Living in London is expensive, everyone in the UK knows this. Everyone knows that this is mostly due to the price of property, which we all enjoy talking about.

I've lived here for 3 years now, and when my wife and I were both working we lived comfortably. Two incomes under one roof is just fine. Not as fine as in many other cities, but reasonable. Just over a year ago my first child was born, and now that my wife's maternity pay has ended we are a single income household. This is not fine.

Even though I earn almost £50k/year, and any salary increase will be taxed at 40%, I cannot cover essential day-to-day costs. I'm in the 40% tax bracket, and my basic monthly outgoings exceed my monthly take home pay by £400. If my employer wanted to pay me enough to cover essential costs, it would cost them approximately double the shortfall due to tax. None of this makes sense.

Salaries and living expenses have become really disconnected.

For most people the most obvious way to increase wealth is to buy property. Mortgage repayments are cheaper than rent, and the value of the property increases over time. Double win. But there is a big hurdle to overcome before this is possible - saving money for a deposit on a house is often impossible without external help (i.e. the "Bank of Mum and Dad"), because so much of the money earnt must be spent on rent first.

It's a trap. Repayments on a mortgage are cheaper than paying rent, but you cannot save enough for a deposit because;

1. so much of your salary goes to paying rent¹, and
2. the average cost of a flat in London is 500k², which means a 5% deposit is £25k — which is a higher deposit than you would need anywhere else in the UK, despite being the place you are least able to accumulate it.

What if my partner went back to work and we put our baby in childcare? Childcare is not cheap, and working would need to bring in more than the cost of childcare. This requires a higher than average salary from a graduate job, (which is the life stage when people might reasonably start having children), so unless both parents are unusually high earners that option isnt viable either.

Living in London is only financially possible if you are either single or household income is more than £60k/year.