Why Living in London has Become Impossible

This is London. At first glance, it seems like one of the best places to live in the world. In a city of 9 million people, over 200,000 are millionaires. It's one of the world's top finance centres and has more private jet traffic than anywhere else in Europe. But what was once heart of a global empire has undergone a dramatic shift. Today, more than 1 in 4 people in the city live in poverty, and homelessness is 8 times the national average. It's easy to see why people are being pushed onto the streets. In 2017, the median rent was around £1,500 a month. Today, for a new tenancy, you're looking at over £2,700. An 80% increase in just 8 years. And in the midst of one of the biggest property crises in the city's history, nearly 45% of all property purchases in central London are made by foreign buyers. For many young people in the UK, London was the dream. The capital brings promises of lucrative jobs, opportunity, and a better life that in the past has drawn millions to the capital. But many of the perks of being in the city are now drying up. Jobs are harder to get than before, and the ones that you do land don't pay as much as they used to. Despite having a very wealthy population, the actual standard of living in London is far worse than it looks. After housing costs, high-earning Londoners rank in the bottom 5% for the UK in spending power, and wages adjusted for inflation haven't risen since 2008. You earn more, but live worse. Desperate times call for desperate measures, and last year, shoplifting in the capital surged by 35.5%, the highest increase of any type of crime. Across London, it's not uncommon to see things like this. Basic products, like meat and cleaning items, locked up in plastic boxes to prevent theft. London is not all bad. Some people still live decent lives. But it's a shadow of its former self, and to many, represents the general decline Britain has been experiencing. So how did it come to this? This is how life in one of the world's richest cities became impossible for almost everyone. On average, Londoners spend 46% of their income on housing, 50% more than the rest of the UK. In fact, 1 in 4 Londoners are considering leaving the city in the next year because of high rents. So how did the situation get this bad? Funnily enough, much of London's current housing issues stem from a seemingly inconsequential decision made nearly 100 years ago. In the 1930s, the average house price in London was £500, three times the average income. The housing crisis didn't exist. Back then, the concern wasn't whether enough houses were being built, but the unstoppable growth of cities into the countryside. So the government decided to contain London's growth. The idea was simple. Protect the countryside, preserve the air quality, and stop cities from using up rural land by drawing a boundary around the city, a greenbelt. Local authorities were allowed to purchase land around the capital to be protected from house building. The aim? Preserve nature and keep city life breathable. And for a while, it worked. Large areas of countryside remain untouched today, despite huge demand for a million homes in the capital. But this policy came with unintended consequences in the long term. Today, three times the land area of Greater London is protected. And all this means that there is very little land which people can actually build on. Typically, where 52,000 houses are needed each year, London has only been building 30,000, meaning 1.1 million are now needed to bring London up to the European average of houses per person. But planning restrictions are only part of the story. Back in the 1960s, it wasn't just family homes that were cheap. The city had huge amounts of government-owned social housing. At this point, one in three houses in the UK were publicly owned, following an explosion of house building after World War II. This kept house prices low, as there was a high supply of housing and fewer families looking to buy in the private market, meaning less competition for houses. But this all began to radically change in the 1980s, when Margaret Thatcher was elected. The 1980 Housing Act introduced the now-famous right-to-buy scheme, giving millions of council tenants the chance to purchase their homes at discounts of up to 70%. In many ways, it was a massive success. Home ownership in London soared from 55% in 1980 to 67% in 2003, and over 316,000 homes were sold in the city. For many families, it was a life-changing opportunity. But there was also a catch. Councils weren't allowed to reinvest the money from the sales into building more housing. What followed was decades of decline of the UK's public housing stock, resulting in a record 330,000 households on the waiting list for social housing in London today, and 180,000 people in temporary accommodation. The safety net was sold off, but never replaced, and the long-term effects of this policy are now being felt harder than ever. Houses in London used to cost eight times the average salary in 2005, but that figure has risen to 14 times today. One of the largest issues, not just in London, but across the whole of the UK at the moment, is immigration. But it's really hard to know what's true and what isn't, especially as different sources in the UK have very different narratives. That's why I use Ground News. It's the only platform that shows you how different media outlets report on the same event. You can compare headlines from across the political spectrum, left, right, and centre, and see who's spinning what and why. Take this story about immigration in the US. The left-leaning source says that Trump wanted children to be deported by night and fog, highlighting the illegal nature, while this right-wing source calls the judge a far-left imperial and mentions the Biden regime. Same story, two completely different framings. Their blind spot feature is also especially useful, as it shows you which stories are being ignored by one side of the media, so you don't just see what your usual sources want you to see. If you care about cutting through the noise, scan the QR code or head to ground.news forward slash invisible to get 40% off the vantage plan. That's what I use to stay genuinely informed. Link in the description. Now, let's get back to the video. This is obviously unsustainable, but what you might not expect is there's actually nearly 100,000 unoccupied homes in the capital, all left empty while demand soars. That might sound hard to believe given how many people want to move to the city, but to understand why this happens, we first need to understand how the housing market is different to almost any other good. The problem is that houses are bought to live in, but also as safe investments for the wealthy, so there is often more demand for houses than need. In recent years, the increasing house prices in London have made the city one of the world's most attractive places to invest in real estate. And for that fact, the prices in central London have increased by 46% in the past decade, meaning investors expect to make a high profit. The result? Most of the people buying homes in the city aren't actually interested in living in London. In 2023 alone, an enormous 45% of central London property sales were made by foreign buyers. Foreign investment, of course, comes with some economic benefits, but for the locals trying to live in London, it's a disaster. Studies have found that without foreign investment, average prices would have dropped from 215,000 to 174,000, a 19% difference. And Londoners are left paying for these investments. Unfortunately, it's not just the city's housing market that has been sold to the highest bidder. Many aspects of daily life have also faced a similar fate. A policy experiment with London's water supply in 1989 is now seen as a huge failure. Privatising public utility companies can often lead to the companies prioritising short-term profit over the quality of service and long-term investment, which is vital for water systems. And Thames Water, which supplies all the water for the city, was given to a private company in 1989. Unfortunately, upgrading the city's infrastructure usually doesn't make profit for investors, so it didn't happen, and now their infrastructure is broken. Since 2022, Thames Water has failed to complete 100 infrastructure upgrades to reduce sewage spills, which often happen after heavy rainfall. At the same time, since 1990, they have paid out over $7 billion in dividends to investors, financed by increasing company debts rather than profits. And that debt has now risen to £18 billion, which is roughly 80% of the value of the company itself. Thames Water is now on the brink of collapse. But the result of this catastrophe? Water bills in London are expected to rise by 31% this year, the biggest increase since water was privatised in the 1980s. And regular Londoners are being forced to rescue a failing company which has just announced a new aim to pay out an extra £2 billion to shareholders. To be fair, it's not just privatisation that has been making things more expensive. Prices across the board have risen by 35% in just 4 years, driven by fuel, housing costs, and post-pandemic inflation. Not counting fuel and housing, prices for everyday goods have risen by 25%. For many people, this is simply unaffordable. Take energy bills. Before the pandemic, the average household paid around £1,000 a year. Today, it's £1,700. On top of London has an older housing stock than the rest of the population, so even without these price rises, average energy bills in the city are usually 20-30% higher than the rest of the UK. Of course, with everything becoming more expensive, the government inevitably needs to spend more anyway. But underinvestment since 2008 during the Conservative government's austerity programme has brought the country's public services to breaking point. To put this into perspective, public service debt has risen from £500 billion in 2008 to £2.8 trillion this year. On top of the UK's ageing population, this means Britain's NHS is costing more than ever before, at an extra £100 billion per year than in 2008. And it's not just the NHS. London councils face a £17 billion road maintenance backlog, and 1 in 6 students study in a school which needs major work. The money has to come from somewhere, and so council tax has nearly tripled in some London boroughs since the 1990s, and Britain as a whole is facing the highest tax burden since World War II, at 34% of GDP. Politically, the easiest way to increase income tax is to freeze the threshold of each tax bracket. What this means is that when wages increase with inflation, people are pushed into higher tax brackets, despite not being able to actually buy more with higher wages. Because Londoners earn 30-40% more than people across the rest of the country, they pay higher amounts of income tax, even though higher wages are swallowed up on housing. So Londoners are again paying disproportionately more than the rest of the UK, and these worse living standards have consequences. People become desperate. Research suggests that a 10% increase in the cost of living increases crime by 8%, and Londoners had clearly felt this effect. The city's overall crime rate had increased by 25% just last year, and the situation is even worse when you look at shoplifting, which rose by 35%. But the most common crimes? Violent and sexual offences. And so living in London today means being at serious risk just for leaving your expensive house, which is made more difficult when 50% of Londoners admit to not trusting the city's police force. But it isn't only crime which affects the quality of life. When you think life in London is expensive enough, the costs of just getting around have spiralled. Since 2019, most cars that don't meet environmental standards must pay £12.50 a day to drive into Greater London under the Ultra Low Emission Zone scheme. In the city centre, it's £15 a day for congestion charge. There are of course perfectly valid reasons for this. The environmental and public health benefits are huge, and nitrous pollution has fallen by 54% in central London. But that comes at a cost of over £500 a month just to drive to work, costs that disproportionately hit working class Londoners who can't afford newer cars or alternative forms of transport. To make matters worse, real wages have actually fallen in the last 20 years, and the UK's productivity has stolen since the financial crisis, as wages haven't been able to keep up with other countries. Adjusted for inflation, the average Londoner is earning around 5% less today than in 2008, while other OECD countries have seen incomes grown by around 9%. If wages had continued rising at pre-2008 levels, Londoners would be earning £11,000 more per year. Instead, they now have the highest employment rate in the UK, at 6%. And among young people, nearly 1 in 5 are out of work or education. Unfortunately, it's changing the way people live, and who can afford to live in London at all? Middle class Londoners are increasingly being pushed out. They can't afford to stay, and are being forced into commuter towns beyond the green belt. This is part of the reason why London now has the longest average commute in the UK at 81 minutes. People are far from their support networks and feel more isolated, so much so that half of all Londoners have reported feeling lonely. And all of this financial stress is making people more anxious about the future. Around a third of all people living in London now say it's a good time to save, the highest number since 2007, which means less money spent on restaurants, leisure or entertainment, and a much lower sense of life satisfaction. Then there's public transport itself. Despite the soaring cost of living, London has one of the most expensive public transport systems in the world, being around 1.5 to 2 times more expensive than similar world cities. And only 40% of trains have air conditioning, with summer temperatures regularly exceeding 30 degrees Celsius on the underground. Air quality is even worse, and levels of 2.5 of pollution caused by the grinding of metal wheels can be 15 times higher than at street level, making the tube one of the most polluted environments in the city, with some underground carriages that haven't been updated since 1972. Unfortunately, when we look across many public services in the UK, especially in the capital, a similar picture starts to emerge. They've been underinvested in, and now we're paying the price. Hammersmith Bridge, a key river crossing, has been closed since 2019 due to safety concerns, and might not reopen until 2035, with repair costs spiralling to 250 million pounds. And across the city, 200 out of the 500 bridges are currently rated poor or in very poor condition. In a city of this size, in one of the richest countries in the world, that should be unthinkable, but for millions of Londoners, it's simply everyday life. The bottom line is, London has become a city for the rich. So the question is, can anything be done to fix it? The answer comes with one word. Supply. By building more affordable homes, the government could reduce demand, ease prices, and make it possible for more people, not just the wealthy, to live there. And some of this could come from reforming the greenbelt. If just 1% of it were made available for development, it would create 140,000 new homes, without sacrificing the natural beauty the policy was designed to protect. But there are other, less controversial options too. London is full of brownfield sites, old industrial plots that sit empty and underused. If fully developed, they could provide over 400,000 homes, helping to meet housing demand without eating into green space. Or maybe the government could make it harder to buy homes without living in them, by increasing tax on empty properties. They could also step in to expand the housing stock, not just by building, but by purchasing existing homes and renting them affordably onto those on lower incomes. Perhaps one of the most poignant and cutting issues is that of foreign investment. London's property market has become a magnet for global capital. But without guardrails, it's hurting those who actually live and work there. The government could step in with targeted policies. For example, progressive taxes on empty homes, or higher taxes on expensive properties, purchased by non-residents. Some things are starting to change. The Mayor of London has already announced air conditioning, which will be installed on the Piccadilly line. But the city needs to find a way to lower fares. And it also needs faster links to commuter towns, so that living further out doesn't mean sacrificing hours each day. The outlook is currently bleak, but there is certainly room for change. London is one of the most economically productive cities in the world, contributing over £500 billion to the UK economy every single year. But without access to affordable housing, efficient infrastructure, and a stable cost of living, its long-term competitiveness is at risk. And policy responses so far have not been enough. At this point, it's not just a question of whether London's housing crisis is sustainable. It's just a matter of time to see whether the government is willing and able to intervene and stabilise it.