The Cost of Living in London
How much are you paying for a cup of coffee where you are right now? If you're living in London, one of the most expensive cities in the United Kingdom and in the world, you know that a cup every day does add up. However, if you're an expatriate preparing to move to London, it pays to be prepared when it comes to expenses. What will it cost to live there including rent, utilities or your regular flat white at coffee shops? Find out what's the cost of living in London.
Moving to London? It's an Expensive City
The city came in 19th place in Mercer's Cost of Living Survey for 2018, jumping 10 spots from 2017. What does this mean if you're an expatriate getting ready to up sticks and move to the great city of London?
The HSBC Expat Explorer Survey reports that expats in London are earning slightly higher at USD 107,900 versus the global average of USD 99,900. However, this varies greatly from expat to expat as not all relocation packages are the same. There are also other factors to consider such as inflation and currency fluctuations in the world market.
The median wage in London was GBP 713 per week for employees working full time, according to the Office of National Statistics in its April 2018 report. This represented an increase of GBP 144 over the weekly median wage of GBP 569 for the entire United Kingdom. According to the report, the high median salaries in London reflect a large number of workers in high-paying industries and jobs.
It goes without saying that the cost of living in London for a family of four will be significantly higher than the cost of living in London for a couple. A family with young children will spend more on food, transport and perhaps childcare. Spouses or partners with no children may count leisure activities like holidays as part of their necessary monthly expenses.
Use the Minimum Income Calculator, a cost of living calculator created by Trust for London, to get an idea of how much you should be earning by answering three simple questions. For a more detailed analysis, the Nationwide Building Society also offers a Budget Calculator that takes childcare, pensions and benefits, insurance, and household costs into account.
Find Your Ideal Housing Location
People in London pay one of the highest rates in the world when it comes to housing, although nowhere near the asking prices in Hong Kong and Singapore, which are among the most expensive places to live in the world. While the British pound has gained strength against the US dollar, the cost of renting still takes up the biggest chunk of expenses for many London residents. Location matters so be prepared to pay a pretty penny if you want to live in a popular area, near a Tube station, or closer to the city center.
The Greater London Authority (GLA) website includes an interactive map showing the average rental prices for private housing, ranging from studio flats up to four bedrooms. Updated quarterly, the map is color-coded according to rental prices by borough. A three-bedroom flat in Islington in Central London may go for GBP 1,800 to GBP 2,400 monthly or even higher. In the Outer London borough of Hillingdon, you may only need to pay at least GBP 1,450 to GBP 1,800 for the same number of bedrooms.
Your Housing Options and Paying the Council Tax
In the UK, apartments are called flats housed in blocks and share a common entry and stairway. Flats may also be converted from large houses and contain at least one or two bedrooms, or just a one bedroom in shared housing, which is the cheapest option especially if you're a single expat. Terraced houses are row houses with only a wall separating you from your neighbors. A maisonette is French for "little house" and is somewhat similar to a duplex - basically a house divided into apartments with a separate entrance for each.
Do your research before making a deposit, like finding out how old the property is if there were any prior renovations done, etc. If you have a property agent, make sure to ask what existing utilities or services are in place and ready to use, and which ones may need to be installed prior to moving in.
What is the council tax? Whether you're buying or renting a property, you need to pay the council tax. It's a tax levied on the domestic property based on the property's estimated purchase value, and is applicable to flats, houses, bungalows, mobile homes, maisonettes, and even houseboats.
Each domestic property is categorized into one of eight bands (A to H) depending on its estimated purchase value. The council tax amount is based on at least two adults living in a home and the borough where your property is located. The Gov.UK website stipulates that "spouses and partners who live together are jointly responsible for paying the bill." Find more information about the Council Tax here.
Utilities and Food
Your other cost of living expenses will be for food, water, electricity, gas, and heating, as well as transport, health insurance, broadband, and phone contracts. Look up utility providers available in your area and compare prices accordingly. For gas, heating, and water, have someone from the service providers check the meters for safety prior to your moving date to make sure all is safe.
For broadband, residential phone and TV services, many companies like BT, Virgin Media and Sky have bundled deals that offer all three at special prices for a fixed number of years. This way, you only need to pay one bill for all the services. When it comes to mobile phone contracts, you can choose from EE, O2, Three UK and Vodafone to find the most suitable plan.
Londoners are spoiled for choice when it comes to grocery shopping. There's M&S, Waitrose, Whole Foods, Tesco, Sainsbury's, Morrison, and ASDA. You can also shop at open-air markets, and patronize local bakeries, meat shops, and restaurants.
Your Transport Options and Essentials
When it comes to transport options, you can buy a car or take public transport. Getting a car means adding gas and parking to your monthly or weekly. Having a vehicle of your own means you may have to pay the daily Congestion Charge of GBP 11.50 when you drive into designated zones in London between 7 am and 6 pm from Monday to Friday. In April 2019, London will start implementing the Toxicity Charge or T-Charge which is designed to curb vehicle pollution.
London is divided into travel zones, with zones 1 to 6 covered by most of TfL's services. Zones 7 to 9 are serviced by the Tube, the London Overground and National Rail. To get around, use an Oyster card and Travelcard which can be bought at any train or bus station, or online. The Oyster card is a reloadable smart card so you simply have to tap it when using on any of London's public transport services. The Travelcard gives you unlimited travel anytime on buses, the Tube, DLR, the Overground, the TfL Rail and National Rail services in London. You can buy Travelcards good for seven days, monthly, three months, six months or one year. The monthly and annual Travelcards will let you save more on fares especially if you have a regular route. For example, the average cost of a single journey adult fare from zone 4 to zone 1 is GBP 9.80 daily or GBP 49.00 per week, Monday to Sunday, if using a contactless card.
Another way to pay is via a contactless card, which is now used in credit cards such as American Express, MasterCard, Visa and Maestro, and on smartphones like Apple Pay Samsung Pay, Google Pay, and Barclaycard Contactless Mobile.
London's buses and trams also offer Hopper fares if you use your Oyster or contactless card. You can catch a second bus or tram for free if you do within one hour from the start of your commute.
For more information on London's public transport and fares, visit the Transport for London website at tfl.gov.uk.