Student accommodation has become an important part of the country’s property sector, with a boom in delivery in recent years. In 2018/19, the proportion of bed spaces provided by the commercial sector has reached half of total stock, up from 39 per cent in 2012/13.
In 2018/19 over 2.35m people attended university in the UK, including nearly half a million international students and over 1.25m UK students living away from home during term time.
Whilst the long-term impacts of COVID-19 on the student accommodation market are as yet unknown, more recently, the immediate implications have resulted in soaring vacancy rates and a potential drop-off in student intake for the new academic year, including from overseas students. This was cited in a letter from the British Property Federation to the Government on 8 April 2020 which stated:
“In light of universities closing and students being unable to work, many accommodation providers are in a difficult position but are choosing to waive rents for the remainder of tenancies, at substantial financial cost. There is also considerable uncertainty as to how the crisis will affect the number of students attending UK universities in September. As a result of the global recession, uncertainty around term dates and application procedures, and the possibility of continued travel disruption there could be markedly fewer students arriving for the new term, from both the UK and particularly abroad.”
Whilst there are differing views on if and when university towns and cities may reach saturation point in relation to student accommodation, and the long term implications of COVID-19, what is clear is that there is a continuing shift in terms of what students expect from their accommodation.
It is well cited that the days of students living in dingy accommodation with small, sometimes shared rooms and facilities are gone. There is also a lot of discussion about whether purpose-built student accommodation (PBSA) will free up family homes if students are choosing PBSA over existing Houses in Multiple Occupation (HMOs). However, there is less discussion on how the demands of students continues to shape the PBSA market and what that means for the first generation PBSA; and it is this point that is explored within this blog.
Between 2016/17 and 2018/19 across the UK there has been a 4% growth in student numbers living in PBSA, with the PBSA sector having a 22% share of the UK student accommodation market in 2018/19.
Newer PBSA stock is often located centrally within a town or city, often close to university campuses. The National Student Accommodation Survey 2019 found students live on average 20 minutes from their university. This represents a clear benefit for students, compared to accommodation located on the periphery, in terms of convenience for both academic and social activity. This is often due to affordable values and availability of sites as developers tested the immature market.
Indeed, planning policies such as Newcastle City Council’s Core Strategy and Urban Core Plan Policy CS11 supports this trend, setting out that:
“Promoting lifetime neighbourhoods with a good range and choice of accommodation, services and facilities to meet varied and changing needs, will be achieved by…Focusing the provision of purpose built student accommodation within the Urban Core.” (Emphasis added).
This means that any new PBSA schemes will be better located compared to those that have been built outside of the defined Urban Core.
Newcastle Council’s ‘Maintaining Sustainable Communities SPD’ (2017) sets out a number of planning benefits of focussing the growth of PBSA in the Urban Core including:
making the Universities more attractive to prospective students by offering a range of high quality, affordable accommodation in accessible locations;
providing increased vitality to the city centre through the increase in student residents with the associated benefits arising from increased footfall and spending in shops and local services;
reducing demand for existing HMOs in Article 4 areas and thereby encouraging their return to family dwellings;
securing development on often vacant or under-utilised sites and bringing previous vacant upper floors of historic premises back into use;
delivering a series of often striking architectural buildings that enliven the centre of the city;
generates little day to day vehicular traffic, except at the beginning and end of term;
limited amenity impacts on existing residential areas;
the Council receives New Homes Bonus payments and planning obligation contributions provided by the PBSH sector…to be used on infrastructure projects related to the developments... (Para 3.18)
The SPD further recognises that markets fluctuate and seeks to safeguard the Urban Core with Policy SC2 requiring that the design of PBSA schemes must ensure that it can be adaptable to alternative future uses.
Newer PBSA typically boasts facilities such as 5G, en-suites, double beds and well-designed communal areas. As this becomes the norm in response to competition in the market, it means that significant changes are needed to bring older accommodation up to the standards expected by students today. Even if existing older stock is brought up to similar standards, their peripheral location remains. Therefore, if price points do not reflect this difference in location, maintaining high levels of occupancy is likely to become challenging and there is a risk that more peripheral schemes become obsolete.
However, with these challenges comes opportunity. It is well documented that we are in the midst of a housing crisis; with a national ambition to deliver 300,000 new homes each year for families, first time buyers, renters, young professionals and older people. With strong demand across such a broad demographic comes a similarly broad housing requirement; meaning there is a need to deliver a range of house types, sizes and tenures in a variety of locations.
Whilst the first generation PBSA may not be as centrally located to university campuses as newer PBSA, they are generally on the periphery of towns and cities, with good public transport links, existing infrastructure and some with car parking provided.
So what does increased supply and the growing demands of a mature market and planning policy context mean for the first generation accommodation? There is a clear opportunity to repurpose older PBSA stock to better balance demand and supply whilst helping to meet the housing needs of a different, non-student, sector of society. This could include apartments for older people or young professionals alike; both of who typically seek well located and connected accommodation. Indeed, re-purposing an existing PBSA block would not have to be focussed on solely the young professional or solely a retirement scheme; there is clear merit in integrating the two to help form a balanced and mixed community.
Lichfields has developed the Bedspace Model and Carepacity Toolkit to assist developers, operators, universities and local planning authorities in identifying opportunities for PBSA and housing for older people across the UK; being able to find sites as well as demonstrate the need and capacity for such development within a local area. We are also able to find sites or appraise existing sites that could benefit from being re-purposed to bring them into a more viable and attractive use.
If you would like further information on our planning services, please do get in touch.
 NUS responds to accommodation cost survey 2018 HESA data Supporting the student accommodation sector through COVID-19 Planning matters, Student accommodation Lichfields analysis of HESA data National student survey 2019