How much more is New York expensive than London

How much more is New York expensive than London?

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New York City and London have each been called the greatest cities in the world, but they’re not easy places to live. New York City is home to more than 8.3 million people and was ranked one of the most expensive cities in the world in 2022, tied with Singapore. Whereas London, with its nearly 8.8 million residents, was deemed the 28th most expensive.

The cost of living in New York is higher than in London. It would cost approximately $9,500 USD. A month to maintain the same lifestyle as about $7,200 would get you to London. Here, we explore all about whether New York is more expensive than London?

Let us know something from two residents of two cities

Lucy Wong, a 25-year-old New Yorker living in London, claims that she overspent in New York. But New York City residents tend to earn more money than Londoners, so businesses are able to charge more.

Londoner living in New York 28 years old, Lily Slater says—without any contest. London is relatively less expensive than New York.

I think commodity prices are one of the appetites and stronger here. There are also many other asymmetries, but what can I say about this? Rarely do they feel that way in London. The United Kingdom residents tend to pay more in taxes than people in the US, but the difference is less stark in New York City than the rest of the country.

Anna Nicholls, chief economist at the Economist Intelligence Unit, told us that, in general, the tax burden in Europe is far higher than it is in the States. On the other hand, that also means that a lot of what we would deem public service is much more expensive in the states because you have to pay for that on top of the taxes.

Daniel Boone, president and CEO of the Tax Foundation, said: The difference between New York and what you would see in London isn’t as large for local income taxes, but it is significant for sales taxes, where you have relatively low sales taxes within New York. 20% VAT is payable in London.

Is New York or London worse for your credit card?

So how much does it cost to live in New York versus London? Why are people ready to spend so much on living?

Business Expensive

A little while ago, I introduced you to Lucy Wong, a 25-year-old New Yorker living in London. Now I will hear some more experiences from him again: Lucy has been challenging herself to limit her weekly budget for everyday expenses to $150 USD. This is day two of trying to spend less than $150 a week living in London.

It was so interesting to compare how expensive New York is with other cities across Europe. It really makes you conscious of how much you’re spending. Whether you live in New York or London, let’s start by accounting for your biggest expenses.

Housing rent prices in New York City are about 47% higher than in London. A one-bedroom apartment in the city center averages around $3,800 in New York. In London, a comparable apartment would cost nearly $2,600.

Lucy Wong said, Rent is cheaper in London. In New York, my apartment was $1800 a month for a not-tiny but not gigantic studio. It’s like a walk-up building. There’s no laundry in the building. We couldn’t control the heat. So, like a mid-tier apartment in London, I pay £1300, which I believe is about $1,600 for a room in a six-bedroom house.

We have laundry. We have a gardener and a housekeeper. I do think the current house that I’m in is expensive for London, and I would be able to find something cheaper if I wanted. I’ve never had a backyard before, and it’s so nice. 

Also, Lily Slater said, I grew up in London. I now live in a studio apartment in Prospect, Hight’s, which is an equivalent neighborhood to Islington in London. There, I could get one bedroom for the cost of my studio.

Grocery cost comparison

Grocery prices are also 70% higher in New York.  New York is also more expensive when it comes to having fun. The culture of spending is just major here. Social things mean spending money. Like if you go out for dinner and it’s really expensive or you go to a show.

It’s really expensive, and there are just affordable ways to spend time with your friends and your family in the UK in London at least, that just don’t really exist here because there are things like pubs that are affordable because a lot of people in their 20s live in nice houses with living rooms, dining rooms and kitchens.

Tipping culture is also a big part of the US with restaurants and bars expecting a 15% to 25% gratuity on service on top of taxes and potentially a service fee. This can significantly add to the cost of going out. Lucy said that’s because alcohol can be a lot cheaper here.

Like, you can get a pint of beer for like £4, but then they still have places where it’s like £19 or £20 cocktails, which is the same in New York where you can get a $25 cocktail and feel really bad about yourself afterwards.

Income and taxes

New York may be more expensive, but New Yorkers tend to make more money and are taxed less than Londoners. The average New Yorker earns a little less than $1,391 per week, whereas London’s average is a little less than $970 or £805. Because of this, local purchasing power in New York City is about 19% higher than in London.

Lily said, When I took out my most recent job, I got a pretty big pay bump, and my dad, who lives in South London, was astonished by how much money I was going to be making. And then he came to visit me like two weeks later and was like, Oh yeah, that must not go very far because he was. He and his girlfriend bought a coffee, and it cost $15 for just two coffees or whatever.

But we also have to factor in taxes. The United Kingdom’s income tax rates are set for the whole country. They’re progressive, which means that as you earn more money, you will pay a higher marginal tax rate. The UK has four tax brackets, with the highest rates set at a little over £125,000, or around $157,000 USD.

Compared to US income tax brackets, that’s a relatively low threshold for such a high rate. It’s more difficult to figure out exactly how much New Yorkers pay in income tax because, unlike in the UK, we have state income tax, so we don’t have a clean table of tax brackets like in the UK.

New York has the highest top personal income tax rate, when you combine state and federal, than anywhere else in the country. but the state tax system layers on top of federal tax rates. So you can have folks who are making relatively modest incomes for New York City and are facing rates that are in the high 30s and low 40s.

Lily said, My friend just can’t ignore the figure of what their salary is going to be and do the same thing. So I think if it is marginally different, it’s either side of that number. I think I might be like 28 and she might be 32 or something, but it’s pretty close.

We also have to factor in consumption taxes, which are taxes on things that you buy. Those are called sales taxes in the U.S. and value-added taxes in the UK. The value-added tax in London is set at 20% for most goods and services. In New York, total sales tax is about 8.875%.

But there’s one crucial difference. In the United Kingdom taxes are built into display prices in stores. It’s more part of the way you budget. It’s like, It’s a number that you don’t even think of as being separate from the cost of things

Here, it’s two separate things, and I think that makes it feel more like it is less money,” said Lily. You may be wondering, if there’s a 20% tax on goods in London, why are things less expensive? Well, there’s a lot going on behind the scenes when it comes to how businesses are paying taxes. But that process depends on what country you’re in.

Businesses also pay that tax when they’re buying things for their business. And this can lead to additional tax burdens where the business buys the thing, they build the thing, and then they sell the thing, and there’s taxes all along the way, even at a 5% rate.

This can build up into a kind of pyramid structure where their total tax burden across the supply chain is relatively high. Value-added taxes are calculated differently. The business is able to get a rebate for the tax that they paid at an earlier stage of the process. When they sell that thing along to the next business, either for final manufacturing or to the consumer.

Is it worth it?

So why are these cities so expensive? The short answer is because more than 8 million people want to live there. According to a recent Time Out magazine survey, readers’ top dream cities to relocate to were New York and London. If you could move to one other city, which would it be?

London and New York are both financial and political hubs with a broad set of industries and job opportunities. Lily Slater said, I work at social justice. My sector is just less interesting, in my opinion, in the U.K. than it is here. Both cities also have vibrant nightlife and cultural events.

New York City’s nightlife is an industry worth over $35 billion that creates nearly 300,000 jobs and generates roughly $700 million in tax revenue for the city. But those statistics are pre-pandemic. New York’s restaurant, retail, and recreation sectors lost 4% of business as a result of COVID-19, but there has been a rebound.

As of April 2023, those jobs are down 2% from their peak in February 2020. London makes up 25% of the UK leisure economy, which means the city’s sector is responsible for generating more than £42 billion, or nearly $53 billion USD, in 2019. Between March 2020 and June 2021, the UK nighttime cultural economy lost £36 billion in business, or roughly $46 billion USD.

In Lucy’s experience travelling Europe last year, London was the place that I found to be the closest to New York in terms of there’s always something going on, there’s always something to do. You’re never going to be sitting at home, like, What am I going to do this weekend? Both cities also do not require a car to get by, which can save on transportation costs.

Jeff Speck, author of Walkable City, said that’s because walkable cities and good cities are more expensive, and they become more expensive because they’re valued. If you make places better or you make better places, people vote with their feet, and they become more expensive.

London and New York both have world-renowned public transportation systems, but New York’s fares are a fixed $2.75 per ride, whereas in London, the further you travel, the more you pay.

Lucy said, I think I prefer the subways in New York because they are cheaper and they’re 24/7. There are more subway stops in New York City than there are in all the other cities in the United States put together. The tube is nicer than the subways because it doesn’t run 24/7 and they have attendants always posted. The London tube is a lot, a lot cleaner, like radically cleaner. I never saw a rat.

Ultimately, New York City seems to be a little worse for your wallet right now. So if city life is for you and you’re willing to pay the price, it may just come down to personal preference. My impression is that the level of zeal is higher in New York.

I think something about New York is that people are so obsessed with living here that they will put up with how gross it is, how hard it is, and how expensive it is anyway. and don’t feel like that’s true in London.