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The struggle to find decent accommodation in London is legendary. It starts with a vicious cycle of scouring the internet, getting ghosted, and eventually, attending auditions masquerading as viewings. Often, it concludes with a commitment to pay thousands month to share a less-than-ideal apartment with strangers.<\/p>\n
These tales will be familiar to older millennials and Gen Xers who navigated the start of their careers in London in the early 2000s, as in other major cities like New York and Dublin.<\/p>\n
What\u2019s changed in the last few years, though, is the economic context in which Londoners are forced to deal with that rite of passage.<\/p>\n
Working in a major city can be trying at the best of times. Millennials and Gen Z will likely sacrifice disposable income to develop their career and build their cultural capital, hoping the early money problems will take care of themselves.<\/p>\n
However, the promise of achieving higher wages in London isn\u2019t necessarily true anymore, either.\u00a0<\/p>\n
Since the financial crash of 2007\/08, wages have grown slower in London than the U.K. average, but costs have risen faster, adding to the squeeze.<\/p>\n
Full-time workers in London make an average of \u00a344,370 ($57,027) a year, according to ONS data. As rents have risen faster than salaries, it\u2019s become increasingly common for workers to spend more than half their post-tax wage on rent, well above the generally recommended 33%.<\/p>\n
Landlords have been increasing rents by 20% or 30% in some cases, leaving current tenants with little choice but to look elsewhere. There isn\u2019t currently legislation in place to prevent these sharp rises.<\/p>\n
According to data from SpareRoom, the average room in London now sets a tenant back \u00a3983 ($1270) per month.<\/p>\n
\u201cThere aren\u2019t really any affordable pockets of London left,\u201d Matt Hutchinson, SpareRoom\u2019s communications director, told Fortune<\/em>.\u00a0<\/p>\n Hutchinson says the average age of people using SpareRoom, which primarily connects renters to available rooms in shared housing, is rising, and people are sharing longer into their lives.\u00a0<\/p>\n When the group first launched online, it was catering to young professionals getting their first flat out of university.\u00a0<\/p>\n Now, however, it\u2019s common for older demographics going through major life changes, like coming out of a breakup or moving to London for a mid-career job, to share for the first time in their lives.<\/p>\n Low supply is driving affordability issues. Across the U.K., homes are being let eight days faster than they were pre-pandemic, according to Savills research<\/a>. The real estate group says there are 30% fewer homes to rent in the U.K. than in 2018\/19.<\/p>\n In addition to an affordability problem, the conditions those renters have to live in are getting worse as well.<\/p>\n Across England, private rental homes were twice as likely as the average to have a problem with damp, according to the English Housing Survey<\/a>.<\/p>\n A study<\/a> last year by the think tank Resolution Foundation found that people living in London were twice as likely as people living elsewhere in the U.K. to experience poor-quality housing.\u00a0<\/p>\n Those living in poor housing were accordingly twice as likely to experience poor health, either physical or mental.<\/p>\n Cara Pacciti, a senior economist at the Resolution Foundation, suggests there has been an increase in instances of damp since the cost of living crisis when rising energy prices forced people to cut backon the heating in the winter.<\/p>\n Many tenants avoid complaining about their conditions because they fear eviction and being forced to look for more expensive accommodation.<\/p>\n Polly Neate, chief executive of housing charity Shelter, has also seen this trend.<\/p>\n \u201cWe regularly hear from young renters in London who feel powerless to complain about conditions or challenge an unfair rent hike because they know they could be slapped with a no-fault eviction the moment they do,\u201d Neate told Fortune<\/em>.<\/p>\n SpareRoom\u2019s Hutchinson often wonders at what point London becomes \u201ca theme park for rich people and tourists,\u201d but concedes he didn\u2019t expect things to get as bad as they have without that occurring.<\/p>\n However, in the last year, the scale of the affordability problem has caused some people to put off life decisions.<\/p>\n Research by the rental service in February last year found that seven in 10 renters had postponed plans to move house in the prior 18 months, with budgetary issues the main drawback.<\/p>\n \u201cPeople are turning down job opportunities, not because they don\u2019t want to move but because they don\u2019t want to get into the market the way it is now, and so people are just staying put who don\u2019t really want to,\u201d said Hutchinson.<\/p>\n \u201cThat\u2019s really worrying for them on a personal level, but also, if we intend to get out of the mess we\u2019re in by growing the economy, people being able to move for those jobs is really important.\u201d<\/p>\n According to data compiled by Savills, more private investment is flowing into the build-to-rent market, which should relax supply issues over time.<\/p>\n Shelter\u2019s Neate has urged new legislation that stops no-fault evictions and limits rent hikes to one per year.<\/p>\n Detractors argue that this could exacerbate supply issues, but as young workers become more disenfranchised with the city, few answers remain.<\/p>\n \u201cIf you are disincentivizing people from moving to better jobs, more productive jobs, in high productivity areas, that\u2019s obviously not great for your economy,\u201d says the Resolution Foundation\u2019s Pacitti.<\/p>\n London\u2019s loss is the rest of the U.K.\u2019s gain. The country\u2019s leveling up agenda sought to spread the wealth outside the capital, and new opportunities are beginning to crop up in second cities like Manchester and Birmingham.\u00a0<\/p>\n That takes time, though, and while other regions catch up, a flight of talent from the country\u2019s largest economy could hit the U.K. economy hard.<\/p>\n<\/div>\nPoor conditions<\/h2>\n
Impact on the economy<\/h2>\n
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