One of the big issues rehearsed in HEPI’s excellent and eye-opening new report on the realities of contemporary student accommodation is affordability.

As the report notes, rent now takes up three-quarters (73%) of the maximum student loan on average, up from 58% just a few years ago. Rents have consistently risen faster than inflation and maintenance loans, and student accommodation is not subject to affordable housing requirements in the same way as traditional housing is – although affordability criteria have been set by the National Union of Students and adopted in the London Plan.

The report calls for all institutions to adopt an affordability policy – but that’s unlikely to help those not covered by an on-campus undergraduate guarantee, and doesn’t address the way in which students of different family background, means and income are being stratified around our cities.

A ministerial anecdote

Back in the Before Times, we had a chat with the Universities Minister Sam Gyimah about student accommodation costs. This was just after the launch of his famous app competition, when we were all focused on giving applicants the information they needed to make an informed decision about where and what to study.

“Rather than this LEO nonsense,” we said, “could we not give student information about likely accommodation costs?”. Sam was not convinced – not least because we don’t really have the data, and even the fact that we have a Designated Data Body that could collect it (and that it once did, with the data appearing on a Discover Uni forerunner) wasn’t enough to move his resolve. “Some things are not best done by central government”, he kindly explained.

There is an odd prurience about accommodation costs in government. We do get a look in the one-in-a-blue-moon Student Income and Expenditure Survey (SIES), but that’s a small sample-based survey. HESA collects information on where students live (a private or provider-owned hall? At home? In an HMO?), and there are a few suspicious “cost of living” sites out there (a few run by lettings agencies), but there is nothing reliable on costs. Surely the largest single outgoing for a student, larger in many cases than the actual maintenance loan, would be worth gathering data on?

There’s a clear case for government to step in here, for all Gymiah’s small state protestations. And if there is any move to regulate these costs – or even reject their regulation – data collection would need to be the first step.

Another student bubble scheme

Once you have some data, you’d need a policy intervention. The authors of the HEPI pamphlet are pessimistic about the prospect of central government introducing rent controls, and so suggest that universities should take the lead in protecting their existing low-cost accommodation – either developing low-cost provision themselves or somehow partnering with the private sector. Intervening in supply, anyway.

It’s an interesting thought. The student accommodation market is expected to be worth £146b in five years, yet the entire university sector turned over £40b by comparison last year. Before this bubble bursts, one supply side intervention would be to nationalise all student accommodation – a much better bet than the broadband or rail nationalisations offered as policy options at the last election.

Outside of these pipe dreams, over the years some have suggested that an important piece of the puzzle would be for the treasury to offer loans at preferential terms to universities to invest in student accommodation. That makes lots of sense from multiple perspectives – but over the next decade if student numbers really do rise we ought also to think about something else too.

Armchair economists will assume that one of the things affecting price is the way in which university expansion over the past ten years has run ahead of supply. Cushman and Wakefield notes that notwithstanding some local exceptions, demand growth continues to outstrip supply at a national level, and most are hoping that this will return to being a problem for UK higher education towns and cities once a vaccine appears.

Over the past decade, the basic assumption has been – if we take the controls off student numbers, universities will expand – and the student housing sector will respond and expand with it. But the time lag between those two things has created problems in relation to where student accommodation is located, how dense living arrangements are how much it costs. So given higher education might expand again over the next decade, should we use the same approach?

A little more regulation

Last year on the site York SU CEO Ben Vulliamy proposed a supply-side intervention – new legislation requiring universities to provide, or to actively intervene in the private market, to ensure a more affordable accommodation market with better value for money. Under Ben’s scheme universities would have only been allowed to offer a place to a student if they could guarantee that there was somewhere affordable to live. Let’s work that up a little.

First let’s remember that for student maintenance entitlement purposes, there are two types of student – those living at home with one rate, and those living away with another. Next let’s suggest that student number controls are placed on universities not on what they can teach, but just on the number of students they are allowed to take that fall into the “away from home” category.

Let’s ensure that APP targets are attached to the percentage of students living “away from home” to ensure that these places aren’t all taken by those who’ve already been “boarders” all their life. And then finally let’s assume that that maximum number would be agreed between the university, the OfS (checking for financial sustainability and supervising access to those beneficial treasury loans) and the local authority (checking for community sustainability).

This would do all sorts of things:

  • It would more closely align student accommodation supply to demand, and allow local authorities to respond to community concerns about the rapidity of expansion and the “pushing out” of local communities. Civic agreements would be rapidly signed.
  • It would incentivise universities to focus on the recruitment of commuter students, developing teaching, timetables and services that better suit this group rather than treating them as a “deficit” from the residential norm.
  • It would allow OfS to discharge general duties around financial sustainability, and specific duties around access and participation (“is there enough affordable accommodation for the WP residential students in your projection?”) and student experience (“will the expansion in your financial plan be matched by places to live or opportunities to travel in?)

What all of that would involve would be doing some planning at some level. And that’s where things get interesting – and bring us back down to Covid-19 earth.

Community and place

Communities usually have an ambivalence regarding the hordes of young people that arrive each autumn. On the one hand student spending supports the local economy, everything from keeping smaller shops open to fueling a demand for cafes, bars, and nightlife – but on the other hand students don’t pay Council Tax and do place demands on services like waste collection. And – whisper it – sometimes four 19 year olds in a terraced house are not the best neighbours.

Many university towns and cities have established student “enclaves”, where nearly every property on a given street is a student HMO. The closest we are currently able to get to seeing these patterns at a national level is with ward level data on student accommodation from the 2011 UK Census. Obviously this is old data, but it is reliable, and offers some indication as to where you might find the students in a given area. Here, for example is Leicester:

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You can see the central, “Castle”, ward is where you are likely to find students – either in halls or in shared houses. Wards clustered around that have a smattering of halls but a high number of student HMOs, and numbers dip as you move away from the centre (though all parts of Leicester have more students than the surrounding countryside). You can look at any part of England or Wales by using the highlighter and moving the map.

The other tab ranks the number of students in a ward across England and Wales. Sheffield Central is by far the most student-ified ward in the country, with two wards in Leeds, Cathays in Cardiff, and Selly Oak in Birmingham not far behind. Moving further down you can see some areas – Ellel in Lancaster, and Castle in Cambridge – with large numbers of students in halls, while others – North Jesmond in Newcastle-upon-Tyne – are very much concentrations of HMOs.

Local lockdown

Most census wards tend to have an overall population of around 1,000 to 2,000 – though there are some that get up towards 10,000, and a handful (all student heavy wards) above that. The largest ward in the country by population is Central in Sheffield, which also has the greatest number of student residents. But Central is lower than others on another key measure that will become increasingly important this autumn – density. Large numbers of people living and working in a confined space is a clear risk factor.

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Here we’ve plotted population density against the proportion of students in a ward as a scatter graph. The colours show the number of students in HMOs, meaning that the green and yellow blobs towards the right are where we would predict particular student-related public health problems to flare up. Students in HMOs are literally embedded within a wider community – far more difficult to separate out and isolate during a local lockdown.

The invisible hand and the invisible virus

The fact that we have and are able to tentatively identify (remember, this is 9 year old data) potential hotspots is testament to the unplanned, market-led, development of the student accommodation sector. While the University Grants Commission used to have an active role in funding accommodation developments for students, letting the free market take over during a period of sustained expansion has changed university towns irrevocably.

We now have student enclaves, with young people from all over the country living cheek-by-jowl with locals seeking cheap housing and access to employment. These locals are likely, demographically, to be ethnically diverse – and in the high risk Covid-19 population intersection (BAME, precariously employed, low income).

Students have grown as a component of the population both nationally and hyper-locally. The annual study migration is the largest single internal migration event in the UK each year – sending students from all over the country to live in less well off areas of diverse towns and cities. If you wanted to design a mechanism to transmit Covid-19 as fast as possible you would struggle to do better than this.

We are here – on pricing and virus transmission – because of an absence of planning and abdication of responsibility for it over three decades of expansion. That in itself would be troublesome, but the nub of the matter is that we don’t even have accurate national data about where students live, or when they are moving. This data is collected, piecemeal, on institutional systems – and is generally of such low quality that term time addresses are not even used for correspondence.

If universities were to have invested, with Treasury backing, in their own low cost accommodation, we would be in a far better place. But we are where we are – on the cusp of policy correction seeking to correct the ills of a “free market” decade of educational expansion without central controls. If ministers believe that some of that higher education provision is poor “value for money” for both taxpayers and students, surely some of the accommodation that has come with it represents bad value too?

For the coming decade, we will want to ensure that whatever emerges out of the response to Augar in the Autumn isn’t characterised by a lack of urban planning to go with the inevitable sector planning. That would be bad both for communities’ and students’ wallets – and sometimes bad for their health, too.

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