Who will take responsibility for student housing?

The sudden switch from a perceived over-supply of student accommodation in multiple UK university cities to a sharp shortage ought to cause a focus on understanding demand, supply and any shortfall - both in January 2023 and September 2023.

Jim is an Associate Editor at Wonkhe

Cities like Cardiff, Manchester and Leeds have tended to green light as much private halls provision as possible – leading to regular claims of oversupply over the last decade. But as well as reductions in private housing supply, pricing assumptions made a number of years ago by PBSA developers may be out, both in terms of affordability both for home domiciled students hit by a cost of living crisis without inflationary increases in maintenance support, and international markets mining poorer students who often need a different kind of housing.

Last week Property Reporter said that the student rental market is “reaching breaking point” via research by property developer, Stripe Property Group – whose press release “revealed” that “there are now 3 students for every student bed available”.

“Research” is stretching it. It looks like the aforementioned build to rent specialists picked some figures from this Cushman and Wakefield report, which estimated that 697,734 beds were available to students for the 2021/22 academic year – and when compared to “2,180,419 full-time university students across the UK” you get to the 3 for every bed claim.

The C&W bedspace figure was actually for purpose-built student accommodation, excluding HMOs, lodging and living at home. Elsewhere in the report, C&W even stated its estimate that 1.63m students need a bedspace away from home – circa 700k of that demand is being met by PBSA. We do look short in many cities – especially by price band and affordability – but we’d have more than the Tab covering it if we really were “over three students for every bed”.

So how far apart is supply and demand in our big university towns and cities? Last week the Local Democracy Reporting Service (which topslices the BBC License Fee to pay for local independent journalists) carried a fascinating interview with Paul Seddon, the director of planning and regeneration at Nottingham City Council, who at least seems on top of the issue:

Despite the shortfall, Mr Seddon says the city has so far managed to stave off crises seen in other cities such as Durham, where a lack of housing and soaring rents forced students to queue for hours outside estate agents in a bid to secure accommodation. He says this has been achieved by having what he describes as “the best monitoring data of any city” in the country and close ties with both universities…. Mr Seddon says he is “as confident as I can be that we will avoid what has happened in some of the other cities more recently”.

The city’s Student Living Strategy explicitly involves collaborative working with the council to “ensure Nottingham realises the many socio-economic benefits that students bring without putting pressure on the city’s housing stock” – but there are risks. If there was a sudden drop, say, in international students via market changes or even changes to immigration policy, some fear an oversupply of PBSA with little scope to change use – and people like Giles Inman from landlord association EMPO are worried about price too:

Purpose-built is a lot more expensive than HMOs, with the cost of living crisis even students will have to start looking at what they are spending. Some of these blocks can charge between £150 to £160 per week… Blocks have a very, very tight financial model and even with competition they will struggle to reduce rents because of the overheads.

Still, at least you get the sense that Nottingham is on top of the issue. Elsewhere everyone seems to think it’s someone else’s problem – so ideally you’d have government intervene to cause the sort of partnership that is evident in the East Midlands.

To that end Labour MP Diana Johnson asked a perfectly sensible question last week of new Secretary of State Robert Halfon, asking if he would consider legislation mandating the sort of partnership in Nottingham to ensure appropriate provisions are in place to house the numbers of students that universities are admitting.

The rather tetchy and defensive answer she got was as follows:

Neither the Department for Education nor the Department for Levelling up, Housing and Communities have made such an assessment. It is for local areas, through their Local Plans, and in response to local needs and concerns, to determine the level of student accommodation required in their area. Universities and private accommodation providers are autonomous. The department plays no direct role in the provision of student residential accommodation, whether the accommodation is managed by universities or private sector organisations.

If DfE doesn’t understand the size and shape of the problem, maybe Levelling Up, Housing and Communities gets it? Not quite.

Last week at the commons LUHC Committee, the new housing minister Felicity Buchan was asked what the department’s assessment of the impact of its intended renters’ reforms were likely to be on the general student PRS market. She didn’t have an answer per se, but her official did accept that abolishing fixed term contracts could mean landlords resolving to move away from letting to students – where properties leaving the student market would mean more expensive rent for students having to move into PBSA:

We have heard that concern, but we have also heard the reverse concerns almost from student union groups and others who’ve said that the current system with student housing, they don’t like the pressure of having to sign up really far ahead for student housing, they may be at the very start of their, their term, they have to then commit to contract with people who they’ve barely had the chance to get to know. So that is also something that’s been raised with us. And what the white paper proposal was trying to do was strike the right balance between all these different concerns. But as the Minister said, she’s very alive to these questions about the student market and plans to look at it.

To be fair to DfE and LUHC, given both domestic and international higher education plans and regulation tend to champion an HE “market” that is complacently agnostic about impacts upon place, it’s little surprise that nobody – and that includes the Home Office and the Department for International Trade – seems to be on top of the looming bedspace mismatch between supply and demand. If the lack of attention to the issue isn’t biting by January, ministers will have got lucky. If student numbers continue to rise the way they have by next September, ministers will be in full-blown blame game mode. Don’t bet on Felicity Buchan having a plan.

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