The article misses the point about the standard of living in London.<p>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.<p>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).<p>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.<p>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.<p>Apologies for sentence structure and formatting, this post impulsively written on my phone.
> The average cost of a flat in London is 500k<p>House prices are horrible in London yes, but for transparency that's <i>central London</i>.<p>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.<p>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.
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.<p>[0] <a href="http://slatestarcodex.com/2014/07/30/meditations-on-moloch/" rel="nofollow">http://slatestarcodex.com/2014/07/30/meditations-on-moloch/</a>
> This requires a higher than average salary from a graduate job, (which is the life stage when people might reasonably start having children)...<p>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.<p>In Geneva, where I live, the mediab age of the first childbirth is 35.
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.<p>If London were to make housing affordable - a worthy goal - it would no longer be a good investment. The author seems to want both.<p>In other words, if you could afford the down payment, you wouldn't want to.
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!
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: <a href="https://github.com/lukasz-madon/awesome-remote-job" rel="nofollow">https://github.com/lukasz-madon/awesome-remote-job</a><p>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.<p>There are serval reasons for high prices:<p>- Market is heavy regulated.<p>- UK doesn't have any land and estate tax.<p>- Developers oligopoly is hoarding the land to keep the prices.<p>- Foreign investor are using properties as a insurance for rainy days.<p>- Interest rates are low and inflation is high, so people are pumping money into real estate market.<p>- Councils cannot build council housing any more.<p>- Bank of England schemes to buy.<p>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.<p>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.<p>[1] - <a href="https://news.ycombinator.com/item?id=12160680" rel="nofollow">https://news.ycombinator.com/item?id=12160680</a>
[2] - my estimation given other big cities salary to price ratio.
I am curious. Where on the planet is it currently attractive to work and reasonable cheap to live?<p>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?
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.<p>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 <i>net</i> 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?<p>[1]: <a href="http://www.netsalarycalculator.co.uk/50000-after-tax/" rel="nofollow">http://www.netsalarycalculator.co.uk/50000-after-tax/</a><p>[2]: <a href="https://www.incometaxcalculator.org.uk/?ingr=50000" rel="nofollow">https://www.incometaxcalculator.org.uk/?ingr=50000</a><p>[3]: <a href="http://www.netsalarycalculator.co.uk/74000-after-tax/" rel="nofollow">http://www.netsalarycalculator.co.uk/74000-after-tax/</a>
<i>Salaries and living expenses have become really disconnected.</i><p>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.<p>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.
Sadly, Berlin ( although still cheap ) will match the same equation pretty quickly.<p>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.<p>Talking with friends, we are wondering how people such as bakery-owners, taxi-drivers, delivery / DHL employees work it out!
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:<p><a href="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" rel="nofollow">http://www.rightmove.co.uk/property-to-rent/find.html?search...</a><p>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.<p>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.<p>I'm self employed, work from home and I don't have a child yet - which makes it a lot easier to move.<p>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.
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.<p>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.<p>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.<p>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.<p>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.
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.
Looking on some London IT job offers in London:
<a href="https://jobsquery.it/jobs;page=1;tags=;sortBy=publishedAt%3Adesc;query=;location=London%2C%20UK" rel="nofollow">https://jobsquery.it/jobs;page=1;tags=;sortBy=publishedAt%3A...</a><p>Average salary is about $70k / year:<p><a href="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" rel="nofollow">https://jobsquery.it/map;bounds=%7B%22south%22%3A49.82321169...</a>
It seems that a lot of people feel essentially forced to take out a mortgage in order to avoid the high cost of rent.<p>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.<p>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.
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.<p>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!
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?
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.
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.
Is one year paid maternity/paternal leave normal in the UK/EU?<p>In the US it's only a few weeks, maybe a few months if at a really good company.
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.<p>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.
another good comparison would be the size of london vs the population of UK, compared to rents<p>e.g supply and demand, assuming demand is linear with UK population size
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.<p>All while living in various rent-controlled apartments in Montreal, where even people who are working modest jobs get to live happy lives.