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Private student accommodation makes up 50% of the market

Private student accommodation makes up 50% of the market

The growth of private student accommodation is one of the biggest changes to the university experience in the last decade. These purpose-built student rental homes have pushed up living standards for students and helped to regenerate town and city centres across the UK.

A recent survey from the National Union of Students (NUS) demonstrates the extraordinary growth of the sector, finding that the split of student accommodation between universities and the private sector is now 50/50. The report states that this represents a de facto “handing over” of university accommodation to private developers.

The main consequence of this from a landlord’s point of view is that rents have been pushed upwards rapidly, rising faster than inflation. This growth has been driven by two factors – the fall in availability of low-cost accommodation and the increasing luxuriousness of the private alternatives on offer.

The latter point in particular is clear to see now that it is standard for accommodation developments to include on-site amenities such as gymnasiums and cinemas, and for residents to be provided with services like free WiFi.

Because of this, the NUS report states that rent levels in private student accommodation now account for 73% of student loans – an increase from 58% as recently as six years ago. This equates to an average annual student rent of £6,366 for the 2018/19 academic year (a figure which goes up to £8,875 in London).

The average weekly rent for the private accommodation sector is 9.3% higher than in the university-owned sector, and the standard length of contract is six weeks longer, meaning that private landlords are earning more for longer.

The growth of the private sector, and the rents charged therein, has been partly driven by a changing stock profile. Over the last six years, the number of beds in standard catered accommodation traditionally provided by universities has declined by a third. Concurrently, the volume of full self-catered studio apartments available to students has increased by more than 120%. With the latter worth more to private landlords due to the higher rents which can be charged, it is no surprise that developers have focussed on this type of stock.

The uptake of larger studios among student tenants has been equally enthusiastic. Attending university now costs more than ever thanks to the increased cost of tuition fees, so it makes sense that students would try to get as much for their money as possible. A large, private studio in a modern development is much more appealing than a smaller room in a traditional hall of residence.

With all this in mind, it makes sense that the NUS report found more than half of private landlords invested in student accommodation (53%) said that they anticipate expanding their portfolios in the future rather than shrinking them or maintaining their current levels. 85% expect will rise over the next five years, with 21% confident that the strong rent increases from the last few years will continue.

Private student accommodation is set to continue growing and is likely to make up the majority of student homes sooner rather than later unless something drastic changes. This is the perfect time to invest and take advantage of growing rental incomes. Have a look at our available properties today!