Everything in life is a transaction



To skrr or not to skrr? That is the question?

Before I start, for those who have no clue what “skrr” means, it is the colloquial term formed by Atlanta philosopher Radric Davies, imitating the sound made by cars in transit. 

London is one of the most beautiful, popular and diverse cities on this planet. Everybody knows this. Everybody… But therein lies the problem: too many people want to live and work in London. Add to that the ever-crazy housing issues, throw in a cheeky bit of gentrification, and you have a cocktail of chaos. I therefore pose the question: would it be beneficial to leave London? If so, who would it benefit, and under what circumstances? Pipe down, “fairness” fighters and Team “I’ve lived in London since the Battle of Hastings, why should I leave?” My friend, this is not Disneyland, this is the Western World. We don’t look out for our fellow human beings here, we pretend to by offering free money in exchange for votes (I’ll get to this at a later date).  I can sympathise with the narrative, but I do not have time for unrealistic dreams; there is no incentive to make things ‘fairer’ so this is likely how it will remain. I like problem-solving, not complaint Olympics. So back to the question, would it be beneficial to leave London? Well, this depends on the cost of living. What is the average cost of living, and who can maintain such? Once that is established then you can work out if leaving London is worth considering economically.

What are the Issues?

•    Housing Costs are extremely high
•    Wages aren’t rising enough
•    Transport costs continuously rise

Let’s use nurses as a mini case study. According to the Royal College of Nursing, 40% of nurses in London are expected to leave London by 2021. These nurses aren’t leaving because they are bored with mid-week drinks down West End; the cost of living is running them out of town. London has the HIGHEST rent rates in Europe, and the wages don’t match, either. This means Londoners are spending a higher proportion of their earnings on housing than everyone else. 

Nurses’ salaries from 2010 – 2015 have increased 3.5%, but in that same time period London house rents have risen by 25%! For argument’s sake let’s say this:

•    Nurses started on £24,000 (£2000 pm pre tax) in 2010 and rent in London was £700 per month. 
•    Your rent consumes 35% of wages every month before the taxman gets his buffet on. 
•    Now in 2015 that salary is now £24,840 (£2,070 pm pre tax) and rent is now £875 per month.
•    Your rent now consumes 42% of your wages before taxman gets his slice. 

As you can see by that quick example, rent prices are eating more and more into the pocket of Londoners. I don’t even want to get into the property ladder issues (cheeky post on that coming soon), but please swallow this spoonful of madness (that’s it, all the way down). 
According to Shelter, the average deposit needed for a first time buyer in London by 2020 will be a small change of £138,000. The average salary needed by 2020 will be around £106,000. No problem, we’ll just become Traders; real traders, mind, not those lads that look outside windows for Instagram and try to sell you dodgy ‘trade in 3 days’ courses. Depressing isn’t it? 

Back to our mini case study, what are the implications if we use the same salary figures, but apply them to the cost of transportation? 

•    Zones 1-4 in 2010 would cost £159 which is 7.95% of your wages pre tax
•    Zones 1-4 in 2015 was £177 which is 8.55% of your wages before tax

As you can see from both examples, the rise in housing and transportation costs has started to confiscate a larger proportion of Londoners’ earnings, and we haven’t even gone into how much the price of food and bills have increased. Nowadays, you give a shopkeeper a fiver for a chocolate bar and a canned drink and you get back 40p and some attitude. So we’ve established that it’s expensive to live in London, right? So, what is the alternative?

What happens if we skrr?

I’ll say it again; living in London is pretty pricy! Unless you are really well off, you are most likely to be surviving on bread and Indomie (gourmet noodle brand) after your expenses have gone. The problem is working in London pays considerably more than any other city in the UK. As of 2016, the average London salary, according to Payscale, is £34,700 - considerably higher than the UK’s average salary of £27,000. Ideally, you would want a London salary without the London cost of living, right? Well, what a lot of people are doing now is commuting into London from Narnia and Asgard, saving thousands each year. When I say Narnia and Asgard, I am referring to those areas in which an oyster card is nullified. Let me massage you with a few examples:

•    Basildon, Essex. 33 minute train ride into Fenchurch Street. Transport costs? £3,700 a year but the average house price is £177,000, £33,000 cheaper than London’s cheapest borough Barking and Dagenham. 
•    Hatfield, Hertfordshire. 26 minute train ride into Kings Cross. Transport Costs? £3,600 a year with the average house price of £248,000.
•    Gravesend, Kent. 24 minute train ride into Kings Cross. Transport costs? £3,800 a year with the average house price of £204,000.

Although you are probably spending almost double your annual outlay on transport, the savings you will make on housing will be colossal. Even from my own professional experience thus far, many of my colleagues commute from Essex and Kent, and rave about the tranquillity, size of homes and savings made. Imagine saving thousands a year, and only being 40 minutes away from the capital? Decent, right? 

The  best commuter hot spots for working in London

The  best commuter hot spots for working in London


How do you decide if it is right for you to move away?

From a financial sense, I think it is best to assess how much living in London is leaving you with after expenses. I would imagine that a lot of Londoners would be living a much more comfortable life if they commuted into London, instead of being based in the capital. If, however, you or your household are still able to maintain an adequate (obviously subjective) standard of living, then you may decide that the trauma of shops closing before EastEnders starts, and buses that come every leap year, may not be worth the additional savings. 

London is one of the best cities in the world; by default it’s going to be costly. I personally don’t have too much of a problem with the pricy cost of living. I’m a believer in free markets; let us the people and businesses determine prices of stuff (although I do believe there are things the government can do to help this issue, which will be in my housing post).

My main concern is how Londoners who are deeply integrated can tackle this problem. I have no dependents; I can up and move to Syria if I fancied it, but what about those with children in schools?  It’s a lot trickier to up and leave London when you have children integrated in schools. The cost of living is an extremely complex issue, but it is my nature to attempt to make life as simple as possible. Analyse all possibilities and pick the one that suits you and your household the best. I truly believe that across the next decade, more and more of us Londoners will move outwards to avoid living on peanuts for the rest of our lives. And that is good economics.

I hope you enjoyed