Soaring rents driving start-ups out of London after one year

After one year of trading in London, entrepreneurs’ attitudes towards doing business in the city changes dramatically for the worse.

Two-thirds of start-ups founded in London contemplate leaving the capital after 12 months, according to research from Sussex Innovation.

The poll of 500 small business leaders across London and the South-East suggests rent is by far the biggest concern for start-ups looking to grow in the capital.

At the time of launch a little more than one-third (37%) believe that high rents are a factor that would hold back growth. However, after one year 62% hold this view.

The numbers do eventually fall back down after longer periods. Among businesses who have traded in London for nine or more years, only 31% see rent as a major issue.

>See also: Building business success through workplace wellbeing

Due to the shifting attitudes to soaring rents, one year after launch businesses are much more likely to be considering relocation.

Among business leaders who launched less than one year ago, 47% said they were considering moving their operations base. This jumps to 66% after one year.

Mike Herd, executive director of Sussex Innovation at the University of Sussex, said the results “reflect the start-up journey”.

“A London address provides kudos and contacts when you begin but a year later, the honeymoon is over as bills start to flow in,” he continued.

“In a reverse of the seven year itch, our polling shows small firms fall back in love with London only once they’re well established. If London is to hang on to more growth businesses it needs to look again at business rates and affordability.”

Further reading: Six tips to develop your high-growth mindset

Praseeda Nair

Kellen Rempel

Praseeda was Editor for from 2016 to 2018.

Related Topics

Venture capital funding