Young people quitting London over housing crisis: 'Owning a home is a distant dream'

Twenty-somethings are quitting London after being priced out of the city, leading social housing associations have warned in a plea to Labour to ramp up funding for housebuilding.

The G15, a group of London largest housing associations including L&Q, Notting Hill Genesis and Peabody among others, warned surging private rents and out-of-reach house prices are leaving youngsters with little option but to leave.

• Tenants win more than £250,000 of rent back from billionaire landlord in five-year legal battle
• This is the devastating impact growing up in temporary accommodation has on children’s GCSE results
• ‘They had nowhere to go’: The story of rough sleepers left outside in London’s Covid-19 lockdowns

Private rents are rising faster in London than anywhere else in the UK. according to the Office for National Statistics (ONS). Monthly rents increased by 9.9% in London to an average rent of £2,235 a month in the year up to February – albeit down on 11% in January.

House price inflation increased by 2.3% in the 12 months to January – up from 0.4% in December 2024 – but experienced the lowest rise across the UK. Despite that, house prices in London remain far in excess of elsewhere in the country – Nationwide reported this week the average price for a London home is £529,369. 

Fiona Fletcher-Smith, chair of the G15 and chief executive of L&Q, said: “Young people are telling us loud and clear they want to stay in London, but they cannot see how. They are priced out of private renting and home ownership is an increasingly distant dream. They do not have access to social or affordable housing due to short supply.

“If we want London to remain a city for everyone, we need more than funding. We need structural change so housing associations like ours can get back to building.”

The G15 pointed to research from London Assembly that shows some Londoners aged 25 to 29 years old on low incomes were spending as much as 77% of their wages on housing during the cost of living crisis.

A total of 2.2 million people – or a quarter of London’s population – live in poverty in the city, according to Trust for London. But the rate of 20-24 year olds below the poverty line is 29%, the G15 said.

The housing associations also reported that the number of private renters in poverty has reached 4.8 million across England, rising by 300,000 in the space of a year, according to Joseph Rowntree Foundation analysis of DWP figures.

With London rents higher than anywhere else in the country, private rented tenants are particularly vulnerable to falling into poverty, even with higher incomes.

G15 research found tenants must earn £76,000 a year to afford the average private rent in London.

The housing associations said the government must commit to building social housing at June’s spending review.

Providing homes for the 336,366 households in the city still waiting for social housing would unlock over £7.7bn annually for London and the wider UK economy, the G15 claimed.

They called for a 10-year social housing rent settlement to offer certainty so that housing associations can plan and build. Currently, social housing rents are set annually at CPI inflation plus 1%. The group also called for full access to the Building Safety Fund to carry out safety work on social housing properties.

“These are practical, achievable steps,” said Fiona Fletcher-Smith. “They would unlock long-term investment, enable housing associations to help meet the government’s 1.5 million homes target, and protect the services our communities and young people rely on. London’s future depends on keeping the next generation here.”

The Labour government has pledged to build 1.5 million homes while in power, although it has yet to commit to a specific social housing target, despite calls from housing campaigner Kwajo Tweneboa to do so.

Ahead of the Spring Statement, ministers announced a £2bn investment to deliver 18,000 affordable and social homes.

But Office for Budget Responsibility forecasts showed that the government is on track to miss its 1.5 million targets, despite chancellor Rachel Reeves’ claims that Labour would be in “touching distance” of hitting the milestone by the end of the decade.

In London, city mayor Sadiq Khan has a target of delivering 23,900 and 27,200 affordable homes but reportedly only 902 new affordable homes were delivered under the programme between October and December last year.

He has previously said 1% decrease in house prices in London could yield a £7.3bn boost to the economy over a decade.

The G15 warning comes as the Housing, Communities and Local Government Committee’s report into children living in temporary accommodation put the spotlight on the homelessness crisis in London.

One out of every 21 children in London are homeless – equivalent to at least one homeless child in every London classroom – and it’s costing councils £4m a day to house them in temporary accommodation.

Reacting to the report, councillor Grace Williams, London Councils’ executive member for housing and regeneration, said: “Secure and stable housing is fundamental for education, health, and well-being. London boroughs are hugely concerned by the tens of thousands of children caught up in the capital’s homelessness emergency, and what this means for London’s next generation.”

Do you have a story to tell or opinions to share about this? Get in touch and tell us more. Big Issue exists to give homeless and marginalised people the opportunity to earn an income. To support our work buy a copy of the magazine or get the app from the App Store or Google Play.