London on a graduate salary
Painted houses on Lancaster Road, Notting Hill. Photograph: Bex Walton, Wikimedia Commons, CC BY 2.0, cropped
On a graduate salary, London's average whole-home rent takes most or all of a month's take-home pay. Sharing, your borough and the fare caps decide what is left.
A first salary in London looks large on an offer letter and smaller on a payslip. This story in Places works out a month’s cost of living at three graduate salaries, with figures from HMRC, the ONS and TfL.
Plan with take-home pay, not salary
The budget uses three salaries: the Skilled Worker new-entrant floor, £33,400; High Fliers’ median starting salary at leading employers; and the general threshold, £41,700.
A month in London at three salaries
| Item | New-entrant floor | Median graduate starting salary | General Skilled Worker threshold |
|---|---|---|---|
| Salary a year | £33,400 | £35,000 | £41,700 |
| Take-home a month, after Income Tax and National Insurance | £2,297 | £2,393 | £2,795 |
| Average private rent in London, a month (August 2026) | £2,332 | £2,332 | £2,332 |
| Zones 1 to 2 Travelcard, a month | £171.70 | £171.70 | £171.70 |
| Left for everything else | £-207 | £-111 | £291 |
Take-home uses HMRC’s 2026 to 2027 rates for England, Wales and Northern Ireland: Income Tax at 20% above the Personal Allowance of £12,570, National Insurance at 8% above £12,570.
The bottom row, what is left after rent and travel, decides how a London month feels.
More on what the payslip leaves outLess on what the payslip leaves out
Your payslip may show less still if you repay a student loan or pay into a workplace pension; the budget above leaves both out.
Your employer must usually enrol you in a workplace pension (opens gov.uk) automatically, and in most cases adds money of its own. Your share comes out of your pay every payday. You can opt out, but the employer’s money stops with yours.
More on why these three salariesLess on why these three salaries
These are the salaries an international graduate meets first. The floor and the threshold are the salary rules a graduate on a Skilled Worker visa meets first; the graduate pay table explains how they apply to one job. The median shows what large employers pay.
The average rent outruns two of three salaries
Read the bottom row of the budget first. On this edition’s figures, the average London rent plus a Zones 1 to 2 Travelcard comes to more than a month’s take-home at the new-entrant floor and at the median.
£2,332 average monthly rent for a London home
That does not make London impossible on those salaries. The ONS average describes a whole home, of every size, and a first job rarely pays for one.
More on renting a room insteadLess on renting a room instead
Most of the arithmetic of a London first year is about not paying the average. Sharing a flat, renting a room, or living further out each change the rent line more than any pay rise in the first year will.
There is no ONS figure for a room in a shared flat, so this page does not invent one. Look at current listings on your commute line for a week before you decide, and note the bills each listing includes.
When you compare two rooms, compare the whole month: the rent, any bills it leaves out, and the fare from that street to the office. The cheaper room on paper is not always the cheaper month.
At the general threshold the sums turn positive even at the average rent, but the margin is thin, and it comes before food and bills.
Where to live: rent falls as you move outwards
The ONS publishes an average rent for every borough but the City of London. The spread is wide: Kensington and Chelsea averages £3,690, more than twice the cheapest outer boroughs.
| Borough | Average monthly rent, August 2026 |
|---|---|
| Islington | £2,868 |
| Hackney | £2,658 |
| Tower Hamlets | £2,453 |
| Lewisham | £1,829 |
| Barking and Dagenham | £1,698 |
| Croydon | £1,582 |
Pick the borough by the journey, not the rent: a cheaper flat an hour from work can cost more in fares and time than it saves.
More on all 32 boroughsLess on all 32 boroughs
These are averages for a whole home, rounded to the nearest pound by the ONS, for August 2026. Inner boroughs cost most; outer boroughs such as Barking and Dagenham, Bexley and Croydon cost noticeably less.
The ONS publishes every borough’s figure in its Price Index of Private Rents. The cheapest in August 2026 included Bexley at £1,537 and Sutton at £1,556; Westminster averaged £3,196. The full table is on the ONS rents dataset page (opens ons.gov.uk).
Travel: the fare caps set the cost
Transport for London caps pay as you go fares by the day and by the week, and sells Travelcards by the month and the year. For Zones 1 to 2, the 2026 adult fares are below.
| Zones 1 to 2, adult fares, 2026 | Price |
|---|---|
| Daily cap, pay as you go | £8.90 |
| Weekly cap, Monday to Sunday | £44.70 |
| Monthly Travelcard | £171.70 |
| Annual Travelcard | £1,788 |
With fixed hours, the Travelcard is the simpler budget line.
More on how the caps add upLess on how the caps add up
The caps cover the Tube, DLR, Elizabeth line, London Overground and most National Rail services in London. Living further out means more zones and a higher cap, which can claw back part of an outer borough’s saving.
Commuting five days a week, the daily caps add up to about the weekly cap, and a monthly Travelcard costs less than four weekly caps plus the extra days.
An annual Travelcard costs less again, but it ties up a large sum in your first month of pay.
TfL’s full table is in its adult fares document (opens content.tfl.gov.uk).
What is left has a lot to cover
Whatever the bottom row shows must cover food, energy, broadband, a phone, council tax and a life outside work.
More on the costs outside the budgetLess on the costs outside the budget
None of those is in the budget above, because none has a single reliable London figure. Energy and broadband depend on the home and the contract you inherit or choose.
Council tax depends on the borough and the band of the property. A home where everyone is a full-time student is usually exempt, but once you are working, your flat is not, so ask whether a listing’s rent includes it.
| Salary on the offer | How a London month works |
|---|---|
| Near the new-entrant floor or the median | With a shared home and a careful month |
| At the general threshold | With less care |
| Above the general threshold | The choices widen |
So the city question and the salary question are one. The seven-city story sets London’s rent against six other cities; the graduate pay table shows which sectors start above the threshold.
Graduates from Singapore and Malaysia have their own guide to starting out in London in the Singapore and Malaysia edition.
A salary near the visa bar needs a plan
Near the new-entrant floor, the budget is not only tight but temporary. If you are on a Graduate visa, or were in the last 2 years, you count as a new entrant for the salary rules.
4 years in total on the new-entrant rate, Graduate visa time included
More on what comes after the new-entrant rateLess on what comes after the new-entrant rate
After that, the salary must meet the general rules: for most roles, at least £41,700 and the going rate for its occupation code.
Plan the pay rise as well as the rent. In practice, that means asking at offer stage how pay progresses in the first few years, and keeping the London budget at a level the second and third year can sustain.
A lease is easier to keep than to escape. Before you sign, check how long it runs and what a break clause costs, so the home still fits if the salary takes longer to rise than you hoped.
A flat you can afford at the floor is a flat you can keep when the rules move.
This week
- Work out your monthly take-home for the salary on your offer
- Price a room in two boroughs on your commute line
- Check the fare cap for the zones between home and work
- Compare London with Manchester in the three-city comparison
Sources
- GOV.UK: Skilled Worker new-entrant salary floor You can be paid 70% of your job’s standard going rate if your salary will be at least £33,400 per year and one of the following applies: Checked
- GOV.UK: Skilled Worker general salary threshold You’ll usually need to be paid the ‘standard’ salary rate of at least £41,700 per year, or the ‘going rate’ for your job, whichever is higher. Checked
- GOV.UK: Who counts as a new entrant you’re currently in the UK on a Graduate visa (or you have been in the last 2 years, and a Graduate or visit visa was your most recent visa) Checked
- GOV.UK: Most time allowed on new-entrant rates SW 12.3. Granting the application must not mean the applicant’s combined permission as a Skilled Worker, Graduate and/or Tier 2 Migrant would be more than 4 years in total, whether or not the permission is for a continuous period. Checked
- HM Revenue and Customs: Income Tax rates and Personal Allowances (GOV.UK) Basic rate; £12,571 to £50,270; 20%The standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on. Read
- HM Revenue and Customs: National Insurance: how much you pay (GOV.UK) The Class 1 National Insurance rates for most people for the 2026 to 2027 tax year are: £242 to £967 a week (£1,048 to £4,189 a month) 8%; Over £967 a week (£4,189 a month) 2% Read
- HM Revenue and Customs: Rates and thresholds for employers 2026 to 2027 (HM Revenue and Customs, last updated 1 September 2026) Primary threshold; £242 per week; £1,048 per month; £12,570 per year Read
- Office for National Statistics: Private rent and house prices, UK: September 2026 (released 16 September 2026) Average rent was highest in London (£2,332) and lowest in the North East (£788) in August 2026. Read
- Office for National Statistics: Price Index of Private Rents, UK: monthly price statistics, Table 1 (16 September 2026 edition) Time period: August 2026; Area code: E09000020; Area name: Kensington and Chelsea; Region or country name: London; Rental price: 3690; Rental price one bed: 2640; Rental price two bed: 3428Time period: August 2026; Area code: E09000019; Area name: Islington; Region or country name: London; Rental price: 2868; Rental price one bed: 2178; Rental price two bed: 2697Time period: August 2026; Area code: E09000012; Area name: Hackney; Region or country name: London; Rental price: 2658; Rental price one bed: 2001; Rental price two bed: 2489Time period: August 2026; Area code: E09000030; Area name: Tower Hamlets; Region or country name: London; Rental price: 2453; Rental price one bed: 1992; Rental price two bed: 2418Time period: August 2026; Area code: E09000023; Area name: Lewisham; Region or country name: London; Rental price: 1829; Rental price one bed: 1457; Rental price two bed: 1789Time period: August 2026; Area code: E09000002; Area name: Barking and Dagenham; Region or country name: London; Rental price: 1698; Rental price one bed: 1377; Rental price two bed: 1721Time period: August 2026; Area code: E09000008; Area name: Croydon; Region or country name: London; Rental price: 1582; Rental price one bed: 1265; Rental price two bed: 1573Time period: August 2026; Area code: E09000004; Area name: Bexley; Region or country name: London; Rental price: 1537; Rental price one bed: 1229; Rental price two bed: 1526Time period: August 2026; Area code: E09000029; Area name: Sutton; Region or country name: London; Rental price: 1556; Rental price one bed: 1239; Rental price two bed: 1554Time period: August 2026; Area code: E09000033; Area name: Westminster; Region or country name: London; Rental price: 3196; Rental price one bed: 2548; Rental price two bed: 3305 Read
- Transport for London: Adult rate prices 2026 (Transport for London fares table, PDF, last modified 1 March 2026) Zones 1 to 2: Pay as you go caps: Daily peak £8.90; Daily off-peak £8.90; Monday to Sunday £44.70. Travelcards: Day anytime £16.60; Day off-peak £16.60; 7 Day £44.70; Monthly £171.70; Annual £1,788 Read
- GOV.UK: Workplace pensions Your employer must automatically enrol you into a pension scheme and make contributions to your pension if all of the following apply ... In most cases, your employer also adds money into the pension scheme for you. Read
This page is about the UK job hunt and is not immigration advice. For your own situation, speak to a regulated immigration adviser or an immigration solicitor, and check the current rules on gov.uk.
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Pictures on this page
- The Library of Birmingham Photograph: Alex Liivet, Wikimedia Commons, CC0, cropped
- The Lloyd's building, City of London Photograph: Choinowski, Wikimedia Commons, CC BY-SA 4.0, cropped
- St Paul's Cathedral and the Millennium Bridge, seen from Tate Modern Photograph: Rafa Esteve, Wikimedia Commons, CC BY-SA 4.0, cropped
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