Fears over student accommodation supply and rising student rents

Fears over student accommodation supply and rising student rents

10:32 AM, 3rd August 2022, About A week ago 5

Text Size

The UK’s leading student accommodation search engine says the supply of HMO student accommodation (Houses of Multiple Occupation) will be compromised under planned changes to tenancies as part of The Renters Reform Bill.

This will, Accommodationforstudents.com says, result in fewer accommodation choices and higher rents for students.

Currently, the UK student housing market offers students a good range of accommodation options, including Purpose Built Student Accommodation (PBSA) provided by universities and the private sector, or shared housing options in HMOs provided by student landlords.

‘Vital that the Government exempts private student landlords’

Simon Thompson, the director of Accommodationforstudents.com, said: “It is, in my view, vital that the Government exempts private student landlords from its proposal to move all tenancies to periodic ones, as it has for institutional landlords who run Purpose Built Student Accommodation.

“Failing to do so will force private landlords out of the market, reducing the mix of affordable options and driving up rents for students who are already on a limited budget.”

UK students account for 77% of enquiries on HMOs, but only 60% on PBSA. International students are more likely to enquire on PBSA properties, accounting for 40% of enquiries.

However, plans to ban fixed-term tenancies as part of The Renters Reform Bill, and instead move tenancies to one system of periodic tenancies, would mean students would not have to leave their HMO accommodation at the end of their fixed-term – usually the end of the academic year.

This would mean private landlords would be unable to guarantee spaces to new students at the start of the next academic year, and could result in student landlords exiting the market, subsequently reducing the mix of accommodation options for student life.

‘Students will be forced to look for accommodation further away’

Mr Thompson said: “Furthermore, where demand exceeds supply, students will be forced to look for accommodation further away from their university town or campus, meaning transport then becomes an additional cost and problem for students.

“Student accommodation and its location form a fundamental part of university life.”

He added: “Many are already facing higher costs owing to rising utility bills.

“If students cannot find or afford accommodation, those on limited budgets are more likely to feel ostracised.”

Students struggling to find suitable accommodation

Accommodation for Students has already seen the impact following a similar change in the law in Scotland, with students struggling to find suitable accommodation.

Edinburgh ranks in the top ten of most expensive cities for both HMO and PBSA at £156.34 and £193.47 per week respectively.

According to AFS data, HMOs are currently marketed at an average of £22 per week less than PBSA, and where a student chooses to manage their own bills, this difference increases to £30.15 per week.

The average price of an HMO is currently £122 per week, or £113.85 without bills. The average price of a PBSA is £144 per week.

Cities are already experiencing an undersupply of affordable accommodation

Following post-pandemic grade inflation, which resulted in a higher intake of students at some of the most sought-after universities, some cities are already experiencing an undersupply of affordable student accommodation.

For example, in Bristol, the average price difference between HMO and PBSA is £76 per week, in York this is £43.53 and in Edinburgh the difference is £37 per week.

Currently, the most expensive city for student accommodation is London, averaging £253.17 per week for HMO accommodation, followed by Cambridge and Bath, which are £191.74 and £191.39 respectively.

The cheapest city is Wolverhampton at £68.75, followed by Bolton £70.45 and Stoke 77.41.

London is also the most expensive for PBSA at £258.11 per week, followed by Bristol £243.04 and Bath £232.80.

The cheapest cities for PBSA are Hartlepool at £69 per week, Bradford at £70.82 and Hull at £75 per week. Coventry, with access to Warwick, represents excellent value at £125.83 per week.



Comments

Ian Narbeth View Profile

11:24 AM, 3rd August 2022, About A week ago

"[P]lans to ban fixed-term tenancies ... would mean students would not have to leave their HMO accommodation at the end of their fixed-term – usually the end of the academic year."

That is not the only problem. The problem of people not moving out already exists because of the time taken to evict a tenant who won't leave.

Another serious problem is that the students leave early and the landlord cannot easily re-let until the start of the next academic year. Perhaps the students fall out with each other or someone drops out of their course and the others don't want to stay. Whatever the reason the landlord will be left with a void.

Students will also learn a lesson: that lying to landlords (e.g. that they want the property for 10-12 months and will stay) has no adverse consequences. With young people entering into what is probably their first proper "contract" after reaching adulthood, this is an appalling lesson to be teaching.

Karen

13:28 PM, 3rd August 2022, About A week ago

I think the entire move would threaten the very existence of HMO student accommodation.

Students want to share with students and not with people already in work. They often are looking for accommodation as a small group. I frequently let to a group of 3.
I have a few grad-student only HMOs and try to match gender and courses where required. Happy tenants are good tenants after all.

If a student decides to stay on after the course finishes, their maintenance grants also stop, which raises a funding/affordability issue. They are no longer a student and there goes your student only accommodation.

David

15:20 PM, 3rd August 2022, About A week ago

As above it would probably be the end of the private student rental market.

Call me cynical but... I can't help thinking that the proposal is so ridiculous that its been included in the white paper as something of an Aunt Sally that the department are content to see knocked down so that they can show there have been concessions following the consultation.

Carol

15:43 PM, 3rd August 2022, About A week ago

It is not only student accommodation that will be affected. All HMO's will suffer. It's a nightmare now with the current energy costs where rooms are let bills included. Post graduates, doctors, etc often rely on HMO's as their contracts are not permanent. The cost of setting up a tenancy is often around one month's rent. If the tenant can leave after two months then the whole operation of an HMO becomes unprofitable/unmanageable

Yvonne Francis

10:04 AM, 6th August 2022, About A week ago

I would like to say I agree with everything in this post. The real losers will be the students who like private houses where they can live independently with their friends at a cheaper rate than the PBRS. Could there be an article on 118 discussing any serious options if landlords wish to stay with students. (perhaps I will start one). Could someone from Scotland tell us how it is working out with them. Although I self manage my student lets I will talk to a few agents I know next week for ideas. One agent has already offered to talk me through the whole white paper. But as they say on Dragons Den it's probably 'I'm 0ut'.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now