Active discussions

Meet the Other Phone. Child-safe in minutes.

Meet the Other Phone.
Child-safe in minutes.

Buy now

Please or to access all these features

Talk
Property/DIY

Join our Property forum for renovation, DIY, and house selling advice.

Original poster

Is the London dream unaffordable for young people?

119 replies

fenika · 21/12/2023 21:58

Other than London being an exciting place to live for culture, fun, experiences, and the like, it is now completely unaffordable.

We are from a working class family in the north. My brother was a complete swot at school and got a place at Cambridge. He became an accountant in the City of London where he met his wife. They worked their way up in corporate careers and built a huge amount of money in property. They are now retired at 50 and live very very comfortable lives.

My dd went to the same state comp, won her place at Oxford to study economics and is now working in finance. Her boyfriend is also in finance. Between them they earn in the top 1-2% of the UK. Despite this, even if they continue in the long term in their careers, they won’t be able to afford much more than a 2 bedroom flat in a nice area. They work just as if not harder in their careers.

Is the dream of moving to London to move up in the world a dead dream?

OP posts:
TedMullins · 22/12/2023 18:17

Eigen · 22/12/2023 17:15

I think the crucial differentiators are going to be a) when did you buy your house and b) do you pay for childcare and c) do you pay a student loan.

If you’re 10/15 years into a mortgage and your children are at school, that’s a very different proposition to someone paying a mortgage on a house bought post-2020 and paying for daycare (also someone with a student loan on 100k will be paying something like £700 a month). I’m not saying it can’t be done, but it’s going to be much harder. I think this is where the under 30s HENRYs and the older generation don’t really understand each other. Maybe you’ve managed to do all of these things in the last 5 years without family help in which case kudos to you.

Aside, I also don’t buy this ‘just buy a two bed starter flat’ because that’s no longer good advice. Leaseholds are so punitive; when we looked at buying the flat we were renting in some years ago (call it 450k) there was a £300 a month service charge for not very much benefit at all, and it still had huge cladding issues that were unresolved for years, and in the end the management company ran off with the million pound slush fund. At that point we knew that only freehold was worth going for, and that means spending at least 600k in our area (zone 3 in a place that most West London people still think is too dangerous to raise children in) for a 2 bed house. Houses round us were going for 200k 10 years ago.

Show quote history

Sorry to disappoint but I did indeed do it without any family help - bought a flat entirely alone in 2021 while earning 45k. It was very cheap by London standards and (I’ve checked) many, many flats exist round here for under 250k right now. In my area you can find a 3 bed terrace for under 500k still. If by “unaffordable” people mean “I can’t get my dream detached in Primrose Hill” they need to lower their expectations significantly. I agree some leasehold terms can be punitive but not all - you need to find these out before you commit to buying. My flat is leasehold but it’s got over 160 years left and doesn’t cost £300 per month in service charges. To answer your other question though no I don’t pay childcare (no kids, yes I accept this makes a big difference, but don’t think OP’s £100k earning daughter has kids either) and no student loan as I dropped out of uni.

TedMullins · 22/12/2023 18:18

Eigen · 22/12/2023 17:15

I think the crucial differentiators are going to be a) when did you buy your house and b) do you pay for childcare and c) do you pay a student loan.

If you’re 10/15 years into a mortgage and your children are at school, that’s a very different proposition to someone paying a mortgage on a house bought post-2020 and paying for daycare (also someone with a student loan on 100k will be paying something like £700 a month). I’m not saying it can’t be done, but it’s going to be much harder. I think this is where the under 30s HENRYs and the older generation don’t really understand each other. Maybe you’ve managed to do all of these things in the last 5 years without family help in which case kudos to you.

Aside, I also don’t buy this ‘just buy a two bed starter flat’ because that’s no longer good advice. Leaseholds are so punitive; when we looked at buying the flat we were renting in some years ago (call it 450k) there was a £300 a month service charge for not very much benefit at all, and it still had huge cladding issues that were unresolved for years, and in the end the management company ran off with the million pound slush fund. At that point we knew that only freehold was worth going for, and that means spending at least 600k in our area (zone 3 in a place that most West London people still think is too dangerous to raise children in) for a 2 bed house. Houses round us were going for 200k 10 years ago.

Show quote history

Sorry to disappoint but I did indeed do it without any family help - bought a flat entirely alone in 2021 while earning 45k. It was very cheap by London standards and (I’ve checked) many, many flats exist round here for under 250k right now. In my area you can find a 3 bed terrace for under 500k still. If by “unaffordable” people mean “I can’t get my dream detached in Primrose Hill” they need to lower their expectations significantly. I agree some leasehold terms can be punitive but not all - you need to find these out before you commit to buying. My flat is leasehold but it’s got over 160 years left and doesn’t cost £300 per month in service charges. To answer your other question though no I don’t pay childcare (no kids, yes I accept this makes a big difference, but don’t think OP’s £100k earning daughter has kids either) and no student loan as I dropped out of uni.

Almahart · 22/12/2023 18:34

Your brother will have benefited from circumstances very specific to that generation. Property prices were historically very low in the 1990s, so it would have been relatively easy to build up a property portfolio. I don't think YANBU in that regard, that ship has long sailed. But your DD and partner will be able to build a good life in London, just not to the same extent.

Torganer · 22/12/2023 18:36

Our company employ lots of grads. They’re starting salary depending on sector but no more than £35k. They all live in London and are having a blast.

Eigen · 22/12/2023 18:47

BrimfulOfMash · 22/12/2023 17:33

On what planet is moving to Zone 3 or 4 a definition of it being ‘very hard’ to get on the property ladder? Millions of Londoners live happily in these zones, with good train links etc.

It is right that people need to be very wary of leasehold properties, but a conversion or v small block with shared freehold and freeholders being directors of the mgt co can be a good model, especially if the mgt co has string rules in place. Not all leaseholds are a nightmare. Avoid anything with cladding, a lift, etc.

I agree with you, but try telling that to people who think that anything outside of zone 2 is the wasteland 🤣

Re your point about leaseholds - a friend had her freeholder try to block the sale of her flat(Victorian conversion) by withholding some section whatever from the solicitors unless she transferred 10k into his bank account. Just because he was a greedy scamming sod. There’s no way you can foresee crap like that. Actually in our old rental block, it was below the height limit for cladding replacement and therefore exempt. However, leaseholders still weren’t able to sell their flats because lenders were just straight up refusing to lend and the management company weren’t engaging at all. Then there’s my boss who has share of freehold and it’s just constant aggro and disagreements within the RA and if you haven’t got a good chair or people won’t pay up then you are stuffed. I’ve seen it happen too many times not to avoid it with a barge pole.

secular37 · 22/12/2023 18:55

TedMullins · 22/12/2023 00:42

What are you on about? If they earn 6 figures each they can absolutely afford a flat in a decent area or a house in zone 4. So it’s not unaffordable for them is it? It’s unaffordable for people on an average or below salary, like the millions of essential workers in London.

...

Exactly. They earn good figures. A 2 bed flat is reasonable for couples without children. Usually couples share the bed!

Echobelly · 22/12/2023 19:00

@lorien9 - don't assume 3.5x earnings mortgage under current rules. DH and I could only get 2.5 on a good 6-figure household earnings.

It feels like we were only able to afford a family home in London because we had two properties to sell. Otherwise we'd have to be looking at commuter belt.

Don't know how my kids are going to live in London, I don't think either will go for a megabucks career, nor do I think they should have to and I can't see how DH and I will turn up the 100k+ each they'd probably need as a deposit if not earning way over national average to buy somewhere even now, let alone in 10+ years time.

Eigen · 22/12/2023 19:06

TedMullins · 22/12/2023 18:18

Sorry to disappoint but I did indeed do it without any family help - bought a flat entirely alone in 2021 while earning 45k. It was very cheap by London standards and (I’ve checked) many, many flats exist round here for under 250k right now. In my area you can find a 3 bed terrace for under 500k still. If by “unaffordable” people mean “I can’t get my dream detached in Primrose Hill” they need to lower their expectations significantly. I agree some leasehold terms can be punitive but not all - you need to find these out before you commit to buying. My flat is leasehold but it’s got over 160 years left and doesn’t cost £300 per month in service charges. To answer your other question though no I don’t pay childcare (no kids, yes I accept this makes a big difference, but don’t think OP’s £100k earning daughter has kids either) and no student loan as I dropped out of uni.

Show quote history

I actually genuinely wasn’t being snarky, more just that I see people saying ‘well I’m ok on this salary’ when circumstances vary wildly. Congrats on your flat. I guess it took you about 10 years of renting to save for a deposit?

Rents have gone crazy since we bought though, I don’t envy current young people in their situation.

Bahhambug · 22/12/2023 19:14

This reply has been deleted

This has been deleted by MNHQ for breaking our Talk Guidelines.

KnowThyself · 22/12/2023 19:19

I think what the op is saying is that her brother and his wife have ended up very wealthy because they bought up various properties and could retire early. Her child is in the same sort of arena but though they can afford to buy they will not become as wealthy ever. In fact people like the posters brother owning multiple properties as investments has contributed to the London mega bubble.

DH and I are on decent salaries, DS and his GF will end up on comparable ones, not top 1 to 2%, more like 10%. Our standard of living was much easier to attain for us and our plan to retire early. Average house was x3 annual salary when we bought now it’s close to x9 times annual salary. The house next door sold at an increase of 400% two years ago over the 23 years.

Ilovemyshed · 22/12/2023 19:19

fenika · 21/12/2023 21:58

Other than London being an exciting place to live for culture, fun, experiences, and the like, it is now completely unaffordable.

We are from a working class family in the north. My brother was a complete swot at school and got a place at Cambridge. He became an accountant in the City of London where he met his wife. They worked their way up in corporate careers and built a huge amount of money in property. They are now retired at 50 and live very very comfortable lives.

My dd went to the same state comp, won her place at Oxford to study economics and is now working in finance. Her boyfriend is also in finance. Between them they earn in the top 1-2% of the UK. Despite this, even if they continue in the long term in their careers, they won’t be able to afford much more than a 2 bedroom flat in a nice area. They work just as if not harder in their careers.

Is the dream of moving to London to move up in the world a dead dream?

I very much doubt top 1-2 %. That would actually be millions not thousands.

literaryloveaffair · 22/12/2023 19:25

We bought a two bed flat in 2019 on combined income of 76k at 27 and 29. Earn much more now and we're lucky to live at home for 3 years but a couple in the top 10 % to 20% of incomes (nationwide) should be able to afford it. We bought at the same age as my MIL who bought her 1 bed flat in 1989 and would be able to afford her 3 bed home (valued at 600 k in unfashionable z3 location) which she bought at age 34 (now 31 and 33).

The difference is I think we earn significantly more than MIL even in real terms.

Eigen · 22/12/2023 19:28

BrimfulOfMash · 22/12/2023 01:36

they won’t be able to afford much more than a 2 bedroom flat in a nice area.

And what is wrong with a 2 bed flat in a nice area?

Many if us live very happily in areas not considered ‘nice’ but have the transport we need, often a good sense of community and are amongst others in the same boat.

My nephew is in LA admin in, a DP in retail, neither on big salaries, both under 30, they have saved hard and have a sizeable deposit and are buying a nice 2 bed terrace for under £400k. In an area with excellent fast train connections, Zone 3, the sort of place where ordinary Londoners live their lives but is often mentioned in times of horror by MNers.

If you are SE I might also live there haha!

TedMullins · 22/12/2023 19:29

Eigen · 22/12/2023 19:06

I actually genuinely wasn’t being snarky, more just that I see people saying ‘well I’m ok on this salary’ when circumstances vary wildly. Congrats on your flat. I guess it took you about 10 years of renting to save for a deposit?

Rents have gone crazy since we bought though, I don’t envy current young people in their situation.

Show quote history

Fair, sorry you never know what’s intended with snark or not when it’s in writing. Yep, 10 years of renting and I managed never to pay over £650 inc. bills in a shared house (only time I did was when I rented a flat to myself in Tooting/mitcham on the border for £950 a month). That was only in 2019 and rents have gone bonkers since then. Some people in my extended circle really didn’t help themselves by being so picky though like refusing to live anywhere except Hackney or Clapham and wanting a newly refurbished house with an en-suite while renting, or having a huge deposit and big salary but claiming they can’t afford to buy ANYTHING but only looking within 1 square mile of Islington. It’s those people I have no sympathy for!

Fretfulmum · 23/12/2023 23:11

They will be able to afford it. But what has changed is moving up the ladder. The days of buying a starter flat in London then moving to a terrace in Zone 3/4 then the commuter belt, all by using equity building up is long gone. Flats in London haven’t increased in price since 2016 but houses have significantly increased so either they should buy a house or they rent. I wouldn’t touch London flats now, especially with the cladding and leasehold issues. The house they will want to buy in the future will have increased far more than the flat

alrighthen · 23/12/2023 23:43

That’s a great salary and yes, it’s totally possible! I bought a four bed house in london back in 2020 in a family friendly but not very ‘cool’ part of zone 4. I earn less than your daughter and had no inheritance or ‘help’. I think it’s still totally possible to lay roots in London but we do tend to be older buyers and need to be quite a bit scrappier to get there! All my friends now have houses but it happened closer to 40 than 30 for those of our without trust funds (boohoo us!) Like me, most people I know had their first babies in tiny one beds in central London then moved out. This was always the way really - even for Gen X or boomers.

It must be incredibly tough as a key worker or low paid contractor and I feel for them. But your daughter should be fine.

Morrisons01 · 24/12/2023 02:04

Its certainly out of my price range,

literaryloveaffair · 24/12/2023 05:22

Fretfulmum · 23/12/2023 23:11

They will be able to afford it. But what has changed is moving up the ladder. The days of buying a starter flat in London then moving to a terrace in Zone 3/4 then the commuter belt, all by using equity building up is long gone. Flats in London haven’t increased in price since 2016 but houses have significantly increased so either they should buy a house or they rent. I wouldn’t touch London flats now, especially with the cladding and leasehold issues. The house they will want to buy in the future will have increased far more than the flat

The thing with renting is the rental shortage. They may have to live with that for years, competing with 20 tenants for a rental. The flat opposite me now rents for £1900 and it is a below average priced 1930s London flat and it is being rented by international students. The previous professionals who live there have had to move on. I have viewed many ex London rentals in the past two years as I am thinking of buying a larger flat and what has changed from the time I bought our starter two bed flat is the demographics of the tenants in our area seem to have gotten richer but yet I don't think living under the thumb of a landlord and having your home open to constant viewings has improved.

It's a choice but I would rather live in a flat forever than do that. There is an argument that if you are on a higher income, it's better to wait because you save on stamp duty. But there is a compromise solution for those who don't mind conversions - ground floor share of freehold period maisonettes that are aplenty in the zone 3 London suburbs. Cheaper than a house and affordable for those on higher incomes. My downstairs ex neighbour who is on a high London income has managed to move on not by selling her flat but by renting it out and buying a 4 bed commuter belt house and this is possible if the flat is cheap enough as you pay it off faster.

Twiglets1 · 24/12/2023 07:10

I agree with people saying leasehold share of freehold is the way to go if buying a flat in London. Lots of conversion flats in London have this arrangement and the leases tend to be very long like close to 1000 years.

MeMySonAnd1 · 24/12/2023 07:16

I think OP was making the point on how, with the same conditions a couple in the past could get a portfolio of properties in London while now you can hardly get a single property.

I agree with that but I would say it is not limited to London. A good number of professionals in the North are also paying for a room in an HMO a higher percentage of their salary than what we would have paid for a 3 bedroom house mortgage.

Sodndashitall · 24/12/2023 07:23

OP I think you made the mistake of revealing that your kids were well off! Hence the pile on.
Living in London is ridiculously expensive these days, rent or buy. Yes there are areas that are more affordable but then you have longer or more awkward commutes.
My sibling is a single parent and wanted to buy near me for childcare reasons (so I can help out with minding DC). Absolutely unaffordable to get a 2 bed flat either for rent or buy on the very very average salary they earn. Basically I've had to loan them a bunch of money so they can buy a flat (which I can only do because I am gen X, a lot older than thwy are, and bought in London ages ago and am close to mortgage free). They have found a decent social housing flat to buy but it took about a year of looking (whilst living with me) to find something suitable. It's possible but it ain't easy

literaryloveaffair · 24/12/2023 07:28

Twiglets1 · 24/12/2023 07:10

I agree with people saying leasehold share of freehold is the way to go if buying a flat in London. Lots of conversion flats in London have this arrangement and the leases tend to be very long like close to 1000 years.

Yep or if you cannot find it at least buy a leasehold in a development where the residents bought the freehold. My unit didn't participate in the enfranchisement as the person who owned it at that time was a 90 year old lady but we have a long lease and we are allowed to participate in the management of the block.

whirlingdevonish · 24/12/2023 07:28

You're right OP, it's unaffordable for very many. DD has friends who live in horrible flats and pay stupid money out of not great salaries.
But on a joint income of the one described your DD should be fine.

literaryloveaffair · 24/12/2023 07:31

MeMySonAnd1 · 24/12/2023 07:16

I think OP was making the point on how, with the same conditions a couple in the past could get a portfolio of properties in London while now you can hardly get a single property.

I agree with that but I would say it is not limited to London. A good number of professionals in the North are also paying for a room in an HMO a higher percentage of their salary than what we would have paid for a 3 bedroom house mortgage.

Yes my friend who is a civil servant and a modest income and has zero help hastily bought a 1 bed flat as his room in a hmo in Wolverhampton was apparently going to increase to £800! He would probably earn enough for a house in a few years and is not wedded to a particular area (unlike me and dh) but in his view renting was so awful and he isn't even in a relationship so renting and waiting to afford a 'family friendly' house didn't make sense to him.

Twiglets1 · 24/12/2023 07:36

literaryloveaffair · 24/12/2023 07:28

Yep or if you cannot find it at least buy a leasehold in a development where the residents bought the freehold. My unit didn't participate in the enfranchisement as the person who owned it at that time was a 90 year old lady but we have a long lease and we are allowed to participate in the management of the block.

Show quote history

My daughter owns a London flat that is leasehold share of freehold ( 900 odd year leasehold) and the 4 flats in the house are currently in the process of buying the freehold between them. So that’s a good option too, yes.