Why has the cost of living crisis happened, and what action has been taken so far?
With the overall economy growing during 2021, one might expect living standards to improve. However, the real problem lies in inflation, which has reached its highest point in several decades. The Bank of England’s target of 2% will remain firmly on the horizon, with the rate of inflation currently sitting well above that at 10.1% (as of Feb 2023).
With wage increases having no real hope of keeping up with price increases, and the impact of Brexit and the war in Ukraine only compounding inflation challenges, not to mention the recent rise in energy price cap (and an additional increase set for October), UK households are buckling under an ever-increasing strain to make ends meet.
The current government response to the cost of living crisis has been in the form of support packages, including a £400 energy bill grant and a £650 cost of living payment to be distributed to around 8 million low-income households. Additional steps include a winter fuel payment totalling £350, a disability benefit payment of £150, and an extra £150 rebate on council tax, announced in February 2022.
The response has been widely criticised as falling far short of what is necessary to support the UK’s most vulnerable people. Nearly half of UK adults stated that the government’s response was highly dissatisfactory, with many families claiming they now have to make choices about whether to eat or stay warm.
The ever-increasing cost of living in London
While the cost of living crisis has affected people up and down the country, those residing in the capital have to also contend with astronomical increases in rent and commuting expenses. In fact, in a recent survey by Hitachi Rail, one in three Londoners said they avoid public transport due to the high costs. With soaring rents meaning that only the highest earners can afford them, many people are leaving the city in search of more affordable accommodation. The competition for London homes has also been a factor, with those with a more significant income being able to secure the properties when competition is high. Those whose earnings have become outpaced by London rental prices have been forced to move to cheaper outer boroughs or commuter towns. Unfortunately, those on lower incomes typically include key workers such as those in health and social care, education, and vital public services.
While there has been an outcry for something to be done about the impact of housing costs on London residents, the data still shows that many of those on lower-than-average salaries are continuing to be priced out of the city. In fact, it appears that record numbers of tenants are leaving the capital, and with the average monthly rental price for a home in London topping £3,000, it’s no wonder.
We have seen firsthand how rising rents affect key workers, young professionals, and creatives. With a key worker starting salary at around £22k, living in central London has become nothing short of impossible. Should this continue to be the case, a key worker exodus will have a devastating impact on the city, creating a shortage of those working in essential services and damaging the broader economic impact of the city’s growth.
Is a solution possible?
It seems a grave disservice that those who worked so tirelessly to keep the capital going during the COVID-19 pandemic are now being forced to leave their homes. But what is the solution? By bringing rents under control, key workers can continue to live in the city, thus alleviating the pressure on the essential services they work for. By implementing rent regulations, greater housing affordability is possible – but these need to be devised and deployed from the top. The government must commit to delivering discounted rental housing across London before it is too late.
As an intermediate solution, many young people, creatives, and key workers are looking for alternatives that allow them to stay in the city and continue to work. Property Guardianship is one such solution. We now have in excess of 1000 applications a month, around three times more than the previous six months. This reflects just how much demand there is for affordable living in London.
Our key worker prioritisation programme ensures that properties are allocated to socially responsible and reliable guardians, with many working as nurses, doctors, teachers, entrepreneurs, and creatives. We have vacant rooms available which start from £500 pcm with bills and utilities included (roughly 20-30% cheaper market rent) – it’s a small impact, but an opportunity for key workers to work and live within close proximity to each other.
While LOWE cannot hope to be the long-term solution to the housing crisis, we are committed to doing our bit to help those struggling to make ends meet, offering safe, flexible spaces in prime locations at affordable prices. Guardianship acts as a springboard into other housing options. By choosing to become a property guardian, financial pressure is lifted. Instead of living pay cheque to pay cheque, many of our property guardians are able to save each month, eventually having enough to put down a deposit on a home of their own.
If you have a vacant property and you’d like to discuss with us how we could help you – get in touch to discover how we could give it a new purpose.