London Daily

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Thursday, Mar 30, 2023

Is it only the inheritocracy who can afford to live in London now?

Is it only the inheritocracy who can afford to live in London now?

With the average deposit amount reaching almost £150,000, it’s beginning to feel like only the wealthy can afford to buy in London — and it’s creating a brain drain as more talented people are forced out of the capital, says Alexandra Jones

Unless your parents can give you money for a deposit, it feels like it doesn’t matter how much you earn, you’re basically priced out of London,” says 31-year-old art director Chloe Sharp. In 2021 she moved out of London, to Cambridge, where she now lives.

Before the move she had spent a happy decade renting in the capital and assumed the city would be her home forever; she and her partner, a geography teacher, had even briefly considered buying in Walthamstow, but then fell pregnant. “It was quite soul-destroying to sit down with a broker and work out what we could afford,” she says. Despite years of putting money aside, they had nowhere near enough deposit saved for a place that would be big enough for them plus a baby. “I just felt defeated,” she says. “It made me wonder, like, ‘who is this city even for?’ I was earning more money than at any other point in my career and my partner was doing really well too. We’d been sensible with savings, I thought we were pretty well off. It’s crazy, what this housing market has become. It feels like the only way you can settle in London is if you come from wealth.”

It’s a story that’s all too familiar in a city where the average property price is now £667,600 and where, last year, the average first-time buyer had a deposit of just under £150,000. As Sharp found, saving that amount amid record-high rental prices and now a cost-of- living crisis is a close to impossible task for even those who are on above-average salaries — which is why more than half of all first-time buyers in 2022 were forced to rely on their parents to fund their purchase.

It’s a statistic which paints a picture of a housing market stacked heavily in favour of a small, affluent subset of our society. And it has led many to argue that London’s housing market has become an inheritocracy — where only those who can draw on generational wealth can afford to buy. Now exclusive data from Savill’s shows that much like Sharp, those who can’t rely on “the bank of mum and dad” are looking beyond the M25; in fact, 36 per cent of all first-timers who were moving from a London address in January left the capital altogether — the highest figure since at least 2012.

It’s a growing disaster for a city with a long history of nurturing the young and hard-working, creating a ‘brain drain’ situation where all but the wealthiest are forced to take their skills and talent to cities where they feel they can build stable lives. And as long as people are unable to settle, an imbalance of power is created, which reinforces class and economic inequalities.

Chloe Sharp

For 34-year-old Rosalind Smith, the ripple effect of the inheritocracy is clear. “Even if people don’t mind living in an expensive rental in their 20s,” she says, “eventually we all want to lay down roots. If you can’t do that in London, why bother staying?” This, she points out, means many people are forced out of the capital before they can climb to positions of real influence in their careers. “So it’s not just about housing, it becomes a question of who ends up in the positions of power.”

In London, most professions — the media, arts, banking, the list is almost endless — are already dominated by the generationally rich and privately educated. “I can see how the housing crisis will only make this kind of inequality more pronounced,” says Smith, who left a career in politics when she left London before the pandemic. For her, it seemed like an either/ or situation — either stick with her career or leave and be able to buy a home. In the end she wanted a home. “If living in London had been more affordable, I would have stayed in politics longer,” she says. The shift in trajectory was the right thing for her personally but “within the London political bubble, while I came across lots of people who, like me, didn’t come from money I really don’t know how many of them actually progressed onto bigger roles. And I can’t help but think that has an impact on how our society is run.”

James Chandler, 35, works in tech sales. He’s candid about the fact that he “got very lucky” with his housing situation. Despite earning well above the London average, he could still only buy his first flat in Wandsworth with help from his parents. Since then, he’s seen his personal wealth grow. “The housing market went crazy, and I was able to make a big profit on that flat,” he says. “It’s a really unfair system in London — and I look at some friends who were earning as well as I did, but had to move to other countries in order to save the necessary deposit. Other friends have ended up pooling funds and buying as a couple only to split later because they realised they’d rushed into it just to have somewhere stable to live.”

The effect that leaving London will have on her career is the thing that makes Sharp most angry. Her current company allows her to work from home three days a week, making commuter-belt living manageable for now — but progressing to other roles in other companies would, she argues, be infinitely more difficult. “Design is such a small industry and most high-profile roles are in the capital,” she says. “I know I’ll never be able to go back to working five days a week in a London office, or even four days — it’s unrealistic for me now and I know this will hold me back. I’m an ambitious person and for the first time in my career, I feel like I need to start lowering my expectations for myself.” In the meantime, those who can afford to stay in the city will continue to rise to the top. “Everyone’s been talking about nepotism recently,” she says, “I think we’re all more aware of inequality and the importance of representation, but until we fix this system, where only the wealthiest can afford to live in the capital, I don’t see how any of the other issues will really change.”

Over the past decade, factors including cheap borrowing and a shortage of good housing, as well as the £29 billion Help to Buy scheme (which according to a House of Lords report pushed up house prices, particularly in the capital), have created a hostile environment for would-be first-time buyers. And as talented young people from working and middle-class backgrounds are driven out, social mobility becomes little more than a pipedream. The one positive for Sharp is that as people leave, more of the quality jobs will appear outside the capital. “But obviously, that’s London’s loss.”


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