[Fuxy]

This is the exception not the norm. Most people don't live like this but i have to agree the prices for renting in London are completely crazy and don't even think about buying a house or getting a mortgage.

I really wish i could buy a house in London (renting it out wold pay for the mortgage and some other bits) but there's no way in hell any bank would give me the amount necessary.

Only rich people and the ones that got council housing will ever be able to live/work in London cheaply.

[eru]

How can rich people live in London cheaply?

[Fuxy]

We arguably rich people have the funds necessary for living in London cheaply in the long therm.

If you buy the house you will never have to pay rent ever on the other hand if you rent you may rent for the rest of your life and adding up all the money you spend on rent over your life would more then pay for the house.

A typical house in London is worth about say £300000 an you're usuall rent for a house like that if you're lucky would be about $1200 but more like £1500 if you want to be realistic.

That means that if you rent for more then 21 years (if you're the luckiest guy in london and find one with a rent at £1200) you have already payed for the house (if we ignore inflation and other things).

Regardless in the long run purchasing the house is the way to go however very few banks a willing to give out that kind of money so only the people that are already rich can pull it off.

[eru]

If you buy a house, you miss out on all the other things you could do with that money, eg earn a return on the bond market. (That's what economists call opportunity costs, and they are realy.)

So, rich people have enough resources to live in London, but not to live in London cheaply either.

You can not ignore inflation and yield of alternative investments for these kinds of arguments.