Failure to tackle the scourge of rising rents will undermine London’s startup renaissance
Wikipedia founder Jimmy Wales once said that “in the US, Washington is politics, LA is Hollywood, San Francisco is tech, New York is advertising and finance, but London is all of those things.” If anything, he is selling our city short; throw in the culture of the city that shaped creative geniuses such as Charles Dickens, Jimi Hendrix and Damien Hirst and you start to give an accurate portrayal of all that London has to offer.
But while I am loath to bring economic arguments to bear on creativity, the future of this cultural melting pot is under threat, and rising rents are to blame.
Housing has been central to the capital’s mayoral election, with Zac Goldsmith proclaiming that it is “the most important issue facing London” and Sadiq Khan describing the contest as “a referendum on housing”. The campaign has come at a time when the average asking price for a London property has reached £646,200, in a country where the average salary is £26,500. Artists have always commanded wages below the average, but sky-high rents are starting to squeeze this creative class out of our city, and all of London will be poorer for it.
Dizzying property prices affect all of us. A recent report from the Centre for Economics and Business Research shows that house prices cost businesses £5.4bn in wage premiums in 2015, or £1,720 per person. London’s booming tech industry has been built on the back of the “flat white economy”, originating in east London among entrepreneurs and coders attracted to the area’s lively and creative culture. Founders looking to bootstrap their startups will be turned off London when they are no longer able to pay their rent, or hire employees at a wage that must rise to keep pace with housing costs.
The next mayor holds a position of leadership at this crucial time, and his or her legacy may rest on addressing this issue. The incoming mayor will have to cost and consider all options, and not feel beholden to property owners like me while doing so.
Basic economics dictate that more supply is needed, whether through identifying brownfield land to develop, creating a publicly-owned housebuilding company or building on the sacrosanct Green Belt. The mayor should make a full report costing and assessing all available options in the first 100 days in City Hall if the campaign rhetoric around housing is to be believed.
London’s startups and scaleups are blessed with access to the best financial district in the world, an ideal time zone and a wealth of English-speaking talent. But this last factor is the one that is most stretched, and the most at risk from rising rents. The gentrification of some of London’s boroughs is a concern, as many double up as tech clusters and cultural hotspots.
Coffee shops in east London often see computer programmers and founders rubbing shoulders with aspiring DJs and writers, creating the perfect environment to produce world-beating tech startups. This exposure to creativity and art is underestimated, but crucial. Steve Jobs credited his interest in art and classes in calligraphy as central to building Apple, a company that has put design at the heart of its business strategy and become the world’s most valuable firm in the process.
If the next mayor addresses the housing crisis effectively, it will prove that Londoners really can have it all.