The Cost of Living in the UK - InterNations

As far as the cost of living in the UK is concerned, it is neither easy nor useful to come up with absolute numbers. Too much depends on your household size and the number of financial dependents, your standard of living, and place of residence. Greater London in particular has a tendency to skew all financial statistics related to living in the UK. That is the one thing you can say for sure: London is definitely overpriced with regard to most budget items, except maybe fuel.

Nonetheless, current UK expats who are interested in becoming “repats” and returning to Dear Old Blighty, as well as new residents from overseas who have just moved for family or work-related reasons, all want to know how far their income will get them. To help you figure out your budget, we will guide you through the most important living expenses.

Housing Costs

First of all, accommodation will take a big chunk out of your available income. Especially if you have arrived only recently, you won’t commit to a mortgage yet. So, rental accommodation it is – at least for the time being. Demand for rental housing is said to be higher than ever, though prices have risen by another 1.3% between May 2012 and 2013.

In the second quarter of 2013, average rents across the UK amounted to about £825 per month. However, average rental costs vary wildly between different regions. For example, prices have hardly increased in Scotland and Wales, but all the more in selected parts of England. In Greater London, you can shill out a monthly £1,250 – whereas figures for the (still expensive) South West or East Anglia are below the national average, with £780 and £750, respectively.

Please be aware, though, that average rents do not take the property’s location, size, condition, facilities, etc. into account. As a rule of thumb, your monthly rent should not exceed 35% of your net income to count as affordable. In London, you may have to spend 50% of your monthly budget on rent – but it should not be more than that.

Housing-Related Expenses: Utilities & Co.

In addition to the cost of housing alone, you have to consider council tax and utility costs. Council tax – as new arrivals from overseas may not know – depends on the estimated value of your property, as well as the rates agreed upon by local authorities. For example, if you live in a “tax band D” apartment (i.e. a property of mid-range value) on Princess Street in central Manchester, you have to pay about £115 per month in local taxes. Fortunately, adults living on their own get a 25% discount.

Your utility bill is not to be underestimated. Water supply and sewerage services alone amount to a yearly charge of roughly £400 for most households. However, it’s energy prices that fuel the rise in utility costs. In 2012, gas and electricity combined required an average expense of £1,240 per year in England and Wales, and £1,350 in Scotland.

Don’t hesitate to shop around and compare all sorts of tariffs and energy online. Also note that online tariffs, as well as payment by direct debit from your bank account, come a lot cheaper than, for example, coin-operated meters in old housing.

“Online shopping” to compare fees and special deals also comes in handy for broadband Internet and mobile phone contracts. If you are on a budget and don’t use your phone much, pre-paid mobile cards cut down on communication costs. Pre-paid SIM cards are available from all major phone providers in the UK, such as Orange, Vodafone, or T-Mobile. If you own a smartphone, tablet, or laptop, you won’t get around paying for a TV licence – even if you haven’t got a TV set as such. This fee amounts to £146 per year.

Food and Transport

Next on the list are the budget items for food and toiletries, as well as transport for getting around on a daily basis. In summer 2013, British star chef Jaime Oliver caused a great ruckus in the UK media when he criticized poor residents’ unhealthy eating habits, claiming that they should rather cook a wholesome pasta dish with mussels and tomatoes for less than a quid. Recapitulating the following discussion would be off-topic, but it’s probably safe to say that he was fairly optimistic with his statement. According to the OECD, the UK has one of the highest food inflation rates in Europe, which affects particularly fruit and veggies.

Nevertheless, you can save a lot by shopping carefully. Local supermarket chains like Tesco and Sainsbury have their in-store value brands, and their new competitor – continental import LIDL – often provides cheaper deals on groceries. If you have some cooking skills and regularly prepare home-made meals, a weekly budget of £40-50 for one person should be plenty to buy food, essential toiletries, and basic cleaning utensils. Of course, if you have an above-average income, feel free to splurge on delicacies from M&S or organic groceries from Waitrose.

Transport costs can be kept low(ish) if you buy weekly, monthly, or yearly tickets for your local transportation networks. Again, prices vary a lot between different cities, and London sets yet another record. A monthly Travelcard for zones 1 and 2 of the tube map sets you back nearly £117 pounds – but in York, you can use all buses in the area for £53 per 28 days. Depending on your exact location, such transport options might save you the costs associated with owning a car – such as the annual vehicle tax and fuel prices (currently £1.375 per litre for unleaded petrol).

Additional Costs

Obviously, you can always spend more, rather than less. You might want to take out an additional health insurance policy in order to avoid the disadvantages of NHS universal healthcare. Families might opt for private education instead of free state schools. Eating out and enjoying a lot of leisure activities will soon add up. In the UK, as anywhere else, the sky’s the limit!

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Posted 04Oct13