London is a notoriously expensive place to live – the city was ranked 19th out of 209 cities analysed in the Mercer Cost of Living Survey for 2020.

The UK capital is a city full of opportunities, but expats need to have a full understanding of the cost of living in relation to the salary they’ll be earning to ensure they budget accordingly.

Transport, although efficient, can be rather costly. Lifestyle, entertainment and shopping, however, can be tailored to accommodate various different tastes and budgets as there are plenty of ways to save money in these areas.


Cost of accommodation in London

The majority of expats living in London tend to rent property rather than purchase. The cost of rentals can be eye-watering, especially in the more sought-after areas and suburbs. Space is limited in areas close to the city centre, though fortunately London’s public transport network is excellent which makes commuting easy and widens accommodation prospects considerably. Expats will find that larger properties with gardens are more readily available on the outskirts of the city, and the further away from the city centre one searches, the more affordable the housing becomes.

When looking for accommodation in London, prospective tenants should also budget for utilities, such as electricity, gas and water, along with council tax, as these tend to be excluded from the quoted rental price.


Cost of transport in London

London has an extensive transport network. Public transport includes the Tube (Underground), buses, trams and taxis. But getting around can also become expensive, especially for those who live in outlying suburbs. The best option for people commuting regularly is to buy a monthly or annual travelcard.

There's little need to own a car in London, but those who wish to drive should factor in the high costs of parking, especially in central areas. Added to that, people driving into central London will be subject to paying the congestion charge which was implemented to deter people from driving into the city unnecessarily and causing more traffic.


Cost of education in London

Expats legally resident in the UK are entitled to send their children to a state school at little or no cost. There are plenty of good state schools, but the standard does vary. Nonetheless, it is definitely an option worth exploring, especially for those who plan on settling down in the UK.

Those who wish for their children to continue following the curriculum of their home country will find that London is home to the largest selection of international schools in the UK. Expats should note, though, that fees at British private schools and international schools can be exorbitant, and these institutions tend to be oversubscribed. Wherever possible, expats should attempt to negotiate an allowance for school fees into their employment package.


Cost of entertainment and eating out in London

London plays host to excellent entertainment offerings, from world-class theatres and music venues to museums and art galleries, there is truly something to suit all tastes. Those who want to try out the most exclusive establishments in the city can expect to pay a small fortune for the privilege, but those on a tighter budget will also be catered for. Plenty of places offer special deals and last-minute offers where one can attend some of the best events at a fraction of the usual prices. When it comes to eating out, London has countless options, from fine dining at Michelin-starred restaurants to hearty street food.


Cost of living in London chart

These are average costs for London in January 2021. Prices may vary depending on product and service provider.

Accommodation (monthly rent)

Three-bedroom apartment in city centre

GBP 3,200

Three-bedroom apartment outside of city centre

GBP 2,000

One-bedroom apartment in city centre

GBP 1,700

One-bedroom apartment outside of city centre

GBP 1,250

Shopping

Milk (1 litre)

GBP 0.90

Dozen eggs

GBP 2.20

Loaf of white bread 

GBP 1

Rice (1kg)

GBP 1.45

Packet of cigarettes (Marlboro)

GBP 12

Transport

City centre bus/train fare

 GBP 2.80

Taxi rate per km

 GBP 1.70

Petrol/gasoline per litre

 GBP 1.25

Eating out

Big Mac Meal

 GBP 6

Coca-Cola (330ml)   

 GBP 1.50

Cappuccino

 GBP 3

Bottle of beer

GBP 5

Three-course meal for two at a mid-range restaurant

GBP 60

Utilities

Internet (uncapped ADSL per month)

GBP 31

Mobile call rate (mobile-to-mobile per minute)

GBP 0.13

Utilities (average per month for standard household)

GBP 180