A new report from lettings management platform, Howsy, shows how the presence of some of the world’s biggest tech giants is pushing up rental prices surrounding their main offices in the capital.
Howsy looked at the current cost of renting in boroughs home to Google, Microsoft, Amazon and Facebook and how this compares to the London average, rental growth since each company opened their office and how this compares to the London average, and the rental markets surrounding each specific office and how this compares to the wider borough, as well as the rental yields on offer.
The data shows that on average, boroughs home to a tech giant are also home to an average rental cost 44% higher than the London average. Westminster is the highest, home to Microsoft and Facebook, with the average monthly rent costing £2,838 – 64% above the London average.
On average, rental prices in these boroughs has increased by 4.7% since these companies have moved in compared to an increase of just 1.7% across London as a whole.
The most notable is Google’s move to Camden where they’ve been based since 2016. During this time rents in the borough have shot up by 9.2% while London as a whole has seen an increase of just 0.8%.
Since Amazon moved to Hackney in 2017, the average rental cost has increased by 4.7% compared to 2.5% in London, with rents up 4.5% in Westminster since Facebook moved in last year compared to just 2.9% across London.
Looking even more granularly, rents surrounding the offices of these tech giants is even higher than the wider borough.
With an average cost of £3,413, the rental market surrounding Amazon’s Hackney base is 86% higher than the average rent across the borough.
Surrounding Google’s current campus, the average rent of £3,200 is 32% higher than Camden as a whole (£2,427).
At 4%, the gap between rent surrounding Microsoft’s Westminster office and the borough as a whole is the smallest increase, but Facebook’s Westminster HQ is the most tenant-friendly, with the average rent surrounding it coming in -39% cheaper than the wider borough.
But if you’re thinking of investing in a buy-to-let to ride the tech wave, don’t just yet. Rental yields surrounding all four offices come in below 4%, almost one percent less than the London average of 4.43%.
Not only this but the new age of tech-savvy tenants that go hand in hand with companies like Facebook or Amazon are bringing a different set of needs to the traditional renter and landlords must be well placed to provide satisfy these in order to secure a happy, long-term tenancy.
With a preference to work from home and the requirements this brings, from high-speed internet to suitable insurance cover, and the 24/7 accessibility that is required when working with colleagues across a number time-zones, today’s tech-based tenants need a more on the ball landlord, a quicker turn around time when solving issues, and around the clock access when reporting and resolving these issues.
This need to react quickly to ever-changing requirements has been a key driving force behind the development of lettings management products like Howsy, offering hi-tech management solutions to landlords.
Calum Brannan, founder and CEO of Howsy, commented: “It’s great to see such big names committing to London, and the wider economic benefit they bring through the provision of jobs, investing in their workforce and the surrounding area is a big plus.
However, the downside of so many additional people being drawn to the rental market is this greater demand causes a spike in rental prices. This creates a further financial obstacle for those living in the area without the benefit of a robust tech-based salary and can see many existing residents drive out.
This new age of tenant also comes with an evolved level of requirements for UK landlords to deal with and as we become a nation that is connected on a 24/7 basis, tenants expect an agent or platform that can provide such a service. This is why more landlords are turning to lettings products like Howsy, as we can shoulder the demand of tenants any time of day or night, without any additional fee or inconvenience."