High rents are driving young people out of London and depriving businesses of talent, industry warns
Fears that young talent could be driven out of London due to soaring rents and a lack of affordable accommodation is “bad news” for London’s businesses and the economy, industry bodies warn.
Paul Swinney, director of policy and research at Centre for Cities’, told City A.M the capital has already seen a “squeeze” on the pool of talent it has been able to recruit from in the last 15 years and that a lack of suitable homes for aspiring professionals is “bad for its economy overall”.
He explained:”The difficulty in trying to find accommodation points to a long running challenge in the capital – it hasn’t built enough homes to house the people who want to live here. It’s not clear at this stage as to whether this will lead them to look elsewhere. But if they do it’ll be bad news for London’s businesses.”
Jonathan Seager, policy delivery director at BusinessLDN, told City A.M. its “vital” the capital can deliver a mix of homes across tenures and price points so that housing becomes more affordable to all Londoners, “helping to retain talent already in the capital and attracting it from around the world.”
The warning comes as the chief of estate agency Foxtons said that a lack of rental options in the capital is so “dramatic” that people will need to move further out of the city in order to find a suitable place to live.
“We absolutely don’t welcome this but people are going to have to move,” Foxtons chief executive Guy Gittins told the BBC Radio 4 show on Tuesday morning.
Soaring inflation and a hike in utility bills have been blamed for an increase in rents in the past few months, however Gittins said that a disparity between supply and demand was the real issue.
“The main issue is not affordability for the majority of the market – it’s the stock issue,” he told Radio 4’s Today Programme.
It comes as a study by charity Trust for London showed that more than one in five people living in inner London are aged between 25 and 34 – with many traditionally flocking to the capital and inhabiting in flat shares to better their professional careers.
The rapid decline of supply can be seen in data shared with City A.M . by house sharing platform SpareRoom which shows that the average price for a room in London was £962 per month in February compared to £827 per month in the same period last year.
Matt Hutchinson, SpareRoom director, said: “The last 12-months has seen rents across the UK hit record highs and, unless new supply comes into market over the coming months, it’s hard to see how those rents will come down.”
He continued: “Unless people are able to move freely, the impact on the economy could be significant. “