r/london • u/Pharaoooooh • 1h ago
London is desperate for homes, so why are developers building thousands of £500 a week student rooms? (deep dive)
TL;DR: universities are recruiting international students because they pay way more, developers are ditching normal housing to build more profitable student accom. Councils are letting it happen and it's making the city worse for everyone.
The following is a long read/deep dive that I've gone into about this. An attempt to gather as many sources/evidence of what I think is a bit of a scandal. Or maybe no one cares! It killed an afternoon I had free anyway.
A more detailed TL/DR:
- universities have become increasingly financially dependent on much higher fees from international students;
- international recruitment has therefore been artificially inflated;
- developers have discovered that student accommodation (targeting those high fee paying students) makes them more money than normal housing;
- London planning policy treats student accommodation as part of housing supply and assumes it can free ordinary homes from student occupation;
- yet most of the student housing being built locally costs £300–£600 a week, while rooms in conventional shared housing nearby can be around £200–£250 a week;
- and some sites that could or actually were going to provide ordinary homes have instead become dominated by student accommodation.
- Even less housing for Londoners and huge amount of land lost.
I'm sitting in my flat listening to the pounding sound of a pneumatic drill for the 30th day in a row. It's a new development going up across the road. It's annoying, but I'm not a nimby, we need more houses. But when the hoardings around the site went up and proudly proclaimed a new development for students my patience broke.
I could have sworn that this was supposed to be a block of new flats. Plus I've noticed in my neighbourhood a lot of similar notices/alerts on my good news feed along the lines of "new 300 unit student housing tower approved". Something doesn't seem right to me.
First: how much student housing are we actually talking about?
I looked at a fairly small corridor running from Borough/Newington Causeway through Elephant & Castle and down Walworth Road (my hood). This whole essay is about this area, I don't know if the same thing is happening elsewhere.
These are eight of the major student accom schemes approved, allowed on appeal, or resolved to be granted permission:
Chatelain House, Walworth Road: 283 student rooms + 23 conventional affordable homes.
Elephant & Castle West Site / existing LCC site: 452 student rooms + 507 conventional homes. In March 2026 Southwark's planning committee resolved to grant the revised scheme, subject to the legal agreement and referrals. The previously consented West Site had 498 conventional homes and no equivalent PBSA component; the revision actually increases conventional housing to 507 while adding the 452 student rooms, so this one clearly should not be presented as student housing replacing normal homes.
Add those together and you get:
3,479 student bedrooms in eight major schemes in a small part of inner London. The GLA says that the whole borough will need 1,737 bedspaces in the next 10 years. The London wide total is 31,549.
(Source: Draft new London Plan PBSA targets, Table 3.6)
I'm suggesting this is not a normal amount of student development for this small area and that regular housing has been purposefully sacrificed to build it.
Universities have a powerful financial incentive to recruit internationally
At University of the Arts London, whose London College of Communication campus is literally at Elephant & Castle, a new UK/Home undergraduate in 2026/27 pays £9,790 per year but a new international undergraduate pays £30,890 per year.
(Source: UAL undergraduate tuition fees 2026/27)
It's been reported over the last few years how reliant uni's have become on international students. I have no source but I remember a report stating that some are offering places to pretty much anyone who will apply (regardless if they meet the qualification standard)
The Office for Students has also said there is a reliance across the higher education system on international fee income to support teaching, research etc, and that the higher fees paid by international students mean changes in their recruitment can have disproportionately large financial effects.
(Source: Office for Students financial sustainability report)
Just going to point out here that I have no issue with international students in principle and that this isn't a "it's all the foreigners fault". In fact I think they are being exploited and/or ripped off.
Uni's have been recruiting HARD
At UAL, 12,385 of 22,950 students were non UK domiciled in 2024/25 which is 54% of the entire university. The figuers i found show UAL's number of non UK students has risen approximately 52% since 2014/15.
(Source: HESA-derived UAL enrolment data)
King's College London is similar. 15,690 of 40,870 students were non-UK domiciled in 2024/25, 38.4%. Its number of non-UK students is approximately 89% higher than in 2014/15.
This establishes the first half of the feedback loop: international recruitment grew substantially, and universities have very strong financial reasons to pursue it.
Developers are going out of their way to build as much student housing as possible
They are getting approval for housing (often including affordable) and later claiming "viability issues", later changing permission to student housing. Or they are attempting to lie about how much money they can make from student accommodation developments.
Looking at 31 Amelia Street (one of the 8 sites in the area). The approved scheme contains 146 student rooms. Standard studios are only 16.7m², while bedrooms in shared cluster flats range from 9m² to 13.2m², with kitchens/living space shared between residents.
(Source: Southwark Council Amelia Street planning report)
A developer can fit far more individually rentable bedrooms into a student accom site than conventional self contained homes.
For this development the developer's viability appraisal valued the private student development at about £38.76m and estimated a surplus of about £2.16m.
Southwark's independent assessor valued the site at approximately £44.93m and calculated a surplus of approximately £13.40m.
(Source: Southwark Council Amelia Street viability assessment)
Southwark did then secure a £5.11m payment toward affordable housing with their viability review mechanism.
A previous planning permission for the Chatelain House site (literally across the road from the above site) provided 54 conventional residential units alongside commercial uses.
That permission was legally implemented, but the developer's 2024 planning statement explicitly says the scheme was not progressed because of viability issues and was not deliverable.
(Source: Chatelain House planning statement, section 5.15)
What has replaced it? 283 student bedrooms + 23 conventional affordable homes.
(Source: Chatelain House planning statement)
Southwark's policy would ordinarily also require affordable student rooms in this type of direct let student development but the viability appraisal argued that after prioritising the conventional affordable homes, the scheme couldn't support any affordable student bedrooms. So all 283 bedrooms are market accommodation (very expensive)
(Source: Chatelain House planning statement, paragraphs 5.44–5.47)
That gives us this sequence: 54 conventional homes approved → scheme judged unviable/not deliverable → site reworked into 283 market student rooms + 23 affordable homes.
It's a real local example of an ordinary residential permission failing on "viability" and the site subsequently becoming overwhelmingly student accommodation.
The planning system counts these rooms in housing figures
I was actually a planner in two London Council's over a decade ago. Jumped ship when I realised how utterly idiotic the planning system is. I had either forgotten this or it's something new.
In the Harper Road application, Southwark's own officer report says the 444 student rooms should be converted at the London Plan ratio of 2.5 bedspaces = one conventional dwelling.
The council therefore counted those 444 student bedrooms as the equivalent of 178 homes toward its housing target.
(Source: Southwark Council Harper Road planning report)
The same report says that providing those 444 student rooms would reduce pressure on the private rental sector because it would effectively release 178 dwellings that would otherwise have been occupied by students.
This is the usual argument when student housing is discussed: it free's up housing that the students would have otherwise occupied. I'm hitting doubt pretty hard here though.
Because are £400–£600/week student rooms really substituting for HMOs?
UAL's Highline Building at Elephant & Castle costs £304–£372 per week in 2026/27. A standard room costs £304 a week on a 50 week tenancy, or £15,200 for the year.
(UAL Highline Building prices)
Private YourTRIBE Elephant & Castle listings have recently advertised rooms at approximately £399, £549 and £599 per week.
(Source: Rightmove YourTRIBE listings)
The average shared room listing around an eight-minute walk from Elephant & Castle advertised rooms at around £210–£260 per week including bills. I looked on Spareroom for this.
A student paying £225–£250/week for a shared room isn't going to move into a £400–£600/week room simply because somebody has built one.
The student finance numbers make that mismatch even clearer
The maximum standard maintenance loan for a student living away from home in London in 2026/27 is £14,135 for the entire year. Many students receive substantially less because the loan is means-tested against household income.
(Source: UK Government student finance rates 2026/27
UAL's £304/week Highline standard room costs £15,200 for the tenancy, already more than that maximum standard London maintenance loan before the student done anything else.
The London Plan definition of affordable student accommodation caps annual rent at 55% of the maximum maintenance support available to a student studying in London.
Source: London Plan, paragraph 4.15.8
There is also such a thing as "affordable student housing" in the same sense as developers build a proportion of affordable standard housing.
UAL did secure 80 partially funded rooms at YourTRIBE Elephant & Castle for £204.60/week for 2026/27.
(Source: UAL YourTRIBE Elephant & Castle)
That is much closer to the cost of conventional shared housing. Which raises the question:
if affordable student housing is the only type that genuinely free's up standard housing in the area (and if this is going to be the excuse for building way more student housing than neccessary), what proportion of it actually is.
In some of these developments, the answer is: none
At 31 Amelia Street, all 146 student rooms are market accommodation and instead of affordable student rooms, the developer pays £5.11m toward conventional affordable housing elsewhere (sure, Jan)
At Coburg House, none of the 243 student rooms are affordable either. The developer instead agreed an approximately £11m payment toward affordable housing.
At Chatelain House, the planning documents explicitly say the scheme cannot support any affordable student rooms because financial viability constraints and the decision to prioritise the 23 conventional affordable homes take precedence.
The Council's reasoning is that the borough desperately needs genuine affordable housing, so getting social-rent homes or millions of pounds toward council housing may be preferable to subsidising students.
To summarise. Developers are building student housing targeting almost exclusively the high end of the market and throwing the Council a few million to shut them up. Even if they do genuinly use that money to build housing elsewhere, how long will that take?
City Hall itself now acknowledges the risk of student housing “crowding out” ordinary homes
In consultation work for the next London Plan, City Hall explicitly says:
too much PBSA and similar shared accommodation can crowd out general-needs and family housing, and in some places these forms of accommodation now make up most planning applications and development capacity, with relatively little ordinary housing coming forward.
(Source: GLA: Towards a new London Plan)
That is essentially the issue that is grinding my gears so much.
The new draft approach is also proposing borough specific student development requirements rather than relying only on a London wide figure.
For the whole of Southwark, the proposed requirement for 2027/28 to 2036/37 is 1,737 bedspaces. The London wide total is 31,549.
(Source: Draft new London Plan PBSA targets, Table 3.6)
The same document explicitly says those targets will be kept under review because demand may change according to conditions in the higher education sector. The eight developments in this relatively tiny corridor contain 3,479 student bedrooms, while the policy requirement for the entire borough over the next ten-year plan period is 1,737 (??????)
And the assumption of endless student growth is already looking unlikely
International enrolments fell 6% in a single year.
(Source: HESA 2024/25 student statistics)
The Office for Students likewise reports that international recruitment in 2024/25 was 7.7% lower than the previous year and 9% below what universities themselves had forecast.
(Source: Office for Students: financial pressures and sustainability)
So are we even going to be able to fill all of this new student accommodation if this trend continues?
So who is the villain here?
Universities: The domestic funding model has deteriorated in real terms, while international fees can be dramatically higher. They are reliant on international students to survive so I have sympathy, but should they be allowed to simply import as many as they can regardless of the consequences (or the value to these students)
Developers and investors: They see a customer population that needs accommodation, frequently books before arriving in the UK, usually cannot live with parents locally, rents by the bedroom and are likely very wealthy. They will say and do anything to build these types of developments over standard housing.
Councils and the GLA: They have entirely legitimate reasons to permit some student housing. They genuinely need somewhere to live and can reduce pressure on ordinary rentals.
They are also under immense financial pressure, so they are bending over far too easily to approve inappropriate developments which generate cash for the council. And the current planning framework explicitly treats it as part of London's housing supply so they can claim they are doing their job right.
This is not an argument against international students
I think this needs saying very clearly. International students are not responsible for London's housing crisis. Some take enormous loans, depend on family savings and arrive in Britain under tremendous financial pressure.
Nor am I arguing that London should stop building student housing. The question is whether the current system is being taken advantage of for profit rather than need.
At what point do we not let developers walk all over us time and time again? When will local councils grow a spine? If we funded uni's properly and removed the need to rely on international students, would any of this be happening? I don't know the answers to any of these but it's annoyed me enough to write all of this.
AI use: I used AI to gather some of the sources and to find some of the examples used on this post. I checked them all for accuracy as best I could.