Landlords in wealthy London boroughs are feeling the pinch from international students choosing to study outside the UK, as rents in premium postcodes showed signs of slowing.
The average rental value growth in prime central London (PCL) – which includes the likes of Chelsea and Kensington – fell to 12.4 per in the year to August,, down from a growth rate of 13.7 per cent in the year to July, according to a new report by estate agent Knight Frank.
Demand for luxury pads in the region has started to cool in recent months, with Tom Bill, head of residential research at Knight Frank, saying one factor for this can be linked to is the lower number of Chinese students choosing to attend university in the UK.
The latest data from the Universities and Colleges Admissions Service (Ucas), initially published in The Times, showed a 17.5 per cent decrease in the number of Chinese students accepting firm offers from UK universities in June, compared with the same time last year.
A number of reasons have played into this including tougher visa requirements – traditionally these cash rich students would have flocked to upmarket boroughs in the capital when looking for university digs.
“Rental value growth in prime London postcodes continued to decline in August as supply built and demand cooled. More owners are opting to let out their property due to the weakness in the sales market caused by rising mortgage rates,” he said.
“Meanwhile, demand has dipped over the summer for reasons that include the lower number of Chinese students choosing to attend university in the UK.”
“While the strong rental value growth of recent years has calmed down, it’s still high by historical standards, he added.
In recent months, London’s renters have been battling scarcity in the market as many landlords looked to sell up as they could no longer afford surging energy costs and mortgage rates.
However, Bill added that homeowners nestled in the capital’s wealthy boroughs have more “flexibility” to sit it out the sales market due to their deep pockets.
“Supply [ in Prime Central London] is starting to ease up a little bit but it’s not a reflection of what’s happening across the rest of the country,” he added.