Figures from 2025 show London’s richest earn 11 times more than its poorest after housing costs, over twice the UK average, highlighting extreme income inequality.
In London the top 10% of earners earn 11 times more than the bottom 90%, which is more than double the UK average of 4.8, the State of London Report 2025 found.
This ratio compares the top 10% of earners with the bottom 10% once rent and housing costs are deducted, providing a clearer understanding of how Londoners are affected by rising living costs.
For many low-income Londoners, this gap is felt most sharply through rising living costs.
Kelly Hobbs, 50, a single mother in Sutton said: “I’ve had to look into my finances and do huge cutbacks just to be able to afford to live.”
Londoners on the lowest income decile earn 39% less than their counterparts across the UK after housing costs, as the highest decile earn 36% more.
Analysis from the Institute of Fiscal Studies shows that pay growth in London has been heavily concentrated among top earners in business services, which has driven up geographical inequality in mean earnings.
The highest earning Londoners are pulling further ahead of the workforce, as between February 2020 and May 2023, mean earnings for employees in London grew around 5%, while median earnings only rose by 1.7%.
Around 19% of Londoners, which is approximately 1.7 million people, live in relative poverty, defined as having an income below the average income after housing costs.
Poverty remains the highest within inner London, where 23% of residents fall below this threshold, in comparison with 18% in outer London.
High-inequality boroughs such as Richmond upon Thames, Westminster, Kingston upon Thames and Wandsworth combine extreme wealth with low incomes, whereas areas like Barking and Dagenham, Newham and Sutton show lower inequality but high levels of low paid or insecure work.
In Sutton, a strong housing market contributes to a perception of affluence, which acts as a mask to the financial pressures of a contingency of working homes.
Hobbs alleged that she received just four weeks notice for a rent increase of £300 per month.
She added: “That stressed me out, and that worried me.”
She said she has no savings since approximately 80% of her monthly income goes on rent, food, petrol and other essentials.
Despite working two jobs, financial pressure is constant for those in similar positions.
Hobbs said: “I would say I’m quite a strong person, so I just find ways of having to deal with it.
“They don’t understand why we have to cut back and think about finances.”
A YouGov survey found that 17% of Londoners reported struggling financially between 2022 and 2025.
Those most likely to say they were experiencing financial difficulty were disabled Londoners, renters, those on lower incomes or lower social grades and Black Londoners.
Hobbs has considered leaving London, but fears of fewer job prospects and lower pay elsewhere have kept her in the city, as well as opportunities for her child.
She said: “It’s a sad world out there and I think I am one of the lucky ones that I don’t have to go to a food bank or anything like that.
“It’s just unfair how life works.”
Still, figures show that around one in five Londoners live in relative poverty after housing costs, emphasising how many working households are continuously struggling to make ends meet.
Featured image credit: ByNegativeSpace
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