The Mayor of London has renewed his call for a two-year rent freeze across the city, because the capital’s housing crisis has hit the recruitment of key workers such as nurses and police officers.
Sadiq Khan has warned of the strain of “stagnant public sector wages and rising housing costs [have put] on public sector recruitment and retention”.
City Hall says London lags national average public sector growth because frontline staff, such as firefighters and social workers, spend “significantly more” of their annual income on housing compared to the same workers living outside the capital.
An entry-level police constable in London on a starting salary of around £37,000 this year spends on average £1,700 a month – which amounts to more than half of gross salary – on rent in a borough such as Greenwich, where resident’s median incomes resemble the London median.
By contrast, an entry-level police constable living in West Suffolk – which resembles the UK median – spends 38% of their gross income on rent, says the City Hall report, called Housing Affordability and Public-Sector Recruitment in London.
It adds that housing costs for public sector workers have become just as challenging for homeowners over recent years as for renters.
The study says if the same new police officer bought a one-bedroom apartment in Greenwich on a five-year fixed mortgage rate of 2% back in 2018, their overall mortgage costs would be 3.5 times higher than a police constable living in West Suffolk with the same property type, mortgage rate and loan-to-value ratio.
It adds, if both police officers renewed their fixed-term mortgages at current 6%-plus rates, the police officer in London would spend just under half of their gross income on mortgage costs over the five-year period.
However, the police constable in West Suffolk would spend just 21% of their gross income on home loan costs.
The report forecasts that average private rents in London could soar to upwards of £2,700 a month next year, and that more than 200,000 London households could be forced to pay an extra £520 per month in mortgage costs due to expected rate rises.
The current average cost of rent in Greater London rose 1.1% in July to £1,965, compared to the previous month, according to lettings agent Goodlord.
City Hall says the result of rising housing costs has hit public sector staff growth in the capital.
Its survey says London lagged behind most UK regions in the growth of its public sector workforce between 2018 and 2022, with employee headcount rising in London by 6.2%, against 6.9% across the UK and 6.7% in England.
Apart from a London-wide rent freeze, Khan also calls on the government to invest £4.9bn a year “to deliver the genuinely affordable housing the capital needs”.
The Mayor of London adds: “It’s not right that public sector workers in London, who provide an invaluable service to us all, are faced with stagnant wages and are having to spend even more of their hard-earned money on housing.
“Unless the government acts now and provides the £4.9bn a year required to deliver the genuinely affordable housing the capital needs, I fear talented people will not only continue to leave the public sector but avoid joining it in the first place.”
In Scotland, a freeze on rents for private tenants is set to be replaced by a 3% rent cap for at least another six months, the Scottish government confirmed in January.
The move follows Holyrood’s introduction of a rent freeze under its Cost of Living (Tenant Protection) Act passed last October as part of its response to the living costs crisis.
