The shortage of affordable homes in London has meant that two-thirds (66%) of employers in the capital are struggling to recruit entry-level staff.
According to the CBI and CBRE’s London Business Survey, almost half (44%) of employers felt they had to offer premium salaries in order to attract and retain to staff who face growing housing costs.
More than a quarter (28%) of organisations claimed they were losing staff because they could not afford to live locally, while more than a third (36%) said the housing crisis was having an effect on their ability to offer flexible working to their employees.
Almost six in 10 (59%) of the 176 firms polled said the issue also stretched to the recruitment and retention of more senior staff and mid-level managers.
Two-thirds (62%) did not believe the housing market would become more affordable in the next three years.
Businesses were less optimistic about the effect the housing market was having on recruitment than they were two and a half years ago. In September 2015, when the survey last asked the question, 57% of organisations said it had an effect on entry-level recruitment and 45% said senior positions were affected.
Despite their concerns about the London housing crisis, 46% of employers planned to increase headcount in the next six months.
CBI London director Eddie Curzon said the organisation supported London Mayor Sadiq Khan’s plans to build 66,000 new homes a year, but wanted more clarity over how this would be achieved.
He urged City Hall to press on with infrastructure projects such as Crossrail 2 and the development of more cycle routes.
“London’s housing shortage is a ticking time bomb. The potent combination of lack of supply and high prices means businesses themselves are being priced out of the market, as they can’t afford to recruit and retain their workers, from entry-level to senior staff,” he said.
Adam Hetherington, managing director of the CBRE, called on the Government to “take heed of the key issues such as housing, business rates and infrastructure which are impeding businesses ability for future growth”.