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Much more building work needed for London students

20 Jul 11 The current mini boom on construction of student accommodation has a long way to go in London before demand is met.

A Mansell student accomodation project at The Minories in London
A Mansell student accomodation project at The Minories in London

Drivers Jonas Deloitte’s third annual crane survey of student accommodation in London records a near doubling in construction activity, with more than 7,700 bedspaces in progress. But the capital now supports a record number of full time students - up 6% cent on last year to 283,500. So the gulf between the number of students and the supply of purpose-built bedspaces continues to widen, despite the sharp increase in construction. As a result, rents continue to rise.

Chris Baldwin, head of student housing at Drivers Jonas Deloitte, said: “Our analysis shows that there are currently around 55,000 purpose-build student bedspaces in the capital. With the total number of full time higher education students in excess of 280,000, this provides accommodation for just 20% of the student population. The fact remains we are still a long way from filling the supply gap and this level of undersupply looks unlikely to ease any time soon. This is only being exacerbated by the lack of bank finance and tougher planning policy for developers as they struggle to get approval for schemes.”

This year, the report records 21 schemes under construction, compared to 11 last year. As a result, the number of bedspaces currently underway has risen by almost 90% from 4,078 to 7,744 with around one third of these units due for completion in 2011. Brent recorded the largest amount of construction activity with 1,095 bedspaces underway, albeit in just two schemes.

Andrew Gale, planning director at Drivers Jonas Deloitte, said: “We’ve seen planning policy across London evolve in the last 12 months and several local planning authorities harden against student accommodation development. In Southwark, Islington and Camden policymakers have adopted quite stringent policies to limit new student accommodation in their boroughs. The Panel Report for the London Plan, the hearing for which Drivers Jonas Deloitte presented evidence, has introduced a greater degree of flexibility and will be welcomed by private sector developers/operators. It will be interesting to see how this shift in strategic policy, and the further detail that is expected in the pending Housing SPD from the GLA, will influence the review of borough planning policies in the future."

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Drivers Jonas Deloitte warns that restrictive local policies will limit new supply in the core central London locations. This will place a premium on existing stock and schemes currently with permission, as well as any schemes that secure consent in the future.

Mr Gale continued: “Achieving planning permission will require careful negotiation, by developers and operators who are smart and flexible. Bringing forward new student accommodation as part of mixed use development and partnering with universities, to address concerns about need and student management will improve the prospects of gaining planning permission, particularly in Southwark, Camden and Hammersmith & Fulham. We expect restrictive policies in central London to impact the pipeline in other boroughs. In particular, we will be watching Brent, Ealing, Greenwich, Hackney, Haringey and Newham over the next 12 months.”

Students studying in London are paying a growing premium for the privilege.  Average rents in the capital currently stand at £145 per week, 55% above the UK average and rental growth has outstripped the UK as a whole by 7% over the last year. 

The gap between rents for university and direct let accommodation remains wide, with direct let rents across all unit types averaging £216 per week, 79% higher than the university average of £130 per week.

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