Why this might be the best time to buy in London

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This is Chubby Wallet. The newsletter that delivers golden nuggets of property information straight to your inbox.

Here's what’s in store..

• Best cities for student housing

• What’s happening with rents?

• Why buyers love auctions

• North - South divide (and why this is the best time to buy in London)

The student housing market is growing but it’s not undergrads leading the charge. Postgraduate numbers have gone up by 47.9% since 2019, while undergrad growth has been a modest 6.7%. according to StuRents.

International students are also driving this increase… Indian student numbers have jumped by 98.4%, while Nigerian students saw a rise too - until their currency took a hit.

However, this growth isn’t evenly distributed across the UK…

Cities like Manchester and Leeds are thriving (postgrad numbers up 7% and 17.6%, respectively), while Coventry and Portsmouth are struggling (down 43.6%).

PBSA vs. HMO

The UK student housing market is a tale of two worlds: PBSA (Purpose-Built Student Accommodation) and HMOs (Houses in Multiple Occupation).

PBSA is modern and often pricey, while HMOs are more affordable. Surprisingly PBSA supply is growing, but it’s not keeping up with demand.

HMOs on the other hand are gaining institutional interest due to their affordability and flexibility, especially for domestic students.

Let’s talk affordability

The average blended cost of private accommodation in England hit £150 per week in 2024, but maintenance loans (money from the government to cover living costs) haven’t kept pace.

For a student from a household earning £40,000, the remaining weekly loan after rent has dropped from £27 in 2021 to just £8 in 2024.

And with tuition fees rising, domestic students are feeling the squeeze.

This isn’t new. Rental growth has outpaced maintenance loans for years, but the gap is now at a breaking point..

If this trend continues, we could see a drop in domestic student enrollment —something universities can’t afford.

BTR - The new competitor

Build-to-Rent (BTR) offers flexible contracts, spacious apartments, and amenities like gyms and workspaces—all at competitive prices.

In Leeds, for example, a 1-bed BTR apartment costs £259 per week, compared to £299 for a PBSA studio.

BTR is already attracting 10-40% student occupancy, and its growth could further squeeze PBSA, especially in cities with high demand.

Winners & Losers

Not all cities are created equal. While Manchester and Leeds are thriving, Coventry and Portsmouth are struggling.

In Coventry, PBSA rents fell by 0.7% in 2024, while Glasgow saw a 10.2% increase.

Even within cities, performance varies… In Glasgow, one PBSA scheme reported 14% rent growth, while another saw just 9.4%.

HMO appeal

HMOs are affordable, flexible, and cater to domestic students who can’t afford PBSA’s premium prices.

In Leeds, the average HMO rent is £154 per week, compared to £225 for PBSA. so HMOs might be the real winners in this market.

Final thoughts

The UK remains a top destination for international students, and recent changes in other countries such as Canada and Australia could give it an edge.

We’re predicting that the UK could see stronger international and domestic demand in the coming years.

So there’s an opportunity for investors to diversify into more mid market PBSA’s and HMO’s in cities wth strong fundamentals

January 2025 saw a 4.6% jump in rental prices across England compared to last year.

That’s a big acceleration from December’s 3.3% year-on-year rise. But the reality is that actual rents tenants are paying are far lower.

So, what’s happening? Landlords are listing rentals at premium prices, but tenants are negotiating hard—and winning.

📉 Tenants are fighting back

According to Goodlord’s analysis, tenants are securing deals up to 24% cheaper than what landlords initially ask for in London, and 20% lower outside the capital.

That’s not a small margin—that’s a fundamental shift in the power dynamic.

It tells us that while demand remains strong, renters are no longer willing to accept outrageous hikes without a fight.

So, is this a turning point where landlords start lowering expectations? It might just be!

🏚️ Empty homes are stacking up

One of the most underrated market indicators is void periods—the time a property sits empty between tenants.

In January, voids stretched to 24 days, the highest since April 2021. The West Midlands took the hardest hit, with voids going up by 28%.

This is huge. Longer voids mean tenants have more options, and landlords may need to rethink their pricing strategies.

The only region bucking the trend is the South East, which interestingly also saw the only rent decline.

Where does this leave landlords, tenants, and investors?

For landlords: The days of “set it and forget it” pricing are fading. Expect longer negotiation periods, and be realistic with your listings—or risk costly vacancies.

For tenants: Data proves they have leverage most will stand firm in negotiations save thousands in the process.

For investors: The regional divide is growing. The North East is on fire, while the South East is showing early signs of softening.

Watch for pockets of opportunity where rents remain resilient but voids stay low.

Savills published their first-ever buyer survey, conducted in late 2024.

Of the 472 respondents, 95% said they’d buy at auction again, with over half citing value as their primary motivator.

But who exactly is bidding in the auction room? The survey breaks it down:

• Commercial Investors: Leading the charge, with the strongest commitment to buy.

• Owner-Occupiers: A growing segment, particularly among those seeking a primary residence.

• Developers and Redevelopers: Still active, but more selective in their purchases

Key Takeaway: Buyers aren’t reckless—they’re calculated.

As one respondent put it:

Why buyers love auctions

• Value: Over 50% of buyers said the primary reason they buy at auction is the value on offer.

• Speed and Certainty: Auctions offer a quick, transparent transaction process, which is increasingly appealing in a volatile market.

• Diverse Opportunities: From residential homes to commercial assets, auctions provide a wide range of options under one roof.

The Risk Myth

Contrary to the stereotype of auction buyers as high-risk gamblers, the survey reveals a more cautious approach.

Most buyers only pull the trigger when they feel confident about the asset and its potential.

56% said they only buy when they’re certain of the property’s value and condition.

33% are willing to take on some risk, but only after thorough due diligence.

Just 9% described themselves as comfortable with high-risk purchases.

According to Ben Hodge, Director at Savills Auctions:

What’s Next for Auction Buyers in 2025?

Looking ahead, the survey suggests that the auction market will remain a hotspot for value-driven buyers. 

Commercial investors, in particular, are expected to dominate, with many looking for “bargain” opportunities in retail and logistics.

Meanwhile, owner-occupiers are likely to continue their search for affordable homes, especially in lower-value locations.

What You Can Do:

Stay Informed: Keep an eye on upcoming auctions and market trends.

Do Your Homework: Research properties thoroughly to ensure you’re getting the best value.

Get Expert Advice: Work with professionals who understand the auction process and can help you navigate it successfully.

February usually brings a rise in asking prices as buyers shake off their winter blues, but not this time. Instead, national asking prices dipped by 0.1%.

That might sound like a small blip, but when you break it down, we think it’s an opportunity for buyers in London and the South East. 

London and the south east

Property listings in London increased by 21%, and the South East wasn’t far behind at 13%.

More properties on the market usually mean more buyer choices, and this time, demand just isn’t keeping up.

The South East is now officially the weakest-performing region, with an annual price growth of just 0.1%.

With yields at 3% (in some areas), and regulatory hurdles multiplying, many landlords have decided to cash out. 

But their loss is a buyer’s gain. London, for the first time in years, is offering real discounts. In a city where competition has historically been extremely high, the playing field might finally be levelling.

Why London is the Smart Play

Unlike previous downturns, this one isn’t being driven by an economic collapse—it’s an oversupply problem, meaning prices will recover faster than people think.

Investors willing to think long-term can secure assets at a discount before the inevitable rebound.

The numbers don’t lie:

• £1.59bn worth of £5m+ sales transacted in Q4 2024, up a remarkable 50% from Q3.

• While total £5m+ sales for the year were 4.1% lower than 2023, they were still 36% above pre-pandemic levels.

London isn’t a single market

According to Mercury home search, London has 2 main property markets:

• The Swamp – Overpriced properties with unmotivated sellers who are still clinging to yesterday’s valuations. These are the listings that sit for months without movement.

• The Live Market – Motivated sellers with realistic pricing, often found in off-market deals or through smart negotiation.

These properties represent the real opportunities for buyers who know where to look.

The key is filtering out the noise and focusing on high-quality, well-priced assets in the Live Market. 

The market is far from dead, - and those who recognize the shift early stand to benefit the most.

Vincent Tchenguiz started his career in Financial Trading but he saw the real power was in assets you could touch…

So, in 1988, he co-founded Rotch Property Group, going headfirst into real estate. His masterstroke was large-scale freehold acquisitions.

While others chased quick flips, Tchenguiz built a £3 billion empire, playing the long game with aggressive leverage…

His appetite for expansion saw him push into commercial real estate, healthcare, and venture capital, always staying ten steps ahead.

Then came 2008— the Global Financial Crisis (GFC) could have crushed him. Instead, he fought back, restructured his business - even taking on the Serious Fraud Office (SFO) after a wrongful arrest, ultimately walking away victorious.

That kind of resilience is what separates empire builders from the rest.

The lesson is that Scale matters and Leverage is a great weapon If you use it wisely

That's it for this week folks. Each week we'll cover strategies, updates and insights to help you succeed in real estate. We love this stuff!

If you Have questions or just want to chat, We want to hear it.

See you next time in your inbox!

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