Foreign students are dominating the property rental market in central London and they are edging out corporate professionals as data reveals that in the last 12 months, 41% of new tenancy starts could be attributed to international students.
An annual lettings audit from London Central Portfolio (LCP), a rental company responsible for 42% of Central London’s prime rental property, shows that while finance professionals make up the private home segment’s largest market share (38%), foreign student rental is gaining and now accounts for 29% of its tenancy agreements in London.
This means the market share of rental agreements to foreign students has more than doubled from 12% to 29% in six years from 2006 to 2012.
Westminster is home to Imperial College, University College London and LSE and annual incoming student numbers top 100,000
The report states that foreign students have “picked up the slack” as tenancies held by recession-hit finance professionals – historically the mainstay of the market – have stalled after employment in the sector fell by around a third.
The increase in student tenants in prime central London (PCL) “should be no surprise”, LCP’s CEO, Naomi Heaton, commented, noting that Westminster is home to Imperial College, University College London and LSE and annual incoming student numbers top 100,000.
“Even as financial markets recover, landlords are increasingly buying into the concept of international student tenants,” she commented.
“Many have experienced a sophisticated lifestyle: they treat properties with the same care are corporate tenants but the wealth underpinning them is stronger,” she added. “This means they can often outbid professional tenants, offering higher rents, often a year upfront, as parents are keen to install their children in the best, most secure homes.”
Their buying power means students can outbid the corporate sector for properties, paying £600 a week for a flat, 7% more than the average market rent of £562.
Students from Southeast Asia make up around a third of private student tenants, with a further third from West Europe. Students from the Middle East account for 15%.
The London rental market is now “back on track”, according to LCP, after “some softening” during the earlier part of last year, with occupancy rates now at 96%.
“International student accommodation in London and the student flats sector in general has a very positive future outlook as worldwide middle classes become increasingly mobile,” the report said. The company estimates that 82% of affluent Chinese families are planning to send their children abroad to study.
