London lettings heat up with summertime student rush

Applications to study in London reached their highest level in 15 years in the 2021/22 academic year, whilst international applications across London are now 10% higher than they were pre-pandemic.

Overseas students are becoming an increasingly important part of London’s rental scene, accounting for 52% of JLL’s international tenants in London over the last 12 months. Across London, applicant demand from overseas tenants increased by 223% from Q2 to Q3 2021, the last time an influx of students in London were looking for rental property. Applicant demand was up 64% from August to September, in preparation for the new academic year.

Recent JLL analysis of UCAS applications highlights the key hotspots of international students in London, amongst the highest 10 ranked higher education providers (HEP’s), by the number of international students.

Over the past year, international tenants paid an average of £2,737pcm to rent a property in Central, West or East London. This is 20% higher than the average rent paid by domestic tenants and a 14% year on year increase in rental values.

Rental searches from overseas students are convenience led. New, modern apartments are typically favoured, either within walking distance to the chosen university or within close proximity to transport links. The City, Nine Elms and Canary Wharf are all hotspots for overseas student tenants; almost 70% of our tenants in The City are overseas students, 60% around Nine Elms and 45% in Canary Wharf. Average rental growth in these areas has ranged from 11.3% - 27.1% over the past years. Albeit, some of this growth follows rental falls during 2020 as London remained in lockdown and demand for rental properties fell.

Charlotte Russell, Area Director – JLL Residential Lettings explains: “We see a surge of Tenant demand from overseas students at the start of June.  These prospective Tenants are typically 2nd and 3rd year students looking for a new home when they return to London for the start of the academic year and usually want to take a two or three bed apartment to share with other students or friends, they also already have a strong preference over which developments and areas they want to live in, with budgets often determining the proximity to the university.  The second wave of students in late July throughout August are 1st year students, these new students have to leave their search until the last minute as the location and price paid is typically dictated by where they will study causing a lastminute rush, this can in turn inflate prices as stock levels then deplete in to September”.

International applications are 10% higher than they were pre-pandemic

Most students will be waiting on exam results to confirm where they will be heading in the autumn, but we expect to see a continued rise of international students heading to the capital.

There were over 464,000 applications to universities across London for the 2021/22 academic year, 36% of which were from international students. Applications from international students has increased by 34% over the past five years and are now 10% higher than they were pre-pandemic. This growth has primarily been driven by an increase in the number of Non-EU students applying for courses at HEP’s across London, up 68% over the last five years.

Why London?

The prestige of UK universities has always made them popular with overseas student and London is home to some of the world’s, leading higher education providers. Currently home to four of the world’s top 50 universities and five Russell Group universities. Imperial College London, ranked third in the UK and 12th in the world by Times Higher Education, is the highest ranked university in London.

University College London (UCL) received the largest number of international applications (over 68,000) for 2021/22, however London School of Economics boasted the largest number of international applications as a proportion: international applicants made up 66% of total applications in the 2021/22 academic year.

It’s not all about applications though; the number of students accepting places at HEP’s across London has increased by 16% over the past five years.

Meg Eglington, Senior Research Analyst at JLL says: “The UK, and particularly London, have benefitted from the large increase of international students in recent years. The number of students applying from EU countries has fallen, mainly because EU students starting from the 2021/22 academic year now require a visa and are subject to international fees (unless exempt through the EU Settlement Scheme). But there has been a large increase in the number of students from China, India, Nigeria and the USA over the past three years, more than making up for the fall in EU students and bolstered international numbers”.

Looking forward, the outlook for rents in London and around the student hotpots remains positive. A new surge in overseas students in London preparing for the 2022/23 academic year, further fuelling demand for rental properties.

With overseas travel returning to normality we anticipate a surge in demand from overseas students this summer. Analysis of Heathrow passenger numbers show travel from international passengers is up 24% since the first lockdown in 2020, which has continued to promote the return of international students to the capital.

Sustained student demand underpins JLL’s latest rental growth forecasts for London, with rents forecast to rise a further 15.9% by 2026.

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