A viable opportunity

Until now, much of the growth in student accommodation has been focused on the higher value and growing international student market but there is the opportunity, with both a carrot from the developers/ operators and a stick from local and central government, to target the 500,000 students living in the private rented sector.

Local authorities could unlock a substantial supply of lower density family housing in central locations while still meeting the higher density and viability requirements of the current development environment by allowing the provision of more student accommodation.

From a council’s perspective not only would this help with the housing supply issue but it could also add to its council tax revenues.

Households containing only full-time students are exempt from paying council tax and so switching to a new council tax liable occupier would result in on-going payments on the existing property and six years worth of payments through the New Homes Bonus on the newly constructed student housing.

Indeed, many local authorities have already realised the impact of students on their local housing markets and revenues and are consulting on and enacting Article 4 Directives (of the Town & Country Planning Act) to restrict the new supply of Houses in Multiple Occupation (HMOs) in markets with already high concentrations of student households.

If they prove enforceable, the use of Article 4 Directives without the provision of new student accommodation is likely to only displace demand into surrounding markets or even increase overall housing demand as larger households are split into smaller ones.

Therefore, it is important that councils recognise the need to provide alternative desirable student accommodation to counterbalance any displacement of demand while also taking care not to damage the housing prospects for young professionals struggling with the unaffordable housing market.

Identifying the opportunities

According to the 2011 Census there were 132,000 full-time student households across England and Wales housing 500,000 people and we have identified those markets that contain high concentrations of larger sized properties and student households at the expense of families (data for Scotland has not yet been released and so we are unable to include it in this analysis).

From this analysis we have identified a potential 66,000 properties that could be freed up for family housing. This would necessitate the creation of an additional 260,000 student beds across the country.

Two thirds of this unlockable supply is in the top 25 towns and cities and would be equal to 1.8 years worth of recent supply but the scale varies by location:

• In Bath, the provision of student accommodation could unlock 1,100 homes, which is equal to three years of recent housing delivery and £1.4 million in additional council tax revenues per annum, excluding any New Homes Bonus.

• In Oxford it could unlock 1,400 homes, which is equal to five years of recent housing delivery and £1.8 million additional council tax revenue per annum.

• In Newcastle it could unlock 3,300 homes, which is equal to eight years of recent housing delivery and £3.2 million additional council tax revenue per annum.

• In Bristol it could only unlock six months worth of supply but this is still 1,400 family homes and £1.6 million in additional council tax revenues per annum.

Taken from
Spotlight: UK Student Housing