London rents now a 'major risk' to UK economy

With record high rents in London outstripping wages in every borough and a chronic shortage of new affordable homes being developed, vital workers are being forced out of the city, according to a report by housing charity Peabody and the CBI.

The research carried out by the independent Centre for Economics and Business Research (CEBR) found that Londoners living in social housing contributed at least £15bn to the capital’s economy in 2015 alone, but the sharp rise in rents creates a real risk of damaging the economy in the capital.

The report finds that a salary of £59,000 – almost double the average wage – is needed to afford the rent on a home in inner London.

Businesses of all sizes and sectors have made it clear that both housing cost and availability is negatively impacting on their ability to recruit and retain staff.

“London is gambling with its future if the city becomes too expensive to house nurses, paramedics, construction workers or many other lower- and middle-income occupations,” said Lord Kerslake, Chair of Peabody. “Without genuinely affordable housing our great city will cease to function. Businesses will be worse off and the economy will slow down.”

The report clearly demonstrates that there is an urgent need to build more affordable housing to help ensure and maintain the capital’s social and economic success.

James Murray, deputy mayor for housing and residential development, said: “We need to build more affordable homes of all sorts, including social housing to support hundreds of thousands of working Londoners, without whom our vital services would grind to a halt.”

Now more than ever, in light of the decision to leave the EU, London desperately needs a housing strategy to build 50,000 homes a year to enable the city to continue to be a magnet for talented workers, according to Lucy Haynes, CBI London director.

She commented: “Whether it’s the strength of the capital’s professional services sector or our ability to adapt to an ever-changing digital landscape, it’s clear that London is an international trailblazer.

“Yet, the capital does have an Achilles heel – affordable housing. Many of those who, quite literally, keep London running day in and day out are finding it too expensive to live in the city in which they earn their livelihood. For our emergency servicemen and women, young professionals, and low earners, from security staff and cleaners, to postal workers and waiters, we cannot simply carry on as before.”

Haynes insists that without the 50,000 new homes needed, London and its economy will lose out to its international competitors, “who are already snapping at our heels.”

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