The academic year 2014/15 has seen a surge in demand for student accommodation with an extra 30,000 places being offered to students by universities over and above the 2013/14 total, that’s according to a recent BBC report.
This has increased the pressure on universities and student accommodation providers in some locations to such an extent that some students are having to share rooms.
All the indications are that in some locations student accommodation is well under-supplied.
This situation is to some extent as a result of the government’s policy this year of relaxing restrictions on student numbers in the university institutions concerned, and this could be further exacerbated next year as plans are in place to remove restrictions on student numbers in individual institutions altogether.
According to the BBC’s investigation there is a severe shortage of accommodation for students in UK universities across the board, that’s for university provided housing in halls of residence and landlord provided accommodation with privately rented housing.
Demand is such that private landlords have been able to invest with confidence knowing that demand is there. But this could be affected longer term by corporate investors such as the Unite Group PLC moving into the more popular university locations, particularly the Russell group towns and cities formed in 1994 by 17 British research universities – Birmingham, Bristol, Cambridge, Edinburgh, Glasgow, Imperial College London, Leeds, Liverpool, London School of Economics, Manchester, Newcastle, Nottingham, Oxford, Sheffield, Southampton, University College London and Warwick.
This corporate accommodation is similar in style to university halls of residence, built in large modern blocks, but offering higher standards than both the halls and shared private housing. However this it usually at a higher cost, and many students still prefer the camaraderie of living together in a student house.
The shortage of accommodation, as with all rental accommodation in general at this time, has created quite a lot of interest from private investors in the student sector over recent years.
With the prospect of more demand to come, the lack of university-provided accommodation and the prospect that corporate investment is unlikely to make a big dent in the supply situation in most locations, under-supply is likely to continue for some time.
Multi-occupation in the student market, despite that fact that HMOs come under stricter and more expensive safety standards, means that private landlords have been receiving considerably higher investment returns (yields) than those with single buy-to-lets.
The result has been an increasing interest from investors both for direct investment in shared housing and indirect investment in companies like Unite, or through investments in individual units in privately built corporate student blocks sold by investment companies.
Student Accommodation sees a boost in demand to such an extent that some students are sharing single rooms. http://t.co/GgpM5hkeYY
— LandlordZONE (@LandlordZONE) November 24, 2014