High London housing costs are forcing some workers to quit their jobs and are making it difficult for firms to recruit staff, according to the results of a new survey by the Confederation of British Industry (CBI).
The business organisation found that 28% of the 176 leading firms in the capital that responded to the survey said that some of their employees had left because they could not afford to live in the local area.
London housing costs are also apparently hampering the ability of firms to recruit entry-level staff, with 66% of respondents citing them as having a negative impact. This is up from 57% in 2015.
The survey suggests that the housing crisis is hindering the expansion of flexible working conditions for employees too, with 36% of firms claiming that the long commutes of many staff make this much more difficult to offer.
This is despite the fact that 44% of the firms surveyed said that they offer premium salaries to London workers to retain them.
“This survey speaks loud and clear – London’s housing shortage is a ticking time bomb,” warns Eddie Curzon, the CBI’s London Director.
He adds that the organisation backs the goal of the Mayor of London, Sadiq Khan, to notch up the capital’s new housebuilding rate to 65,000 per year, partly by relaxing planning constraints. However, the CBI insists that more “clarity” on the delivery plan is still required.
Two-thirds of firms said that the Mayor should consider encroaching on the capital’s historic greenbelt to deliver more housing.
The average house price in the capital was £472,000 in February, compared to £225,000 for the whole of the UK, according to the latest Office for National Statistics report. This is more than 14 times the average earning in the capital.
Rents in London have been growing more slowly than the rest of the country this year, but they have far outstripped the rest of the country over the past decade and have risen more rapidly than inflation, reports the Resolution Foundation.
The Institute for Fiscal Studies estimates that more than 30% of London tenants spend at least 50% of their income on rent, compared to less than 15% for the rest of the UK, excluding the capital.
Of the firms that responded to the CBI’s survey, 26% were in professional services, 19% operated in the IT and communications sector, 9% were in manufacturing and construction, while 8% were in hospitality, leisure and retail.
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