As our City of Tomorrow campaign concludes, we are taking a look at London as a megacity in the future. Using research available, we have asked experts from across our business to reflect on London as the population hits 10 million, the demographic shift accompanying this, and the practical steps that need to be taken now to deliver sustainable growth. 

In our next article, Associate Will Hyslop discusses the implications of London's population growth on student living and purpose-built student accommodation (PBSA) and provides recommendations to overcome the threats that it poses.

LONDON’S CONSTRAINED PBSA SUPPLY

Higher education institutions and the students that inhabit them are part of the lifeblood of every thriving metropolis. From leading-edge academic thinkers who can partner with commercial interests in new research/emerging markets to new approaches in the creative arts, our cities are richer places with them.

For London-based universities to continue to thrive in a global market, they need to maintain a steady level of year-on-year growth. Furthermore, it is vital London continues to attract and retain young, highly-skilled members of society which, in turn, support the wider economy. However, London has the greatest shortage of PBSA among all other major UK cities, with the student-to-bed ratio estimated to be as high as 3.5:1, a substantially greater difference compared to the UK average of 2:1. This imbalance could weaken universities' ability to attract future students and reach their full potential or further decrease London’s stock of family homes to HMO accommodation.    

As London snowballs towards a 10 million population, projected by the GLA to be as soon as 2033, its student population will naturally grow with it from the already c. 370,000 full-time students today (HESA 2020/21). With full-time domestic students alone projected to grow by c. 2.4% pa, this equates to almost a 47,000 increase in 5 years and just under 100,000 in 10 years. Furthermore, the GLA estimates that by 2037, an additional 50,000 ‘student-aged’ young people will reside in London. It will be increasingly important to develop a new PBSA, to meet the specific needs of students and reverse the loss of London’s stock of family homes, support university growth and enable the capital’s economy to continue to benefit from a strong supply of highly skilled young professionals.

However, substantial challenges in the deliverability of new student accommodation risk demand increasingly outstripping supply. This, in part, can be attributed to the increased scrutiny of PBSA schemes in the planning system, with applications now estimated to take c. 15 months to receive permission, three times the length it took in 2011. Despite a growing number of applications, the deliverability within an efficient timeframe to match demand is compromised. As such, local authorities and the GLA, with the support of the sector, need to develop effective solutions to speed up the process.

As simple economics dictates, a continued lag in supply places upward pressure on values, and with London being one of the most expensive cities in the world already, affordability within PBSA will become increasingly compromised. Current policy, in part, looks to address this through the requirement to provide “affordable student” and the need to have a nomination agreement from a university on the majority of beds within any new scheme. Although well intended, these policies have inadvertently created viability constraints and a further lag in delivery, as it can be challenging to get universities to formally support proposed schemes early in the process - understandably, some institutions can be hesitant to commit resources to a single scheme/provider when they find it hard to project their accommodation requirements years in advance. 

Despite this, improvements need not be seismic and subtle changes to this process would help. For example, Local Plan site-specific allocations expressly supporting student housing; policy tweaks that would offer less rigid support structures and some universities taking a slightly more progressive view on risk in relation to investment in their own student accommodation would all bring about positive change to the future development landscape of London’s PBSA market.

It is important, however, to understand that unless there is some movement in both the deliverability and affordability of student accommodation, London’s position as a leading academic centre could be undermined.