London's housing crisis threatens the city's industries

Over 50 business leaders have warned that London’s housing crisis, caused by sky-high property prices and rents, is so extreme that it threatens to damage the city’s “world-beating” technology and creative industries. It is feared that businesses will struggle to recruit and retain staff and may lose out to international competitors because of the cost of living in the capital. A new study by the Centre for Economics and Business Research reveals that a typical worker aged between 22 to 29 will have to spend 60% of their net income on rent for a typical inner London studio flat. A campaign is urging the next mayor to pledge to build at least 50k homes a year in London.

M ore than 50 business leaders today warned that London’s housing crisis is now so acute it threatens to damage the city’s “world-beating” technology and creative industries, as well as other key sectors.

Advertising chief Sir Martin Sorrell, Canary Wharf Group boss Sir George Iacobescu, architect Sir Terry Farrell and lastminute.com co-founder Baroness Lane-Fox are among signatories of a letter to the Evening Standard sounding the alarm over sky-high property prices and rents.

“The housing crisis in London is a major problem for business,” they write. “If not addressed, whole sectors, including our world-beating technology sector and creative industries, will struggle to recruit and retain staff and find themselves losing out to international competitors.

“Resolving the issue is now urgent, so that we can protect the creativity, innovation and energy which drive London’s business community.”

Other bosses to sign include John Lewis’ productivity director Andrew Murphy; Robert Elliott, chairman of law firm Linklaters; Kathryn Nichols, chief executive of management consultancy The Nichols Group; Heathrow boss John Holland-Kaye; and British Land chief executive Chris Grigg.

Baroness Lane-Fox said: “It’s vital for London to offer homes to the creative, tech and entrepreneurial talent we rely on to keep our city diverse and thriving.” Sir George Iacobescu said: “London is a magnet for talented workers but its success means the incoming mayor must fix the housing shortage.”

Molly Jackson, deputy chief executive of the Southbank Centre, said: “Without sufficient affordable housing or access to proper studio space many workers in the creative industries will be forced to move elsewhere.

“This is a huge concern as London’s cultural institutions, aside from enriching our quality of life, are vital to its economy — drawing millions of tourists each year as well as international businesses.” Mr Elliott said: “The shortage of housing is a real issue for workers in the capital and a growing problem for employers wanting to attract the best talent. If not resolved, I feel it will progressively affect London’s competitiveness.”

The letter was compiled by business group London First, which also released a report for the Fifty Thousand Homes campaign warning of “extreme housing pressure” in the city.

The report warns that over the next decade the housing crisis will increasingly hit workers in the “flat-white economy” such as creative media, advertising, market research and software development.

The study by the Centre for Economics and Business Research forecasts a range of scenarios, including one of a year when a typical worker aged 22 to 29 would have to spend at least 60 per cent of net income on rent for an inner London studio flat.

Such expenditure would force many people to flat-share. For a large group of employees, including nurses, this is already the case.

However, the study says this would extend to many young staff in scientific research and development by 2018, teaching and the property business by 2019, telecommunications by 2021 then architecture and engineering by 2023.

In 2024 young staff in computer programming and broadcasting would be affected, followed by those in advertising and market research in 2025 then publishing and information in 2027.

If the current housing market trend continues, by 2040 only young financial sector employees would be able to rent an inner London studio flat without coming under such “extreme housing pressure”. A one-bedroom inner London flat is already unaffordable to all young professionals apart from those in about half a dozen sectors including City workers, insurance and pension fund employees, doctors and management consultants.

The study also warned that by 2025 individuals in London’s “up and coming” sectors, particularly hi-tech and creative industries, face having to save for more than a decade to get together 10 per cent for a deposit on a first-time home in the capital.

The Fifty Thousand Homes campaign is urging the next mayor to pledge to build at least 50,000 homes annually in London.