Cost of Living in London?

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Cost of Living in London

It’s a well-known fact that London is a very expensive city to live in. This is mostly due to the high costs for housing, but the prices of food, petrol, utilities, and other necessities have also been increasing in recent years. Find out how to budget your expenses in this article on the cost of living in London.
Rental prices are exorbitantly high in London, especially in the city center.

Ever since the financial crisis in 2008, the cost of living in London has been increasing at a much faster rate than the average salary. The inflation rate in the UK for the past three years has hovered around 5.4%. Luckily, as an expat living in London, you will most likely be making an above-average salary. You may even be able to negotiate for a cost-of-living adjustment and to have some expenses covered by your employer, such as accommodation, childcare, school fees, or your car.

Housing Costs

Chances are that the largest part of your paycheck will go towards paying for your apartment or house in London. Due to London’s high population density, land is at a premium, and rental prices have been rapidly increasing over the past few years. Rent for a one-bedroom apartment in the city center is about GBP 1,500 per month and a three-bedroom apartment will set you back an average of GBP 2,800 per month. Outside of the city center, a one-bedroom apartment costs an average of GBP 920 per month and a three-bedroom apartment rents out for around GBP 1,700 per month.

If you decide to buy an apartment or house, property sells for an average of GBP 8,000 per square meter in the city center and GBP 4,900 per square meter outside of it. In prime locations in the city center, however, it is not unusual for property to sell at a rate of GBP 13,000 per square meter.

When choosing where to live, it’s important to find a location that fits your lifestyle and budget. Properties farther outside the city center cost less to rent and buy, but remember, you will then be faced with higher transportation costs and a longer commute. Many people only feel like they’re getting the real London experience if they live in Zones 1 or 2, but prices are of course most expensive here. London Rents Map gives a good overview of the rental prices in different areas of the city.

One positive aspect to renting in London is that most apartments are furnished, meaning you won’t need to budget in money for buying new furniture once you arrive. Keep in mind that you will usually have to pay a security deposit of up to six weeks’ rent as well as the first month’s rent in advance when you sign your rental contract.


The cost of utilities can also carve a substantial chunk out of your budget and can add another 40-50% onto the rental price you see advertised. Utilities in London include gas, water, electricity, telephone, internet, TV, and council tax.

You may find that your gas and/or electricity bill (depending on what you use for heating) is higher than you were expecting, due to the cold and damp climate in London and the poorly insulated older buildings. Shop around to find the cheapest gas and electricity provider.

Telephone, internet, and cable TV are often cheapest when purchased as a bundle. Packages start at GBP 20 per month and go up from there. In addition, you need to pay for a TV license, even if you only watch shows on your computer. This costs about GBP 150 and needs to be renewed annually.

Council tax covers trash collection, local fire and police services, and street maintenance and lighting. The cost varies by district and ranges from GBP 627.86 to GBP 1,883.58 per annum. The amount of council tax you owe will depend on the size of your property. If you live alone, you will receive a 25% discount.

Transportation Costs

As we already mentioned above, your transportation costs will depend a lot on where you decide to rent or buy. If you live in central London, you may be able to save money by walking or cycling. A Travelcard (for trains, the Tube, buses, and trams) for Zones 1 and 2 costs GBP 120.60 per month and GBP 1,256 per year. For Zones 1-3, an annual Travelcard costs GBP 1,472. This increases to GBP 2,288 per year for Zones 1-6 and GBP 3,256 per year for Zones 1-9.

Owning a car can also be very expensive, especially if you want to drive into the city center, as there is a congestion charge of GBP 10 per day. The price of petrol has almost doubled in the past decade, and is currently at about GBP 1.40 per liter for unleaded and GBP 1.45 per liter for diesel. In addition to this, you have to factor in the costs of car insurance and road tax.

For additional information on the cost of living in the UK in general, take a look at our article on the cost of living in the UK.


We do our best to keep this article up to date. However, we cannot guarantee that the information provided is always current or complete. 

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