High housing costs in London are costing the economy more than £1 billion a year and stymieing jobs growth, according to new research
A study carried out by the Centre for Economics and Business Research found that architects need to spend more than half of their pay on rent if they want to live in central London.
The research was carried out by a new business-backed campaign which is calling for the capital to double its housing output to 50,000 new homes a year by 2020.
Jo Valentine, chief executive of London First, one of the business organisations behind the campaign, said: ‘This needless housing shortage needs urgent action.
‘If we carry on as things stand, in 10 years’ time London will be a no-go zone for employees across sectors and at almost all levels.’
According to the research, in 2015, businesses had to spend £5.4 billion more to compensate staff than they would have done had house prices risen in line with inflation over the past 10 years.
In addition, in 2015, nearly 11,000 more jobs would have been supported if the cost of housing in London was more manageable.
High housing costs are also preventing £2.7 billion a year in consumer spending, contributing to a lost in economic growth of £1 billion a year.
The research also paints a grim picture for many workers in London, with workers in shops, cafes and restaurants, cleaners and office administrators needing to pay their entire pre-tax salary to rent an average private home in London.
Only the best paid workers – including company directors and those in financial services earn enough to rent in central London ‘affordably’ (less than a third of their salaries on rent).
Architects face paying 52 per cent of their pre-tax salary in rent to live in central London, only dropping to 40 per cent in outer London.