September 26th, 2016
As swathes of university students arrive at their new accommodation for the academic year it has been reported from numerous universities and student unions that students are facing an availability crisis. Thousands of students have been reporting to their unions and support networks that they’ve been finding it increasingly difficult to find affordable accommodation that provides good value for money.
At the University of Salford, a specific task force has been formed to help students who cannot find appropriate accommodation before the beginning of the academic year. A similar approach has been taken at other universities across the country including those in significant student hubs such as Greater Manchester, Liverpool and Nottingham.
As private investment in Purpose Built Student Accommodation has soared, new developments are being built with increasing frequency across the UK - but the concern remains that the construction rates are failing to keep up with a rapidly increasing student population. To exacerbate the issue, universities’ own stock of student halls are failing students who require good facilities in order to study.
New developments have been approved for the University of Salford, Loughborough University, Coventry University, and the University of Bristol all within the last month which has highlighted the demand for accommodation. In Newcastle, the city council are already concerned that student accommodation is going to become more prominent across the city centre as universities fail to provide appropriate housing near their campuses.
The general quality of student housing has been vastly improved by private investment. The competition introduced by private student accommodation has encouraged developers to provide more and more facilities to their customers at better prices. ‘Boutique’ student housing has certainly seen its stock rise astronomically in recent years, providing the kind of high end services such as super-fast broadband, gyms, and en-suite bathrooms that students are desperate for. The real issue is that these far superior boutique rooms are a similar price to the standard university halls which often provide nowhere near the same service.
As the government allows universities to scrap caps dictating how many students they can accept, there has been a huge surge in applications and in the number of students accepted. While this is good news for university treasurers, the student population face a very real problem in the rush to find appropriate housing.
Among the warnings, however, there is good news as investors and property developers have noticed the gap in the market and begun a massive expansion of student accommodation in city and town centres. Relatively small capital investment and strong yields have seen the popularity of investing in student accommodation grow massively over the last decade and become a mainstream property investment option.
Investors are able to host a diverse portfolio of properties within the student sector and tenancy rates are extremely stable in comparison to a standard residential property which can see wild fluctuations in occupancy.
Many universities have now placed their accommodation strategies squarely at the feet of private investment and many city councils as well as universities are actively encouraging private developers to build in and around these institutions.
If current trends continue, then the investment will be badly needed and investors will be all too happy to oblige. Strong returns on investment are not commonplace in the post-Brexit economy and it is no surprise to see Purpose Built Student Accommodation doing very well.