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Student landlords in London can look forward to around thousands of students from the UK and overseas seeking private rented rooms for the next academic year.
University housing specialist CB Richard Ellis has reported that the capital has seen no publicly funded student accommodation provided in 20 years – and despite billions of pounds of private developments, universities and private halls providers can offer only 54,000 bed spaces.
The quarterly review of student housing in the capital from CBRE also reckons several borough councils are tightening up conditions for student developments that will see a drastic slowdown in the number of developments in future years
“There is still considerable unsatisfied demand, and opportunities for the private sector to continue to build new stock, or refurbish/replace aging university stock,” said the CBRE report.
“During the recession, Central London became the focus of student housing development nationally. This is because, in comparison with other sectors such as residential and office uses, the market dynamics of student housing remained robust. Moreover, funding remained available.”
Worsening trading conditions and a feared over exposure to student developments is also making banks reconsider the risk of underwriting further building – another factor that will squeeze hall development.
“We do not interpret this as nervousness in the sector, more that lenders are seeking to reweight their portfolios having gained significant exposure to the sector in recent years,” said the report.
“The active lenders say they have more applications than they have funds to service, even for quality schemes.”
CBRE also reveals rents charged by private student halls are increasing, and points out that students should pay around £150 a week for a room in a shared house before factoring in broadband, utilities, travel costs and time.
“The long-term dynamics of the London student housing market remain extremely favourable. With the continued shortage of bank debt, the sector badly needs some new funding and investment sources, and there are significant opportunities for investors to fund fully consented schemes for which debt remains restricted,” said the report.
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