In London’s war for talent, housing affordability rises up the boardroom agenda
Access to labour, the impact of artificial intelligence and a tightening labour market – these are just some of the obstacles businesses are coming up against in London’s war for talent. According to our latest Impact report however, housing costs have emerged as another major challenge for businesses.
We surveyed 1,000 CEO’s across the UK and asked is housing affordability restricting their business growth? Three quarters of CEO’s believe that housing costs negatively impact their business. We also asked 2,000 employees their opinions and 85% said that housing and rent costs are important when deciding whether or not to accept a job.
Although this is a UK wide issue, our survey suggests a greater proportion of CEO’s and employees in London are feeling the negative impacts of housing affordability. This comes as no surprise as figures from the 2017 House Price Index suggest seven out of the 10 least affordable local authorities in England and Wales were in London.
The survey found that 71% of London employees felt that housing and rent costs are very important when choosing a job. A massive 91% of London CEO’s are struggling to attract new employees because of high housing costs and one in five businesses are struggling to retain talent; losing 25 employees or more in the last two years as a result.
Proactive steps are being taken to accommodate employees
So what steps are the capital’s businesses taking to overcome this challenge? 54% of businesses are considering moving to a less prime locations and just over half are looking to provide accommodation for new employees. A good example of the latter is Deloitte negotiating preferential terms for it graduates at Get Living’s East Village. Although the thought of living with your colleagues may not appeal to everyone, this is a potential template for other businesses to team up with Build to Rent (BTR) developers going forward. Jonathan Pitt, Senior Director of Alternative Markets at BNP Paribas Real Estate agrees, ‘As BTR starts to grow, more and more employers will actively seek out partnerships with BTR developers. To be really effective, this needs to cover all locations and all employee budgets’.
Improving work life balance is key…
Businesses also need to accommodate for employees that commute, 46% of London employees commute more than 30 minutes to work, compared with the UK average of 37%. As a result, a higher proportion of London employees cite lower productivity as a major challenge. Tiredness and limited time for a social life were also challenges faced as a result of commuting.
To help combat this, London businesses rank high in terms of taking steps to improve work life balance offering their employees flexible hours and the ability to work from home. However, despite the successful trials of shorter working weeks across the globe, offering a four-day week is yet to take off.
… but businesses can only do so much
Businesses are taking positive steps to help employees however a number of fundamental factors are outside of their control. Given that only 2% of all affordable housing in London last year, according to GLA numbers, were delivered in the high density headquarters locations of the City and Westminster, building affordable new housing in the area around businesses is favoured by 56% of CEO’s.
Government investment into public transport is also cited as an idea that could help attract and retain staff. The arrival of Crossrail will certainly help alleviate the pressures on the tube network and make journeys shorter and hopefully less stressful. Other major projects to widen the pool of talent will be the completion of the Northern Line extension expected in 2021 and in 2026 HS2 also will be delivered. Crossrail 2 however, is yet to receive the green light.
Investing in employees will pay dividends down the line for businesses and London alike
Although it is encouraging to see businesses responding to these challenges there is more that can be done. For example, more companies could offer flexible hours to avoid peak prices and periods for employees. For meaningful change though, delivery of schemes like the cycling super highways and tackling air pollution could make cycling more appealing to many commuters. Although such measures will not erase the negative impacts of housing affordability, together with those already being implemented they will help to attract and retain the best talent to London.
Central London Research
BNP Paribas Real Estate