Around 90,000 students are seeking homes in London, according to the latest data from a university housing specialist.
CB Richard Ellis, a property consulting firm, reckons London has had no publicly funded student accommodation built in 20 years - and despite millions of pounds of private developments, the universities and private halls providers still offer only 54,000 bed spaces - less than half of the 160,000 plus needed for the coming academic year.
The good news for private student landlords renting shared houses is London councils are clamping down on developments and the growth in private halls in future years is unlikely to match that of the past decade.
“There is still considerable unsatisfied demand, and opportunities for the private sector to continue to build new stock, or refurbish/replace ageing 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.”
Corporate developers are also facing a funding challenge as banks who have traditionally funded student developments are reviewing their lending policies and are likely to reduce finance in the sector.
“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 notes rents charged by private landlords are still rising, and that a student should expect to 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.