Living in London - Part 1: Costs

For the past 15-months I've lived the Australian backpackers dream - working, partying, sleeping and living it large in London. I've had a brilliant time, with many new memories, scars and stories to tell. Despite this, I have to admit that London is not the easiest place to live in, let alone move to. Yes, travelers are constantly coming from all parts of the globe to setup a new home and live the London life, but that doesn't make the transition any easier.

In an attempt to assist the following few posts will be written to cover some pointers for easing the transition. Some of the content will be common sense points that you'd consider regardless of where you are moving, and some are unique to living in London. Please feel free to comment and let me know your thoughts.


1. The cost of living in London
London is acknowledged as being one of the most expensive places to live in the world. Rents are high, but thankfully wages in central London tend to compensate to some extent. Nonetheless, some items tend to be comparatively more expensive than others.


1.1 Exchange rates
The exchange rate between the Great Britain Pound (GBP) and Australia Dollar (AUD) is currently sitting at around 2.07:1 (May 2008). Bank exchange rates tend to be competitive against money changers, with both charging percentage-based fees which may already be incorporated in to the offered rate. Airport money exchange rates are quite bad (which is to be expected).

For setting up accounts or transfering larger sums of money international wire transfers (via bank) are the way to go. These generally carry a standard transaction rate + percentage fee.

I find that it takes me at least a month in a new country before I become comfortable with the exchange (and the prices I’m paying!). In some ways it’s a good way of holding back on expenditure to calculate the exchange, especially while you’re getting settled and are yet to earn GBP.

Settling into a new city takes time. Over the last few years I've went through the cycle more than a few times (it's that Australian wanderlust kicking in), and find that from arrival to set-up, to getting to the point of financial stability, usually takes 3-months. Of this the first 2-weeks are usually spent getting myself comfortable with my environment, finding a permanent place ot stay and getting work. It then takes a further 2-months before I've absorbed the costs of accommodation bond and needed homewares.


1.2 Cost of entertainment
The biggest difference that you'll probably note in your expenditure is what it costs when you are out on the town. Eating and drinking out in London can be extortionately expensive, whether you are comparing to home ($AUD) rates or supermarket prices.

To illustrate: In a London pub the cost of a pint of beer is ₤3.00+ and a mixed drink (25ml shot) is ₤3.50+. Note that most bars will charge you extra for any mixer that you may choose to have. Premium offerings can be as much as twice this. At a supermarket you can get a 6-pack of beer for around ₤5 (premium beer) or a bottle of spirits (70cl) for around ₤11. Supermarkets will feature a particular brand each month which will have a sizeable discount (₤1 or 2 pounds off).

Eating out tends to be similarly expensive. I remember the first time I was out with friends in London and ordered a simple burger (gourmet thought it may have been). The cheapest option on the menu was ₤12, and while it may have included fries, my internal conversion was spun out at the thought of paying $25 for a simple hamburger. While cheaper eats are available if you search, expect to pay between ₤15-30 for a basic meal (main + beverage). If you’re into posh nosh the sky is the limit.


1.3 Rent
Rent is often identified as the biggest contributor to London’s high cost of living. It’s therefore important to understand what the cost / comfort trade off is and what you can afford to pay.

Factors that you may initially consider include:

• Area demand / posher neighbourhoods
• Locality and transportation links
• Fittings and space
  

High (₤200+ week)
High demand areas such as Clapham or Camden often demand higher comparable rent purely due to popularity and competition for places. If you're taken with posher established neighbourhoods such as Holland Park, Notting Hill or Bayswater, then expect to pay a premium. Cost may also be incurred for living closer to the centre of London (Zone 1); the trade-off for reduced travel time and good transport links. Single or double bedroom properties may also be more expensive (less ways to spread the rent).

Medium (₤120 – 160)
Medium rent areas generally trade off either locality (Zone 2 or 3) or area in favour of improved size and comfort. Areas such as Chiswick, Earls Court and Greenwich may be considered typical medium rent areas.

Low (<₤120/week)
Low rent areas may be further from transport links, less spacious or in less well regarded areas. Low rent accommodation may be found in more reputable areas, however this is often as a result of house sharing (8+ people) and/or bedroom sharing. Such an option is particularly popular with travelers (the term ‘Antipodean’ is often used in the UK to describe those who come from Australia, New Zealand and South Africa) who are working basic jobs but wish to save money for traveling.


As a final note, rent cost is often as much determined by luck as the previously discussed factors. Low historical rent or housemate desperation can contribute to lower rents than generally expected for a given area. The only real way to work out if a place is worthwhile is to see it for yourself!


1.4 Perishables
Food costs can vary significantly in London, although you can survive comfortably on a budget if you are careful (and we’re not just talking pasta and canned tomatoes-style). Supermarkets in particular can offer good value-for-money with their competitive every-day-lowest-price and 2-for-1 offers.

Pre-prepared meals have become increasingly popular, but are generally less cost effective. Investment in a good cookbook and staple ingredients can make eating in London a little more pleasant.

Groceries

• Top tier: Waitrose and Marks & Spencer are at the top-end of the supermarket hierarchy, offering fresher, better quality food stuffs. From experience fruit and vegetables tend to last longer and carry more taste, however you are paying a premium in return.
• Mainstream: Asda, J Sainsbury and Tesco are the three major supermarket chains in the UK, with huge buying power. Between them they account for approximately 70% of total supermarket spend, with Tesco dominating within this holding twice the market share of its two closest competitors. Slightly behind the big three are Morrisons and Somerfield, who each hold about 10% market capitalisation.
  All chains have a large number of stores nationally, are very competitive in their pricing and offer good value. Further benefits may be garnered from in-store membership cards J Sainsbury and Tesco are generally associated with the middle class, while Asda and Morrisons are targeted more at the budget sector. This is reflected in brands and product offering.
• Budget: No-frills style supermarkets have gained increasing popularity in recent years, with emphasis on low margin, high volume sales attracting the budget conscious consumer. Aldi, Lidl and Iceland are representative of this type of retailer, offering a very limited selection of products for very competitive prices.
• Convenience: Local convenience stores such as Cost Cutter, Co-op and local cut-down versions of J Sainsbury and Tesco stores offer smaller format stores. Prices are generally slightly more expensive, with less special offers.

Pharmaceuticals and toiletries
Boots and Superdrug are the main chain pharmacies in the UK. Both offer a range of monthly discounts and specials, with larger stores also offering photo development and optical services.

1.5 Durables
London offers a variety of popular chain (referred to as ‘High Street’ stores) and boutique stores. Besides local shopping centres (generally located around suburban High Streets) key shopping areas in London are High Street Kensington (West), Oxford / Bond Street (Central) and Covent Garden (Central). More alternative fashion options can be found in Camden (North) or Soho (central London).

Key sale seasons are January / February (Winter) and June / July (Summer). At this time High Street and department stores offer attractive discounts on their core range. This is the best time to bargain hunt, with up to 70% discount on certain items.

Clothing - young and casual
Popular retailers for young adults (male) include: Topman, Mexx, River Island and Burton. These retailers offer contemporary seasonal fashion at moderate prices. Quality of clothing can vary between seasons and retailer however and isn't always durable. Office and Aldo are on a similar level selling sweat-shop mass produced shoes. Then there are the fashion outlets Next, H&M and Zara who produce budget fashion based on the latest European fashions for both men and women.

Clothing – formal / suits
While London’s Savile Row has long been associated with quality tailoring and bespoke suits, there are still many options for those who aren’t ready to spend tens of thousands of pounds on a top-shelf morning coat. Most High Street retailers catering to young adults sell off-the-shelf suits. Moss Bros is another popular alternative, who offer both hire and sale. With a large range of mainstream suits, including brand names like Yves Saint Laurent, Zegna and Pierre Cardin.

Jermyn Street tailors have long been acknowledged for their high quality shirts, and during key sales periods a good quality 100%-cotton, French cuffed shirt or spring jumper can be snapped up for a reasonable price. TM Lewin and Curtis & Hawes are two more popular Jermyn tailors who have a number of stores in the London area.


Bedding
Good quality bedding can be expensive. If anything I’d recommend bringing sheets / doona covers over from Australia as good quality cotton in London seems to be comparatively expensive.

If you’re not too fussy about what you’re sleeping in then Primark or Argos offer relatively cheap options. It should be noted however that 50/50 cotton-polyester doesn’t wash well, particularly at moderate temperatures. That said budget retailers tend to offer a limited range of single colour 100% cotton sheets at reasonable prices. Both Primark and Argo are also a good option for cheaper pillows, quilts and mattress protectors.

Alternatively, department stores offer high quality bedding from brand names such as Sheridan and Espirit.

Books and travel guides
Waterstones and WH Smith are probably the most common book chains in London, although there is also a very large Borders outlet on Oxford Street. It should be noted however that while all chains tend to offer Buy-2-Get-1-Free offers, books are not cheap in the UK. A more competitively priced alternative is to order online via Amazon.co.uk which has developed a reputation for good deals.

Department stores

Department stores come in a number of shapes and sizes in London. The most acccessible lie on Bond Street in Central London, with John Lewis and House of Fraser located within a block of each other. Further up towards Marble Arch station on Bond Street is Seflridges and Co., which has a good selection of more exclusive brands.

If you happen to be feeling particularly wealthy then at the upper end of town there is of course Harrods, infamous for its oppulence. Alternatively both Harvey Nichols and Fortum & Mason are also established higher-end retailers who will be very willing to sell you the finest cognac, caviar and champagne.