Introduction
London, a city brimming with history, culture, and opportunities, is an attractive destination for many. From the historic landmarks and bustling streets to the diverse cultural experiences, there's much that draws people to this vibrant metropolis. However, understanding the cost of living is crucial for anyone considering a move to London. This blog aims to provide an insightful overview of what to expect financially when making London your home.
Housing Costs
While it might sound crazy to people who don’t live there, your average Londoner typically spends more than half their income on housing, making it most people’s biggest expenditure.
Housing in London offers a spectrum of choices, ranging from modern apartments in high-rise buildings to traditional houses and budget-friendly shared accommodations. The cost varies significantly across different boroughs. London is notorious for being one of the most expensive cities to rent in Europe, as well as the most expensive in the UK.
For instance, renting a one-bedroom apartment in central London typically costs around £2,000pcm for somewhere of decent quality. Prices drop considerably the further away from the city centre you go, where the average price of a 1 bed can decrease to roughly £1,700pcm if you don’t mind a 40-60 minute commute.
Many people who work in London choose to live in the surrounding commuter towns and get the train to work instead, using London’s extensive rail network.
The cheapest and one of the most common ways to rent in London is to live in a flat-share with friends, where you’ll typically pay between £600 and £1,200 per month for a bedroom and access to shared spaces. There are plenty of online tools to find flatmates in London, but SpareRoom is by far the most widely used.
Whether you're renting in Shoreditch or buying in Kensington, understanding these factors is key to finding the right home within your budget.
Utilities and Bills
Utility bills in London typically include electricity, gas, water, and internet, amounting to a significant monthly expense. All of these would vary depending on your personal usage and how fast you want your internet.
A typical utility bill for gas, electricity and water for a 1 bedroom flat would set you back roughly £160 depending on your usage.
Another important cost to consider is council tax, a mandatory bill that can be paid annually or monthly which goes to your local council to pay for public services such as road maintenance, street lighting and rubbish collection. The amount to pay varies depending on the borough and the value of your property (more expensive homes have greater council tax).
To get a rough idea, in 2023/2024, your annual council tax might be as low as £608 for the cheapest properties in Wandsworth and Westminster, or as high as £4,493.42 for the most expensive properties in Kingston-upon-Thames! Most properties will be paying around £1,500 per year, with around 80% of people paying less than £1,800-2,000. Check with your lettings agent about the council tax band of the property you are interested in.
You may be entitled to a discount on council tax depending on different criteria, for example if you live alone. You can check your eligibility for your address using this government tool. Below is a table of example annual council tax costs for properties in bands A, D and H in each London borough for 2023/2024.
| London Borough | Band A | Band D | Band H |
| Westminster | £608.04 | £912.05 | £1,824.10 |
| Wandsworth | £609.43 | £914.14 | £1,828.28 |
| Hammersmith & Fulham | £870.66 | £1,306.00 | £2,612.00 |
| Kensington & Chelsea | £948.27 | £1,422.40 | £2,844.80 |
| Tower Hamlets | £1,054.02 | £1,581.02 | £3,162.04 |
| Newham | £1,085.02 | £1,627.53 | £3,255.06 |
| Southwark | £1,128.61 | £1,692.92 | £3,385.84 |
| Hillingdon | £1,173.62 | £1,760.46 | £3,520.89 |
| Lambeth | £1,174.60 | £1,761.90 | £3,523.80 |
| Hackney | £1,182.20 | £1,773.29 | £3,546.58 |
| Greenwich | £1,209.49 | £1,814.23 | £3,628.46 |
| Islington | £1,209.60 | £1,814.39 | £3,628.78 |
| Barnet | £1,224.11 | £1,836.16 | £3,672.32 |
| Ealing | £1,227.27 | £1,840.89 | £3,681.78 |
| Bromley | £1,228.13 | £1,842.19 | £3,684.38 |
| Redbridge | £1,242.63 | £1,863.94 | £3,727.88 |
| Hounslow | £1,254.35 | £1,881.52 | £3,763.04 |
| Merton | £1,255.88 | £1,883.82 | £3,767.64 |
| Barking and Dagenham | £1,261.81 | £1,892.71 | £3,785.41 |
| Camden | £1,266.78 | £1,900.16 | £3,800.32 |
| Brent | £1,282.97 | £1,924.45 | £3,848.90 |
| Lewisham | £1,284.19 | £1,926.27 | £3,852.54 |
| Enfield | £1,301.63 | £1,952.44 | £3,904.88 |
| Haringey | £1,328.21 | £1,992.32 | £3,984.64 |
| Bexley | £1,358.51 | £2,037.76 | £4,075.52 |
| Sutton | £1,365.59 | £2,048.38 | £4,096.76 |
| Waltham Forest | £1,370.37 | £2,055.55 | £4,111.10 |
| Havering | £1,392.09 | £2,088.13 | £4,176.26 |
| Richmond upon Thames | £1,427.48 | £2,141.21 | £4,282.43 |
| Harrow | £1,441.87 | £2,162.80 | £4,325.60 |
| Croydon | £1,493.04 | £2,239.56 | £4,479.12 |
| Kingston upon Thames | £1,497.81 | £2,246.71 | £4,493.42 |
Transportation
London's public transportation system is run by Transport for London (TfL). Their network is extensive, including the Tube, buses, and trams. You can pay using pre-paid travel cards, Oyster cards, or contactless payments.
The cost to you depends on how far your journeys are, and how frequently you use it. TfL puts a daily and weekly cap on pay-as-you-go (PAYG) travel, meaning once you reach a certain number of journeys, you won’t be charged more within that time.
For example, a day trip to the city centre from zone 2 will cost you no more than £8.10 per day, or £40.70 per week. You can also buy a monthly travel card from TfL to save even more if you plan to use public transport more than about 4 days per week.
For car owners, it's important to consider the availability and cost of parking, especially in central areas. Depending on where you drive, as well as the emissions of your car, you’ll also have to take into account other fees such as the Congestion Charge, Ultra Low Emission Zone (ULEZ), and LEZ charge.
| Zone | Daily PAYG cap | Weekly PAYG Cap | Monthly Travelcard |
| Zone 1 only | £ 8.10 | £ 40.70 | £ 156.30 |
| Zones 1-2 | £ 8.10 | £ 40.70 | £ 156.30 |
| Zones 1-3 | £ 9.60 | £ 47.90 | £ 184.00 |
| Zones 1-4 | £ 11.70 | £ 58.80 | £ 224.70 |
| Zones 1-5 | £ 13.90 | £ 69.60 | £ 267.30 |
Groceries and Food
The city offers a wide range of grocery shopping options, from local markets to large supermarkets, influencing the cost of groceries significantly. Dining out in London can cater to all budgets, from affordable street food to high-end restaurants. Below are some rough averages of the cost of some common items on the grocery list according to Numbeo at the time of writing this article.
| Grocery item | Average cost |
| Milk (regular), (1 litre) | £1.33 |
| Loaf of Fresh White Bread (500g) | £1.58 |
| Rice (white), (1kg) | £2.19 |
| Eggs (regular) (12) | £3.49 |
| Local Cheese (1kg) | £7.70 |
| Chicken Fillets (1kg) | £7.58 |
| Beef Round (1kg) (or Equivalent Back Leg Red Meat) | £12.72 |
| Apples (1kg) | £2.39 |
| Banana (1kg) | £1.28 |
| Oranges (1kg) | £2.32 |
| Tomato (1kg) | £3.32 |
| Potato (1kg) | £1.21 |
| Onion (1kg) | £1.19 |
| Lettuce (1 head) | £0.93 |
| Water (1.5 litre bottle) | £1.28 |
| Bottle of Wine (Mid-Range) | £9.00 |
| Domestic Beer (0.5 litre bottle) | £1.99 |
| Imported Beer (0.33 litre bottle) | £2.32 |
Entertainment and Recreation
London is known for its entertainment and recreational activities, including theatre, cinema, and sports events. While some of these can be pricey, the city also offers a plethora of free or low-cost attractions, such as museums, parks, and historical sites.
In London, the cost of eating at a restaurant varies depending on the type of establishment and the meal. On average, a meal should cost around £14 per person. Breakfast tends to be slightly cheaper than lunch or dinner. For a typical restaurant meal, prices can range between £10 and £30. If dining at a mid-priced restaurant, the average cost for a meal for two people ranges from £45 to £100.
Drinking alcohol in particular can be pricier than the rest of the UK, with typical beer pricing being between £5 and £7 for a pint. If you’re after a cocktail, you can expect to pay at least £10 in most places in the city centre.
Healthcare
The UK's National Health Service (NHS) provides healthcare at no direct cost to residents of the UK. People who are ordinarily resident in the UK, meaning they live in the UK on a lawful and properly settled basis for the time being, are entitled to free NHS hospital treatment. However, those who are in the UK temporarily, such as tourists or short-term visitors, may not be eligible for free NHS care and might be charged for the services they use.
In recent years, some London employers have begun offering private healthcare such as free health checkups, or dental treatment to their employees as a perk of employment.
Education
Education costs in London can vary, but education is generally free for all children between the ages of 5 and 18. This includes primary and secondary education, which is funded by the government. However, there are some private schools that charge fees.
Beyond secondary education, higher education institutions like universities typically charge tuition fees, though there are loans and grants available to help cover these costs for eligible students. As of 2023, a UK citizen would pay £9,250 per year for an undergraduate course in a University, while international student fees are typically 2-4x more, although they vary depending on the university.
Taxes
Understanding the UK's tax system is crucial, with income tax rates and other relevant taxes being a vital part of financial planning for residents. The UK uses a banding system based on your income to calculate the amount of tax you pay. Below is a table showing how much you are taxed at each level.
| Band | Taxable income | Tax rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
For example, if you have a salary of £60,000 per year before tax, you will be taxed:
- 0% on the first £12,570 = £0 tax paid
- 20% between £12,571 and £50,270 = £7,540 tax paid
- 40% between £50,270 and £60,000 = £3,892 tax paid
That means you will have to pay a total of £11,432 tax from your salary of £60,000, leaving you with £48,568.
In addition to income tax, if you’re employed you will also have to pay National Insurance contributions which are also based on your salary. There are two bands for national insurance which are shown below:
| Your pay | Class 1 National Insurance rate |
| £242 to £967 a week (£1,048 to £4,189 a month) | 12% |
| Over £967 a week (£4,189 a month) | 2% |
£60,000 per year is an income of roughly £1,153.84 per week, which means you’ll contribute the following national insurance:
- 0% on the first £242
- 12% between £242 and £967 = £87 national insurance paid
- 2% between £967 and £1,152.84 = £3.74 national insurance paid
That means, you’ll pay an extra £90.74 per week for national insurance, which is £4,718.31 per year.
Putting that together with tax, that means a salary of £60,000 per year will leave you with £43,850 or £3,654 per month (roughly 27% less), after tax and national insurance.
You can use this handy online tool to check the take home pay of different salaries here.
What is a good salary in London?
Of course, this will vary depending on your circumstances and the quality of life you are looking for. Salaries vary a lot depending on your profession and industry, but the median salary in London in 2023 is £43,623 according to the ONS.
Depending on the borough, London median salaries can be as low as £33,717 (in Barking and Dagenham) or as high as £58,240 (in the City of London). If you earn at least £40,000 per year in London you should be able to maintain a relatively good quality of life but you’ll likely have to choose between a super long commute or share an apartment with others.
If you want to live more comfortably and take advantage of more of what London has to offer, a salary of at least £55,000 is generally considered enough to not have to worry too much about money if you have no dependents or financial commitments.
A salary of above around £70,000 per year is considered to be pretty well off and would put you in the top 10% of earners in the capital.
Conclusion
While London offers a dynamic and enriching living experience, it's important for prospective residents to carefully consider their financial capabilities. Planning and budgeting are key to enjoying all that London has to offer without breaking the bank.
Remember, London is a city of contrasts and opportunities, and with the right planning, it can be an incredibly rewarding place to call home.
Additional Resources
For more detailed information on the cost of living in London, including calculators and comparison tools, the following resources can be useful:
