Tuesday, July 16, 2019

London's High Rent

London and the southern regions of England are facing a dearth of teachers, nurses and police officers as rising rents make housing in large parts of the UK unaffordable for key public sector workers. Public sector workers have been forced to accept below-inflation pay increases during the government’s austerity drive of the past decade while rents have risen by more than the cost of living.

London has witnessed the biggest squeeze on public sector workers but PwC said rising rents in the south-east, the east of England and the south-west meant it was too expensive to live outside the capital and commute in.

The report by the consultancy firm PricewaterhouseCoopers said there was an urgent need to increase the supply of homes after it found that the failure of public sector pay to keep pace with soaring housing costs had made it increasingly hard for workers on modest incomes to make ends meet.

In London, workers in their 20s were spending more than half their incomes on rent, making it impossible for them to save up the deposit to buy a home.

PwC said the benchmark for an affordable rent was that it accounted for no more than 30% of an individual’s gross annual income, but that this threshold had been crossed in the high-rent hot spots in the more prosperous parts of Britain.

“The last five years has seen rental affordability ratios deteriorate and, in the UK as a whole, the amount spent on rent over this period has grown by 8%, while at the same time earnings growth remains relatively weak and below levels seen before the financial crisis,” he said. “This is not only having an impact on social mobility, it will also hinder national productivity growth in the longer term by preventing people from moving to places in the UK where they can be most productive.”


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