There are several things to consider when determining what a good salary is in London. In 2023, the average London salary is £49k. However, this differs according to industry and Borough. Considering these factors, including cost of living and other expenses, a comfortable London salary is £60k. In this article, we’ll go through living costs and average salaries based on Borough and industry to help determine what salary is needed for a comfortable lifestyle in London.
Key Takeaways
Cost of Living in London
A good London salary is determined by a number of factors. This includes the cost of living. Taking these expenses into account can help you determine what salary is needed for a comfortable lifestyle in London. Here’s a breakdown of the average living costs in London in 2023.
Rental Costs
Many factors influence average rental costs in London, including location and property size. The Office for National Statistics (ONS) offers annual estimates for Borough-based rental costs. Rental expenses are greater in boroughs such as Kensington and Chelsea, and a bigger percentage of income is spent on rent. The average rent in Kensington and Chelsea is £3,050 per month. With a monthly salary of £6,586, this equates to 33.5% of monthly income being spent on rent. Similarly, the average rent in Westminster is £3,036. However, with an average monthly wage of £4,688, a higher amount (42.7%) of monthly earnings is spent on rent.
Residents in less expensive London boroughs, such as Sutton and Croydon, spend a smaller proportion of their income on rent. The average rent in Sutton is £1,252. With an average monthly salary of £3,519, rent accounts for only 31.3% of the monthly income.
The City of London has the lowest rent-to-income ratio. With an average rental cost of £2,012 and a monthly salary of £7,838, the average percentage of income spent on rent is only 25.7%.
Rental costs also vary depending on the size of the property. The average monthly rental cost for a studio in Kensington and Chelsea is £1,427, and £2,062 for one-bedroom properties. In less expensive boroughs such as Bexley, the average monthly rental cost for a studio is £688, and £854 for one-bedroom properties.
Larger properties with four or more bedrooms cost between £3,500 and £8,500 a month in expensive boroughs like Westminster and Kensington and Chelsea. Whereas larger properties in less expensive boroughs such as Bexley and Croydon average £1,940 - £1,724 per month.
Transport Costs
If there is one advantage to living in the UK's capital, it is that you won't need a car. Because it serves the whole Greater London area, London's public transportation system is ranked 11th in the world. The metro, trains, DLR, trams, buses, cable cars, and boats make up London's public transportation system, which is managed by Transport for London (TfL).
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However, it’s important to consider that transportation costs in London tend to be higher compared to other regions in the UK. That means that this, of course, is an important factor when determining a good salary range.
As noted above, London offers numerous means of transport throughout the city. One of the most popular forms of transport is Metro, aka the Tube. A single ticket between Zone 1 and Zone 6 costs £6.70. Pay-as-you-go fares, on the other hand, are less expensive and vary depending on the destination. A single trip on the Tube from King's Cross (Zone 1) to Camden Town (Zone 2), for example, costs £2.80. However, the journey from King's Cross (Zone 1) to Wembley Park (Zone 4) will cost you £4.40.
Another common form of transport is by bus. In 2023, buses in London are cashless. Therefore, you must have an Oyster card, Travelcard, or contactless payment card. For adults, pay-as-you-go costs £1.75, with a daily cap of £5.25 and a weekly cap (Monday to Sunday) of £24.70. This means that a day of bus travel can cost you up to £5.25. Within one hour of tapping in for your initial ride, you can transfer to other buses or trams for free an unlimited number of times.
An Oyster card is a smart card that you add money to and is used to pay as you go. You can use the Oyster card for buses, the Tube, tram, DLR, London Overground, most Elizabeth lines, IFS Cloud Cable Car, and Thames Clippers River Bus services. All you have to do is simply touch your Oyster card in at the beginning of your journey and out at the end on yellow card readers. The Oyster card costs £7. You then deposit money onto the card to pay for your travel. However, the £7 charge is not a deposit; you will not be reimbursed for it.
If you are using a car for transport, one added expense to consider is the Ultra Low Emission Zone (ULEZ). The scheme was introduced in 2019, and intended to reduce carbon emissions in the city. The ULEZ operates 24 hours a day, seven days a week. The zone covers all London boroughs but excludes the M25. If your vehicle fails to meet the ULEZ emissions criteria and is not exempt, you must pay a daily fee of £12.50 to drive within the zone. This includes motorbikes, cars, vans, and special-purpose vehicles weighing up to 3.5 tonnes, as well as minibusses weighing up to 5 tonnes. To fulfil the ULEZ emissions criteria, your vehicle must meet the relevant Euro standard for your vehicle and emission type.
It's also important to consider petrol and diesel costs if using a car. Petrol prices update every week, but on average:
Other Costs
In addition to rent and transportation costs, other costs that should be considered when determining a good salary include utilities, food, and council tax.
The cost of utility bills in London varies greatly, but the average amount is between £150 and £250. The primary contributor to this variety is energy expenses, which vary according to individual usage, location, and whether or not you live alone.
For example, the average monthly cost for an 85m2 apartment is £217.09pm. Whereas in Bexley, the average monthly cost for an 85m2 apartment is £209.60.
Other regular bills and utilities to consider when determining the cost of living in London include:
Council tax rates vary greatly from one region of the UK to the next. Council tax is imposed on all residential properties in the United Kingdom. This includes houses, flats, bungalows, and any other type of residence. Houseboats and mobile homes are also subject to council tax if they are regarded as someone's primary residence.
Again, council tax charges depend on a variety of factors, including Borough, number of residents, and band. Council tax bands are determined by property value. For example, if you are living in Kensington and Chelsea, with a property value of up to £40k (Band A), then council tax cost will be on average £583.20 per year. However, if you live in a property with a value of more than £320k (Band H), then council tax will be on average £1,749.60 per year.
It's important to remember that these are estimates and that specific costs may vary depending on factors including personal usage, property size, and location within London. To receive a more exact estimate, contact specific utility providers and verify with your local council for the most up-to-date council tax rates in your area.
As for food, groceries are one of the most variable expenses because they are determined by your food preferences and shopping habits. A single person in London may expect to spend between £200 and £300 per month on groceries, while a couple may be around £430. The average monthly food bill for a family of four is approximately £725. Again, food costs differ between Boroughs. For example, in Bexley and Sutton, the average cost of milk (1 litre) is between £0.75 to £1.20. Whereas in Westminster, the average cost of milk is £0.95.
Average Salary in London
The ONS publishes annual estimates of the median salaries of employees in each of London's local authorities. These figures are based on the Annual Survey of Hours and Earnings (ASHE), with a time record dating back to 2002. Currently, according to the latest statistics, the average salary in London is £49k. However, this does depend on Borough.
The majority of Boroughs, including Croydon, Bexley, and Enfield, have an average monthly salary of between £3,500 - £3,999. Whereas Boroughs like Kensington and Chelsea have an average monthly salary greater than £5k.
Again, this is also dependent on industry; more on that below.
What Industry You Enter Matters
Salaries in London vary greatly depending on industry, employment, and geographical area.
As shown in the table above, certain industries pay more than others. Salary plays a big role when determining living costs and additional monthly expenditures. Therefore, understanding the average London salary will help you evaluate your living expenditures and give you a better idea of what you might earn in different roles.
As is the case with most of the UK, private-sector industries offer higher London salaries. The private sector is the portion of the economy that is run for profit by individuals and businesses rather than the government. For example, financial services are among the highest average salaries in London at £72k. This includes roles in banking, insurance, wealth management, and financial advisory. Professional services such as accounting, law, or marketing are also among the highest, with a £48kaverage.
Public-sector industries, on the other hand, often offer lower salaries. The public sector includes any organization that is run by the government and funded by taxpayers. This covers NHS hospitals and emergency services. For example, the health and social care industry is among the lowest average salaries in London at £31k. Similarly, the education sector, including teaching roles, is also among the lowest with a £35k average.
What Would be a Good Salary in London in 2023?
As a rough estimate, based on the data above, an average salary of £60k per year can offer a reasonably comfortable lifestyle in London. This is due to the higher cost of living in comparison to other parts of the UK.
However, this is all dependent on numerous factors, including industry, living costs, location, and working hours. Whether you work part-time or full-time affects not only your overall wage but also your hourly pay rate. Part-time workers earn less per hour than full-time workers. In 2020, the median hourly wage for full-time employees was £15.14, compared to £10.39 for part-time workers.
Conclusion
Determining what constitutes a good income in London is influenced by a variety of factors such as expenses, location, and job industry. The cost of living in the city, especially accommodation and transportation, is higher than in other parts of the UK.
Taking these considerations into account, a salary of £60k per year is a fair salary that allows for comfortable living in London. It is important to remember, however, that individual preferences and financial goals differ, and what is good for one person may not be suitable for another. Finding the right balance between income and expenses is critical to achieving financial well-being and enjoying everything that London has to offer.
