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Private living comes at a cost for students

   

Fiona McIntyre looks at how the student accommodation market has changed

Among the university news stories that make the front pages, conditional offers, grade inflation and vice-chancellors’ pay packets have been joined in recent weeks by concerns over student accommodation. Tales are rife of students being sent miles to temporary accommodation because their newly built rooms are not ready.

A BBC investigation published on 4 October found that construction was delayed beyond the start of term time at 22 private student blocks this year, pushing more than 1,000 students into temporary accommodation in university towns and cities including Bristol, Liverpool and Portsmouth.

What’s more, the BBC highlighted that there was little scrutiny of the private firms that build student accommodation. Although Universities UK and GuildHE have a code of practice for university-managed accommodation, it does not cover private student blocks. Housing charity Unipol has a code of practice for private owners of student developments, but it is not compulsory to adhere to the code.

Complex market

On 2 October, universities and science minister Chris Skidmore said in a written parliamentary answer that universities were autonomous institutions and that “government plays no direct role in the provision of student residential accommodation”.

But sensing the growing public pressure, Skidmore quickly took to Twitter to announce that he would be meeting private student accommodation providers to discuss how to avoid such disruption for students in the future. “These incidences are deeply concerning—while the current provision of student accommodation is a complex one varying by institution, we cannot allow this inadequacy to continue,” he wrote.

The purpose-built student accommodation (PBSA) market is indeed complex, and late-running construction projects are not the only concern. According to property consultancy Knight Frank, rapid growth in the last decade means the PBSA market in the UK—particularly popular with overseas students—is worth more than £50 billion. But while the admissions service UCAS is forecasting a 15 per cent increase in student numbers by 2030, Knight Frank warns that affordability could become an issue.

In an analysis published in May, the consultancy wrote: “The market for international students is expected to remain strong. However, developers who overestimate the depth of market for high-specification accommodation, targeted at the most affluent students, will find it more difficult to achieve full occupancy.”

Filling the beds

In Aberdeen, students have more choice than ever when it comes to choosing a place to stay as they start their academic year at one of the city’s two universities. A private accommodation block by developer Student Roost opened over the summer, offering en suite rooms with slick furnishings, a chill-out area with a pool table and PlayStation, and a selection of corporate-style meeting rooms that students can book for group projects.

With prices starting at £124 a week for a basic “bronze” en suite and rising to £189 for a top-of-the-range “gold” studio complete with mini kitchen, rent is higher than in the local housing market; according to an analysis by Scottish rental agency Citylets, a one-bed property costs an average of £455 a month in Aberdeen. A sign-in reception encourages students to “upgrade” to a gold studio, which Kirsten Mackenzie, senior operations manager of the 618-room Pittodrie Street block, says gives “internal customers” a good opportunity.

Mackenzie explains that the high-end design of the building, with designer furniture and artwork decorating the walls, offers students a top-quality experience. “With a building like this you can’t provide an average service, because the building is so stunning it wouldn’t be right to not talk to them when they come in, or not chat to them when they come down to pick up a parcel, or help them up with their luggage or that kind of thing.”

By the time Pittodrie Street opened in July, it had almost sold out. It was a relief for Mackenzie, who explains that for privately owned student blocks, not filling the beds has consequences. “It’s just a revenue loss at the end of the day. You don’t make your financial targets, it drops the value of the buildings. Some people may have to look at restructuring or losing staff,” she says. “Also some people might look into doing a hotel business, like a Booking.com, but then it kind of dilutes [it] and it’s not a strictly student experience any more, which is what we don’t want to do.”

As Mackenzie says, the pressure to fill beds means that some developers are looking for other ways to make up the numbers. Students can end up living alongside holidaymakers in a way that “dilutes” their experience.

Mixed use

In Cardiff, a city with three universities, a glut of PBSA blocks has been granted planning permission. According to a separate analysis by the BBC, around 7,400 student rooms have been given the go-ahead over the past five years. In the past year alone, Cardiff Council told HE, planning permission has been granted for 607 beds in three new student housing schemes.

But since 2014, six blocks have been granted applications for a change of use. One was a permanent change to convert 34 student apartments into “apart-hotels”, but others were temporary applications from developers looking to rent out some of the student rooms as hotel-style accommodation or serviced apartments.

As councillor Christopher Weaver explains, this is often because construction delays mean that the developer cannot be sure there will be enough students taking rooms in the first year. Some applications request a change of use for a proportion of the beds, meaning that students and strangers will share the same building, although mixed developments are usually split across floors or flats so that users are separated.

But as Weaver says, splitting a block between students and hotel guests could still affect both groups. “Personally, I don’t feel that’s right. The intention of purpose-built student accommodation is to build accommodation that is very much designed for university students.”

Different standards

The council did receive a “more concerning” request to turn part of a PBSA building into residential apartments. After a permanent change of use application was turned down, the developers submitted another application for a temporary change of use.

“The standards of accommodation are different if you’re building for accommodation that is expected to be in permanent, year-round use, as opposed to student accommodation, which is seen as a temporary type of accommodation,” says Weaver. “What would be very concerning would be the idea that people get permission for student accommodation that is very much intended to be temporary for people studying for a short period of time, and then turning that into permanent accommodation in which you are expecting people to live their lives.”

Weaver stresses that any application for a change of use from student accommodation to another use would need new planning permission, and it would need to meet the council’s standards. But at the moment, there are no quotas or limits for PBSA buildings and each application is considered on its own merits.

“In the right location, PBSA meets a need in the market and can be quite a sustainable way of housing some of the student population. It’s obviously only ever going to be part of the answer, but it has its place,” he says. “A lot of us obviously do not want to see conversions that in any way lower or threaten the standard of the rest of the private-sector permanent accommodation in the city.”

Incentivising developers

In Exeter, a city with a large student population, councillor Diana Moore says that she is aware “of blocks going up and not being full”, and that although no change of use applications have been granted for PBSA blocks in Exeter, there is “anecdotal evidence [they are] being used for other purposes, but without permission”.

Moore believes developers have been incentivised to build PBSA blocks in the city. In 2013, Exeter City Council introduced the Community Infrastructure Levy, a tax paid by developers and used by the council to pay for infrastructure such as cycle paths.

But she says the levy rate for PBSA was roughly 50 per cent of that paid by developers building residential accommodation, and was originally created to tempt students out of local housing stock to free it up for families.

“Because there have been so many thousands of bed spaces built in these blocks, we don’t need any [more]. We have to change the system and think of a different way of accommodating students that is suitable for students and for residents.”

Benefiting locals

Julie Hall, deputy vice-chancellor of Solent University in Southampton, agrees that although there is still “healthy demand” for university-owned accommodation, there has been a sharp increase in the number of PBSA blocks being built in the city.

“It’s really clear that the city has got many more private providers of student accommodation. Just in the two years that I’ve been here, we’ve seen them springing up,” she says. “It seems like almost every six months there’s another block. And many of them are quite beautiful actually, with rooftop cafes and cinema rooms.”

Hall says PBSA blocks are beneficial for local residents as they free up houses for families. “Certainly I know as a city, [Southampton is] actively encouraging students to move away from those run-down, old-fashioned houses because there’s little pockets in the city that are pretty scruffy and they’re landlord-owned houses,” she says. “And the sense is that if there isn’t that student market there then those houses might…be more available [as] homes and residences.”

Rental woes

Sky-high rents have become a feature of life for most students, with average rental costs outstripping the maintenance loan in almost half of the UK, according to finance website Save the Student. But the blame does not lie solely with PBSA properties—Save the Student’s 2019 rental survey found that while private halls and private landlords both set students back by an average of £126 a week, university accommodation cost around £137.

However, the National Union of Students stresses that the problem with late-running PBSA is that students face the dual problem of high rents and a disruptive start to their academic year. Eva Crossan Jory, vice-president for welfare at the NUS, says the union is lobbying to make sure PBSA is treated as housing “rather than a ‘get rich quick’ scheme for big business and financial investors”.

Universities, developers and students will be watching closely to see whether regulations for PBSA are about to change as a result of Skidmore’s intervention.