Tackling the home advantage

It was easier for graduates when I left university in the 1960s. You could afford to rent a flat close to the centre of London. There was no expectation that you had to have several internships under your belt before starting a professional or City job.

Now those with a family home in the capital – or a generous parent to pay the rent – are at an even greater advantage than ever. They don’t have to find the £926 a month that we reckon it takes to hold down an unpaid internship. They don’t have to fork out a four-figure sum each month in rent with a job. And they don’t have to worry about London’s ever-rising house values.

This is not just about affordability for young people generally; it is a serious impediment to social mobility and a loss of talent for the capital’s employers. I’ve seen it trying to recruit older employees with families back to London; now it is a real problem for young people with fewer such ties.

New Sutton Trust research today from LSE London shows how difficult it is for young graduates to move into London for work. While university access continues to improve, only six per cent of new graduates moving into the capital without London connections come from the poorest fifth of neighbourhoods in the UK, compared with 42 per cent from the richest neighbourhoods. So, while those from richer neighbourhoods are 2.5 times more likely to go to university, richer graduates are seven times more likely to move to London.

As our Home Advantage report shows today, the high cost of London housing has also left many young graduates trapped into rising rents in shared accommodation or forced to continue living with their parents. Since 2004, there has been a 28 per cent rise in the number of 25-34 year-olds living in shared homes, while the average house price is less than eight times average income in just two boroughs, Bexley and Barking and Dagenham.

All this affects social mobility. Over half of top professional posts are already held by those from the 7 per cent of families that could afford private school fees, and so many of our leading jobs in finance, politics and policy and the professions are based in the capital. We have made progress through programmes like our summer schools in opening our best universities to those from low and middle income homes. But if they can’t afford to move to the capital, they are missing out on the opportunities that should open up to them with their hard-earned degrees.

But there have been lots of reports documenting the problem. The authors of today’s report show that even the current Mayor’s strategy would build 20,000 fewer homes a year than we need to keep pace with demographic change. We need action from the Mayor and from whoever succeeds him next year, to move beyond expecting graduates in work to live at home or to continue living in student digs. In today’s report, we have looked at some innovative ideas that could help to give young professionals an affordable foothold on London’s housing ladder.

Options include developing new forms of student housing commercially targeted at young people in their first job, special housing developments designed specifically for young professionals, factory built pre-fabricated housing and covenanted housing that must be used for private rent. The report highlights great examples of these types of homes already in use, but argues that we need far more if we are to meet the needs of talented young graduates whom the capital should attract.

London needs to be able to continue to attract the best talent from across the UK, regardless of background. Our brightest young people from less advantaged backgrounds deserve the same chances to reach the top of their professions or to be able to turn their talents into businesses as their better off counterparts. Making it easier to get a foot on the capital’s housing ladder is a key part of meeting that challenge,

We’ll be sending today’s report to all those aspiring to be Mayor, as well as Boris Johnson and the leaders of London’s local councils, and I hope they will act to make London housing affordable for graduates from across the UK again.