New ABC Finance research finds the capital’s workers are left with £154 a month after essential costs, while UK wage growth falls to its weakest rate since 2020. For young workers starting out in London, the gap to home ownership has rarely been wider
A worker renting in London and saving every pound of their disposable income would need 30 years to accumulate a 10 per cent deposit on an average London property, according to new research by ABC Finance. The same calculation in Derby takes 18 months.
The finding emerges from ABC Finance’s analysis of disposable incomes across 12 UK cities, combined with published house price data from the Office for National Statistics UK House Price Index. The average London property costs £554,000, according to the January 2026 UK HPI. A 10 per cent deposit on that sum is £55,400. Against a monthly disposable income of £154, what remains after a median London salary of £46,800 is taxed and essential costs are paid, saving that deposit would take 360 months, or 30 years.
In Derby, a 10 per cent deposit on the average first-time buyer property, which the ONS records at £184,000, amounts to £18,400. Against monthly disposable income of £1,023, that takes 18 months.
The figures arrive against an increasingly difficult backdrop for workers across the country. The Office for National Statistics reported on 19 March 2026 that regular pay growth slowed to 3.8 per cent in the three months to January, the weakest rate since the three months to November 2020. For London workers already spending 95 per cent of their salary on essentials before a penny goes to saving, a pay rise at a five-year low offers no meaningful route to home ownership. The same ONS release recorded youth unemployment among 16 to 24 year olds at 16 per cent, the highest rate since 2015. Young workers in the capital, typically on lower salaries and facing the same rent costs as their older colleagues, face the sharpest version of the squeeze the numbers describe.
Gary Hemming, Managing Director of ABC Finance, said: “Wages growing at their slowest rate in five years, combined with costs that have barely moved, means the gap between renting and owning in London is not closing. It is widening. For young people starting their careers in the capital, the honest picture is that home ownership on a median salary is not a delayed ambition. At current rates, it is a near-impossible one without additional support. That is a significant problem, and it does not fix itself.”
The income gap that drives it
The deposit gap is a direct consequence of what ABC Finance’s wider analysis found: essential costs in London, covering rent, council tax, utilities, transport, and groceries for a single person renting a one-bedroom city centre flat, consume 95 per cent of the typical post-tax salary of £37,216 a year. That leaves £1,849 annually, or £154 a month.
In Derby, the same five categories account for 59 per cent of take-home pay on a median salary of £36,800, leaving £12,278 a year, or £1,023 a month.
The salary gap between the two cities is £10,000 gross per year. The disposable income gap is £10,429 per year. In cash terms, Derby workers have more left over despite lower pay. The difference is almost entirely explained by rent. A one-bedroom city centre flat costs an average of £2,100 per month in London, according to Zoopla’s March 2026 Rental Market Report, compared with £750 in Derby.
The salary you actually need
ABC Finance also calculated the gross salary a London worker would need to earn in order to have the same monthly disposable income as someone on Derby’s median wage.
The answer is £64,000 a year. That is 37 per cent above London’s own median salary of £46,800, according to ONS ASHE 2025. In other words, a London worker would need to earn considerably more than most of their colleagues simply to reach the financial position that a typical Derby worker already occupies.
| London | Derby | |
|---|---|---|
| Median gross salary | £46,800 | £36,800 |
| Take-home pay | £37,216 | £30,016 |
| Essential costs per year | £35,367 | £17,738 |
| Monthly disposable | £154 | £1,023 |
| Average property price | £554,000 | £184,000 (FTB) |
| 10% deposit required | £55,400 | £18,400 |
| Years to save deposit | 30 years | 1.5 years |
What this means for remote workers
The research also calculated the gain available to a worker who earns a London salary while living elsewhere. A worker on London’s median of £46,800 who relocates to Derby faces annual essential costs of £17,738, leaving an estimated £19,478 in disposable income per year. That is £17,629 more than if they remained in London and £7,200 more than the typical Derby resident, reflecting the advantage of combining a higher salary with a lower-cost location.
At that income level, the same 10 per cent deposit on a Derby first-time buyer property could be saved in approximately 11 months.
Gary Hemming, Managing Director of ABC Finance, said: “For young workers with the flexibility to work somewhere other than London, the financial case for doing so has rarely been stronger. Wages are not rising fast enough to change the London equation, and the deposit calculation shows just how stark the consequences are. Earning a London salary in Derby is not just slightly better. It is a fundamentally different financial life, and for many young people it may be the only realistic path to ownership.”
Methodology
ABC Finance calculated disposable income by deducting essential annual costs from take-home pay for a single person renting a one-bedroom city centre flat across 12 major UK cities. The five cost categories examined were rent, Band D council tax, utilities (energy, water, broadband), a monthly public transport pass, and single-person grocery costs.
Median salaries are from the ONS Annual Survey of Hours and Earnings (ASHE) 2025, published October 2025. Take-home pay uses 2025/26 HMRC income tax and National Insurance rates, with Scottish income tax bands applied to Edinburgh and Glasgow. Rent data is from Zoopla’s March 2026 Rental Market Report and the HomeLet Rental Index. Council tax figures are from GOV.UK official statistics for 2025/26. Energy costs reflect the Ofgem price cap for January to March 2026. Transport costs are from each city’s transport authority. Grocery costs are from the WeCovr 2026 household food cost analysis and the Food Foundation’s February 2026 Food Prices Tracker.
The London house price used (£554,000) is the overall average for all property types and buyer types in London, from the UK House Price Index for January 2026, published 25 March 2026 by the ONS and HM Land Registry. The Derby figure (£184,000) is the average price paid by first-time buyers in October 2025, from the ONS Housing Prices local tool. These use different bases, London overall versus Derby first-time buyer specific, which makes the London figure conservative for this comparison. Individual London borough first-time buyer data ranges from £444,000 in Tower Hamlets to £619,000 in Islington, all substantially above the Derby first-time buyer figure.
The deposit savings calculation assumes all monthly disposable income is directed to saving and does not account for interest on savings.
All figures represent a single person renting a one-bedroom flat in the city centre. The analysis does not include childcare, insurance, subscriptions, or other discretionary spending.
Wage growth and youth unemployment figures are from the ONS Labour Market Overview, UK: March 2026, published 19 March 2026. Regular pay growth of 3.8 per cent in the three months to January 2026 is described by the ONS as the weakest rate since the three months to November 2020. Youth unemployment among those aged 16 to 24 stood at 16 per cent in the same period.
About the author
Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business publications as well as local and national press.
