meaning that Londoners who face higher living costs actually have a pay-check similar to the rest of the nation.

People on London tube

Image credit: Viktor Forgacs

In reality, increases in wages have remained stagnant as costs of living fluctuate somewhat freely. Londoners’ primary expense, the big bad wolf that we cannot avoid feeding every month, is the cost of accommodation. While our wages, according to a Verdict study from 2017, have solely increased 1.1% yearly each previous year, the costs of properties have excelled 7.7% every year since 2012.

Such a sombre reality is a key factor in comprehending the costly nature of London. Housing is the essential factor determining our living costs. Earlier this year, Business Insider listed London as the 6th most expensive city in the world for renting a flat – according to Zoopla statistics, the average cost of a property in London in 2020 stood at a rate of £605,437.

We can compare that cost with Copenhagen, located in Denmark, a nation listed as the 8th most wealthy country in the world in 2020, where, on average, one can purchase a property for around £234,000. The cost of purchasing a property has elevated to the extent where few Londoners actually feel incentivised to obtain a mortgage.

Instead, Londoners watch their hard-earned money – note, BBC declared in 2017 that Londoners work three weeks more yearly than the rest of the United Kingdom – evaporate in the money-drain that is renting. Home Let statistics revealed that in March 2020, the United Kingdom average rental cost was £959 monthly, whereas, in London, the rent would cost £1,673. A few years earlier, in 2017, Verdict conducted a similar comparison between London and other European capitals and found that the average monthly rent for a three-bedroom apartment in London was £5,398. The same property would cost £2,747, nearly half of the amount, if based in Paris.

“All prices across London have gone up by 20% in the last year according to the Financial Times, and I think you will agree, in many ways, that is a compliment to London, it’s a sign of success,” was the conclusion conveyed by Boris Johnson at a MIPIM conference in 2014. This quote, recorded in the Vice documentary series, The War to Live in London, reflects the nature of housing issues at the time of its release, 2015, and up until present day.

People by the river Thames

Image credit: Mike Stezycki

Like any other metropolis, there is a constant need to generate revenue in London, which is best done by making a piece of land valuable. Land viability is best nourished through privately-owned residential property, office spaces, retailers and restaurants. As a result, the local government has steadily demolished social housing while erecting luxury apartments. This has led London to become a safe investment – consistently improving and becoming more luxurious and attractive, while continuously seeing a growing population. It is even an easy investment for some, considering you do not have to live in London to actually buy a home. Consequently, housing prices have continued to soar – according to VICE, two-thirds of new houses are funded through foreign investors.

This is the ongoing project of Regeneration – the vision of bringing London into the 21st century. But the futuristic vision overlooks the ramifications of the agenda. As estates evaporate around the city to make space for shiny, sky-reaching towers, the working class that upholds our society is being pushed to the corners of London in a state of hideaway. Hiding the true colours of life in the capital, as the skyscrapers welcome the exclusive elite.

This trajectory, instigated years ago, has been widely acknowledged as a project of social cleansing. The Regeneration Project has been widely criticised as it neglects to take account for the working classes. London was built by the working class, and its rich culture was provided by individuals from around the world, the workers and the hustlers, who were residing in the very housing they now demolish under luxury apartments.

As housing prices soar in the city, attracting elites, others are forced to flee to the outskirts of London where they face another excessive expense: public transport. A monthly travel card, as a resident in the boroughs by the London borders, can cost you as much as £361.40. Today, even living in zone 4 can cost you £200 every month in travel expenses.

In 2017, a study by Deutsche Bank revealed that public transport in London is the most expensive in the world. Multiple authors looking into this subject found it to be an issue which emerged in the 1980’s with former Prime Minister Margaret Thatcher’s agenda of privatisation, which has caused grave consequences for transport costs not only in London, but in the rest of the United Kingdom. Privatisation allows companies to determine costs with minimal regulation, which incentivises competition. While Thatcher proclaimed an aspiration to generate lower prices, the actual outcome was the complete opposite.

Expenses related to public transportation have steadily increased, as Transport for London – the closest thing London has to a publicly owned transport body – remains in a constant deficit. In 2018, TfL recognised a deficit of £1bn for the year. According to the report, TfL Finances: The End of the Line, compiled by a Budget and Performance Committee in November 2018, concluded that TfL is in a financial struggle due to the decline in government funding.

From 2014 until 2018, TfL has lost £800 million in grants. Furthermore, their report found that only the London Underground is actually turning a profit – all other means of transportation has to be subsidised. Alongside the vast debts they face, the committee concluded a dive in number of passengers using public transport. In the years between 2015 and 2018, the average trip rate amongst travellers decreased 4.1% every year.

As a consequence, they impose higher travel charges just to generate a larger revenue, as passenger fares constitute the largest income for TfL.

On top of excessive housing costs and transportation fees, BBC found in April 2019 that bills are increasing every year. While we can appreciate the slow but consistent rise in wages, the cost of bills, including council tax, TV licences, gas and electricity, water bills and even the NHS prescription charge, have steadily amplified. Suddenly, the increase of wages around 1.1% yearly seems sadly insufficient alongside the extensive list of expenses that accelerate to higher costs with every passing year.

At this point, we might ask ourselves: why are we willing to pay more to live in London? We are able to move to similar locations that assimilate the bustling, busy way of living in London, yet we refuse. The most common response to such ideas is: but it is not London. In that case, the common will to live in the City, and the will to pay a higher cost for the sake of a London life, essentially becomes the key reason why it is as expensive to live in London as it is today.

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