Londoners in their late 20s on low incomes are now spending an eye-watering 77 per cent of their income on housing costs, a new report has found.
The City Hall investigation found that in other parts of the country, people aged 25-29 and on below-average incomes spend less than half that amount, at 33 per cent of their income.
The findings have been uncovered by the London Assembly’s housing committee, who have made ten recommendations to mayor Sadiq Khan to improve young Londoners’ access to home ownership.
The report found that while 40 per cent of people across England aged 16-39 are homeowners, the figure in London was just 30 per cent.
According to City Hall data, the average London house price in June 2023 was £528,000, with the average deposit being £143,000.
The report concluded that “young Londoners face an almost impossible situation of high rents and house prices that are out of kilter with incomes”. It pointed out that the median annual income for Londoners aged 22-29 in 2023 was £33,343, while those aged 30-39 had a median income of £43,193.
The committee’s Tory chair, Lord Bailey, said that with incomes and housing costs at those levels, saving for a deposit and getting a mortgage was “out of reach for many”.
He said: “Our survey [used to inform the report] was the most responded to survey held by the London Assembly this year, emphasising the importance of our scrutiny on the topic.”
One survey respondent told the committee: “I love London and have never considered leaving before, but I no longer feel I belong in this city. You have to have lots of money from your parents (£100k) or earn £100k+ to afford a future in this city now.”
Another said: “For those who are born, raised, educated and work in London, it feels we cannot live in the city we grew up in and only those that are wealthy can afford to live here.”
Lord Bailey warned that the mayor “must ensure he is building the homes young people need, whilst also working collaboratively with the Government to keep the prices down as much as possible, through schemes such as the Lifetime ISA (LISA) or Help to Buy”.
He added: “Many young Londoners told us that they would consider moving out of London, which poses significant risks to the economy and delivery of services within our city. Some schools are closing and merging in London due to a lack of pupils.
“The mayor must continue to deliver the homes through the Affordable Homes Programmes so that young Londoners can continue to call this great city their home.”
The report examined the effectiveness of the Government’s LISA scheme in helping Londoners buy their first homes.
The maximum property value which a LISA can be used for is £450,000 across England, despite London having much higher house prices on average. Unless they have a terminal illness, savers face a 25 per cent penalty charge for withdrawing funds rather than using them to buy a home through the scheme, or must keep the money in the LISA until they turn 60.
The mayor was recommended by the committee to lobby the Government to either increase the house price threshold for the LISA in London, or remove the penalty for withdrawal for Londoners who have entered the scheme since its launch in 2017.
The committee also suggested that the mayor “convene a London roundtable with mortgage providers to discuss the opportunities for better provision of long-term fixed-rate mortgages” and that the mayor “work with the Government to ensure that London has the resources it needs to deliver sufficient new supply to meet housing demand”.
