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.
If London were to make housing affordable - a worthy goal - it would no longer be a good investment. The author seems to want both.
In other words, if you could afford the down payment, you wouldn't want to.
People in the UK are obsessed with housing and property, it's a national pastime.
To be fair, the housing market has been propped up by successive UK governments for years, it's the only thing they have left and it's the only aspiration they try to goad the population into achieving.
Not trivial, I'd say it in the sense that's it's fundamentally ingrained into our culture.
Additionally renters are almost treated like second class citizens, most rental contracts are short (12 months), real estate agent fees are exorbitant and clauses in rental contracts are designed specifically to protect and nurture the landlords investment, i.e. you cannot redecorate, put pictures up, own pets etc
As a society, we should address this. I'm more a fan of spreading ourselves across the cosmos and stepping off the planet than say mandated controls here, but it is something we should be discussing. There is a point in time where there isn't enough world for all the people on the world to live a moral life. (and its odd we seem comfortable in many ways that "War" is this answer..)
Virtually everyone alive now is going to die on this planet, and their children, and their children's children. It's vaguely possible that someday we may find a place elsewhere for future generations to destroy eventually also, But no more than a tiny few are going to get to go; it will make no difference to the people left behind. We will have to continue to struggle on with what we have.
Sure, but real estate markets are local. At least in the US, there are plenty of places where real estate prices are not increasing, because local populations are not increasing, wages are not increasing, and wealthy foreign investors are not looking to park their money in places where real estate prices aren't going up quickly. So, yeah, in a broad, long-term statistical measure, re prices do tend to increase over time, but the distribution is far from consistent or uniform.
It is also related to the height of the mortgage rate; higher rates means more people cannot afford to buy a house, so house prices go down.
With the current unprecedented low interest rate levels it is hard to imagine, but there was a time that mortgage rates were above 10%. And there is no fundamental reason why they couldn't go back to those levels one day.
The government props up the market, because otherwise they'll get booted out by the millions who have staked their retirement on property, plus the taxpayer owns £ billions of equity via the help to buy scheme, so the govt takes a direct hit of prices go down.
Local homeowners prop it up by ensuring no new housing gets built near them.
On the monetary side, the bank of England props up the market (e.g. funding for lending scheme), because our economy couldn't handle a crash, our banks are loaded to the gills with mortgage debt, they don't have enough capital to withstand a crash.
No, I lost 25% of the value of my first property after buying at the peak in the eighties. Prices can fall and sometimes the government can't or won't stop it.
Sure, it's not impossible, but there's a powerful alliance of political and economic forces that will do their utmost to prevent this from happening.
I can only see three scenarios where prices fall materially:
a) big interest rate hike (I believe this caused the 89 crash)
b) massive increase in homebuilding (250k+ p/a, sustained)
c) mass emigration out of the UK.
I really doubt a) will happen, the BOE is loathe to raise rates as our household debt is 90% of GDP, twice what it was in 1990, our economy wouldn't handle it, our banks would be insolvent as they have <5% capital. Inflation would need to be double digits before the BOE's hand is forced.
b) also very unlikely. Homeowners make up the biggest voting block, a huge vested interest group. The green belt is a sacred cow. Every time the govt hints at liberalising the planning system, the mail+telegraph kick up a 'hands off our land' campaign.
c) maybe if brexit goes really badly, but we'd be in a true economic catastrophe if this happens. Probably wouldn't have a job with which to pay for cheaper housing.
The market that scares the bejezzus out of me is the commercial property market. Every bank in the UK has massive portfolios of loans leveraged to the 9's vs commercial property with returns calculated on rentals. At the same time high streets are emptying left right and centre. If rents come down then shops can compete, but if rents come down then the bank loans all go south via breached covenants. If rents don't come down the income to service the loans dries up as shop after shop goes out of business due to "internet".
House prices are horrible in London yes, but for transparency that's central London.
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.
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.
So, if a person is supposed to sleep for 8 hours a day, and can manage to cut out of work after spending exactly 8 hours in the office, that 80 minutes of commute is about 17% of the bit of your life that you get to live.
If you have kids and a complex job a spot of time on the train when you have no ability to respond to other people is quality. Of course I am more of a reader than a fitness person but bicycles have a similar quality of self determination.
tbh it's not that much cheaper, I live in Zone 4 and there are new build properties going up starting from £390,000 for one bedroom.
...the OP sounds like he has a wife and child, so realistically a 2 bedroom is his minimum requirement, and that would probably get your close to that £500k figure.
Having lived in London for a year and hearing daily talks about delayed and cancelled (not to mention full) trains from coworkers, this sounds dreamily optimistic, as if coming from a real estate agent. London property market, central or not, is horrible.
How much is your monthly train pass? I had coworker in Watford beside the train station with an awesome 2 bed terraced house with a backyard for £1000/mo, but train tickets were upwards of £20/day.
How did you find that kind of deal on airbnb? I tried it myself during winter months in London, most airbnb properties don't give any discount or a fairly nominal one (e.g.: 10%) on multi-month rentals, so I found it much more expensive. I found eventually went with a serviced apartment.
Yup, his one-bed flat prices are overblown due to being very central. I moved from Waterloo, Canada to London in 2013. First I was in a shared 4 bed flat in Whitechapel for £580/mo all inclusive. Next I found a one bed in Deptford right beside the DLR station for £900/mo. Later when the landlord wanted to sell that flat I found a 1 bed in Woolwich for £800. My office was beside Farringdon station, so my commute was always under an hour (one-way). I could been bike most of the time. I was doing well on £43k in the first year and £45k in the second as a single person.
Even commuting for almost an hour door to door, housing is very expensive. London has chronic money laundering, an out of control banking sector and a culture of rent seeking. That's why it's expensive.
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.
Having lived in both for a few years each I can definitely say that SF is cheaper, at least on a per-sqft basis.
You also earn twice as much in SF (plus the equity lottery).
That all said: SF certainly ain't no London. I'd still pick London any day of the week.
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.
This is the "beauty" of socialism. The greed and covetousness - I want what my neighbor has, is killing societies.
Buddy, your wife is going to have to go to work so that you all can support some single lady who wants to sleep around and have kids, but doesn't want to work. Actually muslims are the most common welfare abusers. Their husbands divorce for benefits, then live with their wife on your money!
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!
yeah, Belfast has been tranquil for a long time, some 20 years or more, the media perception always inflated the reality even in the bad old days..
the good thing is, that in the ensuing time, the city has become alot more vibrant, the youthful generation are now not as shackled with the past. Belfast feels fresh, and its a town with a great industrial and innovative past. Its about time!
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.
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 net 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?
In the UK when people talk about "tax bracket", they don't usually mean "overall tax rate on total income", but rather, specifically which of the following bands you fall into: [1]. The fact that the author is in the 40% tax bracket means that any money he makes above £45k is taxed at 40%.
I can imagine to an outsider this seems like a bit of an unintuitive way to frame things :)
If you make 50k your effective income tax + NI tax is about 33%. If you take other taxes (council tax, VAT, stamp duty etc.) Total effective taxation is around 50%.
Now the dividend tax is 15% (in the best case scenario you can always try funnelling money through Man Island or other tax heaven). There is no land tax and estate tax.
Divident tax is after you paid 20% corporate tax. At the end you probably save the NI, but you have many other charges (accounting, time spent on paperwork, business rates, etc.)
That is still extremely high depending on where you are coming from. The US also uses a marginal tax system and the highest bracket is 39.6% and starts at ~$425k (varies based on how you are filing). ~$38-90k bracket is 25%.
It's banded in the UK. Your first £11.5K of income is tax free, the balance up to £45K is taxed at 20%, anything over £45K and under £150K is taxed at 40% and anything beyond £150K is taxed at 45%.
In return you get free education up to (but not including) university age and universally free health care.
There's also national insurance at 12% of earnings over £680/month (money from this tax is used to fund state pensions and unemployment benefits).
My effective tax rate in London with a salary slightly higher than the OP was 38%.
My effective tax rate in San Francisco with a salary 4x what I was making in London is 36%.
Rent is comparable, with bigger appartments in San Francisco, buying is comparable. Quality food is more expensive in SF, other goods (electronics/clothing/etc.) is more expensive everywhere in Europe. Quality of life depends on wether you like the outdoors (SF), want a car (SF), or prefer city activities and/or dislike driving (London). London is also great if you like to travel, specially throughout Europe. The West Coast is particularly far from almost everywhere and there's a distinct lack of cheap airlines. From London you can have a $20 weekend getaway to, say, Prague. Admitedly, you do travel like cattle, but it is cheap.
In the US, besides what you're taxed, you must add all other fees that get added to almost anything you'll want to do, from healthcare to going out (the famous tipping), going through bank transfers (they're free throughout Europe, regulated markets, they charge you whatever the bank wants to in the US, only reliable way to transfer money here is to send cheques).
Overall, myself and my wife like it here, have made some great friends and don't really want to go (wouldn't cry for too long if we had to). We can save a ton of money because we have two incomes and weren't looking for the "2.5 kids house with garage for two cars and white picket fence", so we got a deal on both appartment ("small" for american standards, twice as big as our flat in London for roughly the same ammonut before the pound plummeted) and our car ("tiny" for american standards and manual transmission, it cost less than the anual insurance).
Every place is great to visit, every single place has things you'll complain about when you move there. Honestly, the thing that worries me is political, from the madman in power to the old lady that screamed at me and a bunch of other techies that "Trump won now so y'all will have to go back, I'm getting my city back." I didn't see the fallout from Brexit, but from my friends over there it is not as bad as here, but objectively bad regardless...
This is pretty common in Europe. For example income tax and social insurance contributions in Ireland would be greater than 50% of marginal income at this level. This money is used to fund services and fund the national debt.
Salaries and living expenses have become really disconnected.
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.
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.
> Real estate is not labour intensive. A single landlord can probably handle dozens of properties.
I can only suspect you don’t own property that you rent out. Tenants of just one flat, if demanding and complaining enough, can easily burden a landlord beyond any extent he considers acceptable. Any landlord whose portfolio extends into the dozens of properties will almost certainly have contracted all the actual work out to an agency with its own staff of multiple people.
It's still true though: the agency with multiple full time staff members probably handles hundreds of properties, or has other lines of business as well.
"Salary is related to the value of an employee's labour."
That would be lovely, but I think salary is related to what the employee can get away with paying the employee, regardless of the "real" value. It's not a totally churlish example to point out how little good mothers get paid by the state for their value of their work.
There might be a similar reconsideration of how living expenses are reached.
I suspect he could easily double his salary in the US, and if outside SF/NYC, would have lower cost of living. Health care and secondary education would be increased costs, but a lot of that would be addressed by the right employer and right location.
Firstly, most younger people do not buy property, they simply rent. Secondly, you share with more people. In the article they reference a single bedroom flat at min £1000 a month which is about right. But that's the most expensive way to live. I share with 3 others and on average we pay about 500 each. This is for a nice enough flat in zone 2 (zone 1 is generally for the very wealthy).
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.
All while living in various rent-controlled apartments in Montreal, where even people who are working modest jobs get to live happy lives.
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?
Kindergarten is expensive, a pretty normal nursery that can cover working hours will soak up pretty much all of the earning potential of the person who is paid the least in the relationship. Nevertheless, it's something you can do with one child, but it won't make the finances much easier. If you have two pre-school children, you're back in the exact situation described.
The article is pretty accurate - a single earner providing for a family and renting in London will not find it easy if they're earning less than 90k (much over the average). On the plus side, once the children are school age, costs go down, and it becomes more possible to be a 2 income family again. You can think of it as 3 years of difficulty but then it'll get bearable again.
Maybe because it's subsided by the government, but I just checked and here in Oslo 12 months of kindergarten would be lower than the average monthly salary. So going back to work will make economic sense after the first month.
I think it's a loss when women leave the workforce after having a baby. (Or, that they have to)
It's that expensive. If you want to work normal hours you'll need to put your kids in private nursery. In London that's about £75 per child, per day.
We were paying £1300 per month to get 2 days per week for our kids at one point. As you can imagine, working just 2 days a week it's hard to make that back. And of course, you're paying out from income you've already been taxed on.
I don't understand the economics of it, though. Are the people working in a daycare making millions a year or what, since each child they care for brings in a full-time salary and they care for multiple children.
The ratio is pretty high - like 1:3 or something. Then they need to pay for the space. Our kids went to various nurseries over the years - some better than others. The best have kitchens where they cook locally sourced produce. There's a premium for that, but honestly it's not much cheaper for ones where the service / childcare standards aren't as high. Demand is high too. We were in an area with a really high birth rate (and relatively affluent families). It was a bit of a fight to even get spaces.
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.
Spoken like someone who has never commuted on the tube... Season tickets for any London public transport are eyewateringly expensive, and you get to stand in a sweat-box for the pleasure.
Folks prefer to live centrally to minimise their tube-time, although it's always been a mystery to me as to why virtually nobody lives in the City, apart from classic chickens and eggs arguments re: services (it's a graveyard at night and weekend).
There is no cheap within an hour of the city. There is no space within an hour of the city - just endless very expensive suburbia.
I'm not sure it even quite works out like that. Property in the burbs is expensive too. You often get more for that money, but I'm not sure it's much cheaper - if you see what I mean. Also, as I posted in another comment - there's a pretty hefty transport tax to pay once you're out of town.
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 further-out jobs probably don't have a recruiting problem. Just the central jobs because... experienced and older folks want/have the cheaper properties and are leaving the central jobs.
Similar problem in Toronto Canada... lots of people start out their careers in the city, then leave with their experience to outerlying areas with more realistic real estate (health care IT).
Not necessarily true. I know that for me, and my friends, the social/cultural/diversity aspects of London mean we'd be unlikely to consider moving out. Yes, living costs are (much) higher here but it's still a great place to live.
The article misses the point about the standard of living in London.
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.
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).
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.
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.
Apologies for sentence structure and formatting, this post impulsively written on my phone.
The OP is now a single income household, and is £400 in the red every month. Also they have just had a kid (big cash drain), so I can't imagine there will be much socialising in the near future. Think they may need to "move to the 'burbs"
> they're still living one of the best goddamn lives in the world.
Thats very subjective. No easy access to mountains and proper outdoor sports. Not very friendly people. British weather. Much of your time is spent on the underground. So it really depends on what you value in life. (Personally I am not a fan of London).
That's a good point, but it's maybe a nitpick when you consider the context of the whole thread? AndrewOfMartin's point was just explaining the trade off that London gets you.
Moving to a rural area, or even farther out into the suburbs, would absolutely help OP's financial situation out. Hopefully he can find a new job or work remotely. Or, if he wants to stay in London, he'll realize the value of things he would miss.
We moved into a more suburban spot outside London a couple of years ago (mostly so we could have more space for our kids) and thee are definitely some trade offs.
Transport back to town is effing expensive - the 15 minute ride to Wimbledon where I work is about £9 per day. Public transport is rubbish. I cycle the 30 minutes to the nearest train station but on the occasions where my bike is out of action using local transport is only just feasible. For that reason almost everyone here has 2 cars. In London you don't even need a car, let alone 2.
I'm a city person, currently living in New York; I often have these types of discussions with people, and it's very easy for any one of us to forget that people can fundamentally value very different things, and that one of the important things in life is to find out what you value, and prioritize it accordingly.
Two of my friends live in Texas, in moderately large houses; they're justifiably proud of them, but all I see is a huge expanse of wasted space, a lawn to upkeep, and nothing (except neighbors) to walk to. Meanwhile, they look at my life and see a tiny cramped apartment where our baby has to sleep in our bedroom, and a commute that's twice as long as theirs standing shoulder-to-shoulder with people.
Well that is true. But generally it really winds me up that people moan about the weather in the UK. You can do almost anything in drizzle that you can do in the sun, except for maybe outdoor parties. Sun all year is boring and texture-less.
Yup! I think that his complaints about taxes are also unfair-- that 40% marginal tax rate is going to pay for health care, which I bet his wife and baby are using a lot of right now.
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.
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.
Public versus private schools indeed. Public schools can be quite good but it depends on the quality of the students and teachers that are willing to work there.
You're getting downvoted for being flippant but your point is valid. Turns out this family made a big life choice that they couldn't afford and now the reality is setting in, if you can't make ends meet on that salary your expenses need to be reduced, so move. No one deserves to live in London, if it's too expensive move or structure your life in a way that is affordable. Hence why I choose to live in the North East of the UK (and before people say "the salaries are lower" - no they are not for engineering)
> This requires a higher than average salary from a graduate job, (which is the life stage when people might reasonably start having children)...
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.
In Geneva, where I live, the mediab age of the first childbirth is 35.
This trend leads to the inevitable question of when the age of being prepared financially for children will cross the point of being unable to bear children physically.
Fifty years ago it was common to have children around eighteen, thirty years ago it was common to have children around twenty five, and now it feels like thirty five is the normal.
This begs the question whether children will be possible before forty five within twenty years, and at that age bearing children becomes a major risk.
Women in large Chinese cities are already feeling unable to balance the pressure of a career and parenthood, opting to not have children at all, or having them very late into adulthood.
I am curious. Where on the planet is it currently attractive to work and reasonable cheap to live?
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?
Lisbon, Portugal is pretty great if you get NHR status and land a remote job. Local wages are, unfortunately, not so great but hopefully this will get better over the next few years (for tech at least).
Do you have an example? Because last time I looked into NHR it didn't seem very attractive. If I remember correctly you paid around 30% in social security and 25% income tax, but the income tax is flat. So the overall tax savings didn't seem that great since you had to make quite a lot to reach a similar effective tax and even more to save any significant amount. Could still be decent if the cost of rent and living is low of course.
But I might be mistaken, so any comment would be appreciated.
NHR has many facets to it (one of which is, as you mentioned, the 20% flat income tax for qualifying professionals).
The most interesting bit of NHR (from a tech expat working remotely PoV) is the tax free foreign income. Providing your clients are not in Portugal (so you don't brush up against CFC rules) there's nothing wrong with incorporating your consultancy in the UK or Malta and then paying yourself in dividends.
Please don't come here. Housing prices are high already, if every techie comes to Lisbon this will become another gentrified city.
Jokes aside, I hope this problem finds a solution real soon, there are a whole bunch of hard working people that are farther and farther of living near where they work.
Here's some relevant data [1], sorting by the 'affordability index' should give you a few ideas. Milwaukee, WI is in the top 10. I have to travel there frequently for work. It's on both a river and a great lake, and the people there are quite possibly the most friendly people on the planet.
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:
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.
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.
I'm self employed, work from home and I don't have a child yet - which makes it a lot easier to move.
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.
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[ 2.5 ms ] story [ 147 ms ] threadIf London were to make housing affordable - a worthy goal - it would no longer be a good investment. The author seems to want both.
In other words, if you could afford the down payment, you wouldn't want to.
To be fair, the housing market has been propped up by successive UK governments for years, it's the only thing they have left and it's the only aspiration they try to goad the population into achieving.
Are you trying to say that the obsession with housing is some how trivial?
I would have thought the lack of land and houses probably prop up the housing market more than the government..
Additionally renters are almost treated like second class citizens, most rental contracts are short (12 months), real estate agent fees are exorbitant and clauses in rental contracts are designed specifically to protect and nurture the landlords investment, i.e. you cannot redecorate, put pictures up, own pets etc
With the current unprecedented low interest rate levels it is hard to imagine, but there was a time that mortgage rates were above 10%. And there is no fundamental reason why they couldn't go back to those levels one day.
The government props up the market, because otherwise they'll get booted out by the millions who have staked their retirement on property, plus the taxpayer owns £ billions of equity via the help to buy scheme, so the govt takes a direct hit of prices go down.
Local homeowners prop it up by ensuring no new housing gets built near them.
On the monetary side, the bank of England props up the market (e.g. funding for lending scheme), because our economy couldn't handle a crash, our banks are loaded to the gills with mortgage debt, they don't have enough capital to withstand a crash.
I can only see three scenarios where prices fall materially:
a) big interest rate hike (I believe this caused the 89 crash)
b) massive increase in homebuilding (250k+ p/a, sustained)
c) mass emigration out of the UK.
I really doubt a) will happen, the BOE is loathe to raise rates as our household debt is 90% of GDP, twice what it was in 1990, our economy wouldn't handle it, our banks would be insolvent as they have <5% capital. Inflation would need to be double digits before the BOE's hand is forced.
b) also very unlikely. Homeowners make up the biggest voting block, a huge vested interest group. The green belt is a sacred cow. Every time the govt hints at liberalising the planning system, the mail+telegraph kick up a 'hands off our land' campaign.
c) maybe if brexit goes really badly, but we'd be in a true economic catastrophe if this happens. Probably wouldn't have a job with which to pay for cheaper housing.
I'd say it's inevitable, the only question is when.
House prices are horrible in London yes, but for transparency that's central London.
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.
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.
Spend 17% of your life on that house, man.
...the OP sounds like he has a wife and child, so realistically a 2 bedroom is his minimum requirement, and that would probably get your close to that £500k figure.
Having lived in London for a year and hearing daily talks about delayed and cancelled (not to mention full) trains from coworkers, this sounds dreamily optimistic, as if coming from a real estate agent. London property market, central or not, is horrible.
Now live in Kent, 33 mins to London Bridge, 3 beds with a garden for almost half the cost of a flat in London...
That all said: SF certainly ain't no London. I'd still pick London any day of the week.
Why's that? I've been working in London for a month and was looking into SF for next year. (So far I really like London.)
[0] http://slatestarcodex.com/2014/07/30/meditations-on-moloch/
Buddy, your wife is going to have to go to work so that you all can support some single lady who wants to sleep around and have kids, but doesn't want to work. Actually muslims are the most common welfare abusers. Their husbands divorce for benefits, then live with their wife on your money!
the good thing is, that in the ensuing time, the city has become alot more vibrant, the youthful generation are now not as shackled with the past. Belfast feels fresh, and its a town with a great industrial and innovative past. Its about time!
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 net 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?
[1]: http://www.netsalarycalculator.co.uk/50000-after-tax/
[2]: https://www.incometaxcalculator.org.uk/?ingr=50000
[3]: http://www.netsalarycalculator.co.uk/74000-after-tax/
https://www.gov.uk/income-tax-rates/current-rates-and-allowa...
I can imagine to an outsider this seems like a bit of an unintuitive way to frame things :)
[1]: https://www.gov.uk/income-tax-rates/current-rates-and-allowa...
Now the dividend tax is 15% (in the best case scenario you can always try funnelling money through Man Island or other tax heaven). There is no land tax and estate tax.
So on 44999 You'd be paying 20% of (44999 - 11500) so 6700 on 44999 (effective rate been 14.8%).
In return you get free education up to (but not including) university age and universally free health care.
There's also national insurance at 12% of earnings over £680/month (money from this tax is used to fund state pensions and unemployment benefits).
My effective tax rate in San Francisco with a salary 4x what I was making in London is 36%.
Rent is comparable, with bigger appartments in San Francisco, buying is comparable. Quality food is more expensive in SF, other goods (electronics/clothing/etc.) is more expensive everywhere in Europe. Quality of life depends on wether you like the outdoors (SF), want a car (SF), or prefer city activities and/or dislike driving (London). London is also great if you like to travel, specially throughout Europe. The West Coast is particularly far from almost everywhere and there's a distinct lack of cheap airlines. From London you can have a $20 weekend getaway to, say, Prague. Admitedly, you do travel like cattle, but it is cheap.
In the US, besides what you're taxed, you must add all other fees that get added to almost anything you'll want to do, from healthcare to going out (the famous tipping), going through bank transfers (they're free throughout Europe, regulated markets, they charge you whatever the bank wants to in the US, only reliable way to transfer money here is to send cheques).
Overall, myself and my wife like it here, have made some great friends and don't really want to go (wouldn't cry for too long if we had to). We can save a ton of money because we have two incomes and weren't looking for the "2.5 kids house with garage for two cars and white picket fence", so we got a deal on both appartment ("small" for american standards, twice as big as our flat in London for roughly the same ammonut before the pound plummeted) and our car ("tiny" for american standards and manual transmission, it cost less than the anual insurance).
Every place is great to visit, every single place has things you'll complain about when you move there. Honestly, the thing that worries me is political, from the madman in power to the old lady that screamed at me and a bunch of other techies that "Trump won now so y'all will have to go back, I'm getting my city back." I didn't see the fallout from Brexit, but from my friends over there it is not as bad as here, but objectively bad regardless...
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.
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.
I can only suspect you don’t own property that you rent out. Tenants of just one flat, if demanding and complaining enough, can easily burden a landlord beyond any extent he considers acceptable. Any landlord whose portfolio extends into the dozens of properties will almost certainly have contracted all the actual work out to an agency with its own staff of multiple people.
That would be lovely, but I think salary is related to what the employee can get away with paying the employee, regardless of the "real" value. It's not a totally churlish example to point out how little good mothers get paid by the state for their value of their work.
There might be a similar reconsideration of how living expenses are reached.
All while living in various rent-controlled apartments in Montreal, where even people who are working modest jobs get to live happy lives.
The article is pretty accurate - a single earner providing for a family and renting in London will not find it easy if they're earning less than 90k (much over the average). On the plus side, once the children are school age, costs go down, and it becomes more possible to be a 2 income family again. You can think of it as 3 years of difficulty but then it'll get bearable again.
I think it's a loss when women leave the workforce after having a baby. (Or, that they have to)
We were paying £1300 per month to get 2 days per week for our kids at one point. As you can imagine, working just 2 days a week it's hard to make that back. And of course, you're paying out from income you've already been taxed on.
The ratio is pretty high - like 1:3 or something. Then they need to pay for the space. Our kids went to various nurseries over the years - some better than others. The best have kitchens where they cook locally sourced produce. There's a premium for that, but honestly it's not much cheaper for ones where the service / childcare standards aren't as high. Demand is high too. We were in an area with a really high birth rate (and relatively affluent families). It was a bit of a fight to even get spaces.
Folks prefer to live centrally to minimise their tube-time, although it's always been a mystery to me as to why virtually nobody lives in the City, apart from classic chickens and eggs arguments re: services (it's a graveyard at night and weekend).
There is no cheap within an hour of the city. There is no space within an hour of the city - just endless very expensive suburbia.
For example a season ticket from St Albans, a 25-30 minute or so train ride into the city costs £400+ a month
And they wonder why the traffic is shit on the westway.
Similar problem in Toronto Canada... lots of people start out their careers in the city, then leave with their experience to outerlying areas with more realistic real estate (health care IT).
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.
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).
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.
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.
Apologies for sentence structure and formatting, this post impulsively written on my phone.
If you move further out then expect to pay as much as 5000£ per year to commute.
Umm, that's pretty cheap for a commuting train pass in London! It's usually way more. Double that at least.
Thats very subjective. No easy access to mountains and proper outdoor sports. Not very friendly people. British weather. Much of your time is spent on the underground. So it really depends on what you value in life. (Personally I am not a fan of London).
Moving to a rural area, or even farther out into the suburbs, would absolutely help OP's financial situation out. Hopefully he can find a new job or work remotely. Or, if he wants to stay in London, he'll realize the value of things he would miss.
Transport back to town is effing expensive - the 15 minute ride to Wimbledon where I work is about £9 per day. Public transport is rubbish. I cycle the 30 minutes to the nearest train station but on the occasions where my bike is out of action using local transport is only just feasible. For that reason almost everyone here has 2 cars. In London you don't even need a car, let alone 2.
Two of my friends live in Texas, in moderately large houses; they're justifiably proud of them, but all I see is a huge expanse of wasted space, a lawn to upkeep, and nothing (except neighbors) to walk to. Meanwhile, they look at my life and see a tiny cramped apartment where our baby has to sleep in our bedroom, and a commute that's twice as long as theirs standing shoulder-to-shoulder with people.
There's nothing wrong with the weather in Britain. It's got more character than the relentless bland sun of somewhere like California.
Here a screenshot of a comparison I did some time ago to motivate ourselves to leave london: http://imgur.com/7tdwCoD
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.
Huh? Do you really get 'bad' public schools?
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.
In Geneva, where I live, the mediab age of the first childbirth is 35.
Fifty years ago it was common to have children around eighteen, thirty years ago it was common to have children around twenty five, and now it feels like thirty five is the normal.
This begs the question whether children will be possible before forty five within twenty years, and at that age bearing children becomes a major risk.
Women in large Chinese cities are already feeling unable to balance the pressure of a career and parenthood, opting to not have children at all, or having them very late into adulthood.
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?
Denver Austin Salt lake
Just to name a few
But I might be mistaken, so any comment would be appreciated.
The most interesting bit of NHR (from a tech expat working remotely PoV) is the tax free foreign income. Providing your clients are not in Portugal (so you don't brush up against CFC rules) there's nothing wrong with incorporating your consultancy in the UK or Malta and then paying yourself in dividends.
Jokes aside, I hope this problem finds a solution real soon, there are a whole bunch of hard working people that are farther and farther of living near where they work.
[1] https://www.numbeo.com/property-investment/rankings.jsp
http://www.rightmove.co.uk/property-to-rent/find.html?search...
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.
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.
I'm self employed, work from home and I don't have a child yet - which makes it a lot easier to move.
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.