Student accommodation leader cancels London project following visa restrictions

Major Student Housing Project in Paddington Cancelled Due to Financial Concerns

A leading provider of student accommodation has called off plans to construct hundreds of new apartments in central London, following stricter visa regulations for international graduates.

Unite, the UK’s largest student housing operator, has decided not to proceed with its £147 million development along the Paddington canal, despite having received planning approval last year.

The proposed project, which would have offered 605 student rooms, was deemed no longer profitable enough to justify the investment.

This decision comes in the wake of the UK government tightening visa rules for overseas students, as part of Labour’s efforts to reduce immigration numbers.

Recent policy changes have introduced a levy on universities’ income from international tuition fees, along with more stringent limits on how long foreign students can remain and work in the UK after graduation.

Joe Lister, Unite’s chief executive, noted that universities are now prioritizing recruitment of domestic students, which is shifting the market dynamics.

He explained that institutions are being more cautious, delaying new building agreements as they reassess student numbers ahead of the upcoming UCAS application deadline.

“Universities are feeling the strain of financial pressures and are less inclined to take on additional risk. They want to avoid being left with empty rooms they must pay for,” Lister commented.

Unite has also postponed the completion of a separate 500-room development in Bristol, citing the need to consider alternative strategies to maximize value.

There are signs that student demand is weakening. Unite reported that it has filled 64% of its beds for the next academic year, a drop from 67% at the same point last year.

Empiric Student Property, a competitor that Unite is currently acquiring in a £634 million deal, revealed in November that demand from Chinese students has declined.

Empiric’s CEO, Duncan Garood, attributed this decrease partly to ongoing geopolitical tensions.

Meanwhile, new data from the Home Office indicates that net migration is set to reach its lowest level in two decades, with over 100,000 fewer foreign workers arriving in the UK during 2024 compared to the previous year.

While the number of student and seasonal worker applications remained steady, there was a reduction in the number of dependents.

Unite’s property portfolio has also lost value, with its main student accommodation fund declining by 0.7% to £2.8 billion.

The company is redirecting funds saved from reduced construction activity towards a £100 million share buyback initiative.