We’re in the midst of one of the busiest times for UK University and student accommodation companies. Whilst a huge number of students are celebrating being accepted to their chosen universities a large number have frantically been on the phone, trying to assure a place via clearing.
Clearing can be frantic and once accepted many students then need to start the chaotic process of attaining student housing for the upcoming term. It’s no surprise that most research suggests there are more than ten students for every single available bed across the UK.
With that in mind let’s take a look at what’s making headlines across student property at the moment:
Student housing deal volumes poised to top 2016 levels
As originally reported by PropertyWeek, investment into student accommodation and developments, otherwise known as Purpose Built Student Accommodation (PBSA), is already set to exceed last year’s totals.
This is despite the slight drop in student numbers and concerns over Brexit negotiations. As we’d predicted in previous articles, the slight drop in student numbers was not only expected but has had absolutely no tangible effect on investment.
PBSA, statistically, remains one of the best performing asset classes in property investment.
Cushman & Wakefield, who produced the data, predicts that deal volumes will total at least £4.8bn this year, up from £3.86bn last year, and that a number of potential portfolio deals could even push volumes beyond the record £5.7bn posted in 2015. In the first half of this year, £2.4bn of assets changed hands, 24% more than in the same period last year, PropertyWeek reported.
The official UCAS figure released for university applications this year stated a 3.7% drop year-on-year based on 2016 figures. Perhaps surprisingly, however, there was a rise in interest in UK universities from EU students despite Brexit concerns.
Cushman & Wakefield also said that for the coming academic year, average headline rents are expected to increase by 2.9%. Cushman & Wakefield’s student accommodation advisory team also said that rents are continuing to rise because of years of undersupply and the increasing popularity of purpose-built stock.
Housing co-operatives to rival PBSA?
In Leeds a group of pioneering students have started a housing co-operative as an alternative to the traditional student accommodation provided by universities and private investors.
As reported by the Yorkshire Evening Post, groups of students are now appearing around the city in order to create and maintain these new student property co-ops.
Housing co-operatives are, simply, homes which have been purchased by a group of people with no one single owner. Often, a group will band together to fund a company, or a mutual, and approach a building society to attain a mortgage. The group will then pay their rent and pay for maintenance through the mutual. Decisions for the running of the property, rent levels and other issues are decided at a group level, democratically.
The Yorkshire Evening Post carries an interview with Cath Muller who has lived at Cornerstone Housing Co-op in Chapeltown for 22 years.
Cornerstone now owns two Victorian houses in the north Leeds suburb; buying its first in 1993. She said: “From a tenant’s point of view, it is much like renting from a private landlord but your rent doesn’t go into a landlord’s pocket – instead it goes to preserving affordable and secure housing for the future, which can be adapted to suit your needs and desires.
This means that – depending on the overall rental income – you’re allowed to drill holes in your own bedroom wall and replace the heating system… as long as the rest of the co-op agrees.”
“We chose the big house in Chapeltown because it had big gardens and lots of cellar space and we bought a second house within 18 months.”
“Over 20 years and 100 members later, we’re still going strong with businesses operating in the cellars of both houses, productive gardens, excellent workshop spaces and infamous annual parties.”
It’s highly unlikely that these co-operatives will every challenge PBSA, with only miniscule pockets of students banding together across major cities to enact the model.
Students, too, are highly unlikely to be able to set up the schemes in large numbers, so PBSA investors are certainly safe for now.