As the global financial center for many international conglomerate companies, London attracts people from all around the world. Many businesses are constantly sending their employees to the area. With so much relocation activity in one city, there are bound to be some broad-reaching effects.
The London is Changing project is a campaign effort highlighting stories of people relocating to, within and away from London by choice or necessity. The goal is to capture the impact of these patterns of migration. In fact, if you’ve been in and around central London, you’ll see many of these mobile people’s quotes, ranging from optimistic to deeply frustrated, posted on billboards.
Here are a few that were recently mentioned in The Guardian article titled “‘I Feel I’m Being Forced Out’: London Billboards Highlight Stories of Relocation.”
- “I used to think people who left London were giving up. Now I’m one of them. I just can’t afford to romanticize the incredible exploitation anymore.” - a graphic designer who recently relocated from Lewisham to Cambridgeshire
- “I feel excited about moving to London – I love London – but also terrified, as it’s so expensive. I’m worried that, even if I do manage to secure a job afterwards, I’ll be signing up to a life of unnecessary poverty, despite being highly qualified.’ - a student moving from Australia to Hackney
- “I relocated for better work prospects 6 months ago and it seems to have worked. I've picked up more TV work in London than elsewhere.” - a documentary filmmaker who recently relocated from Scotland to Tower Hamlets
You can view these and more billboards at http://www.londonischanging.org/review_billboards
What’s the Issue?
London is a globally diverse and safe city where many overseas investors tend to invest their money in property. Unfortunately, in a city with a housing crisis due to its population boom, many of these investor properties are sitting empty, which has contributed to the rising demand for housing.
According to the National Housing Federation, potential homeowners need an income of more than GBP 30,000 annually to purchase an average size home in 46 out of 87 counties. Housing prices in the U.K. have skyrocketed over the past decade, with London being the most expensive place to buy a property in the U.K. with average housing prices upward of GBP 500,000. The housing crisis in combination with a surge in the number of people renting and the rise in immigration is forcing lower paid employees to leave.
In London, Barking and Dagenham are the only boroughs where you can make less than GBP 30,000 annually and still afford a home. In all other London locations, you need to make more than GBP 40,000 annually to afford a home. For other towns in the U.K., like Hereford, you would need an income of almost GBP 37,000 annually to afford an average-sized property, and in the county of Dorset you would need an annual income of more than GBP 44,000 to own a home.
What’s the Fallout?
Rising housing costs combined with the average income earned means more people are renting, but who can afford the rent in London?
The CBRE (the world's largest commercial real estate services firm serving owners, investors and occupiers) has claimed London has the highest rents in the world. This is making it hard for locals to afford to rent there. The most affordable London borough for renting is Bexley, which averages around GBP 1,007 per month – yet it’s steadily rising.
Are There any Solutions?
Those with business interests in London feel there is real concern in the business world that London is becoming unaffordable, which is making the talent pool much smaller. They’ve proposed a number of viable solutions, including:
- Make other forms of investments more attractive
- Offer incentives encouraging investors to rent versus leaving a property vacant
- Change laws requiring new properties be occupied with tenants for a certain time period
- Create more build to rent schemes
- Longer tenancies for families
- Build new housing designed for renters rather than buyers
With London’s population expected to grow beyond 10 million by 2030, the implications of this housing crisis are critical for London’s political agenda. Their reputation is at stake as the world waits for solutions – not only for housing, but for transportation, schools, medical care, sewage network and London’s overall infrastructure.
How Does this Housing Crisis Affect Global Mobility?
Planning is always key when relocating your employees, but even more so when relocating to a location where finding rentals may be challenging. Anticipate potential housing issues and take steps to avoid them.
Below are a few recommendations to keep in mind when securing rental property in London for your expat population:
- Research your options in advance with a local destination services provider
- Have credit check information in place and funds readily available
- Agree to the rental terms as soon as possible since good quality rentals remain restricted
Having a strong partner at your side can be an even more valuable step to take to ensure problems like these don’t derail your global mobility program. Lexicon works with a team of local experts standing ready to help your expats in securing housing, and we’d be happy to be a part of your planning.