The EU Referendum on the 23rd of June has created plenty of short-term economic uncertainty and even more debate about what might happen if the UK votes to leave. It is difficult to assess what might happen across the whole economy, but it is clear that there could be a sizeable impact on the UK’s higher education sector.

Last year there were 125,000 students from across the EU studying at UK universities and they generate around £3.7 billion per year for the economy, according to estimates from Universities UK. A vote to leave could lead to the tuition fees they pay rising to match those paid by non-EU students. If that happens then the costs versus benefits of studying in the UK may become less attractive than in their own or other countries, leading to falling EU student numbers in this country.

^{Source: HESA}

Meanwhile, EU funding, shared research facilities, and shared knowledge are all important components of UK university research. Leaving the EU would have an impact on all these factors and others, at least until new individual country by country agreements are reached.

The threat of a vote to leave is creating short-term economic uncertainty and that is having a impact on activity across all real estate assets. This uncertainty would be increased in the event of a vote to leave and the higher education sector would not be immune. However, EU students are only 5.5% of total student numbers and there remains a requirement for modern purpose built student accommodation in most towns and cities across the UK. Therefore, the long term investment potential of purpose built student accommodation would remain, possibly even boosted by any resulting currency movements post referendum. Meanwhile, a vote to stay in the EU would provide greater certainty to the markets and probably lead to increased investment and developer appetite in the months after the result.

However, in addition to the immediate challenges is the risk that a vote to leave might bring in its wake more aggressive anti-immigration policies. The current Government’s approach has so far limited the growth in numbers of non-EU students coming to study in the UK but has not had a significantly negative impact on total numbers, though we have seen falling numbers of certain student groups. For example, the number of Indian students in UK higher education is less than half the number enrolled in 2010.

^{Source: HESA}

A stricter cap on numbers could have a devastating impact on funding into the higher education sector. Ideally, any attempt to lower net migration should exclude higher education students given their important contribution to the economy. The UK’s ageing population and slow growth economy should make attracting the best and brightest young people from around the world and allowing them to continue working in the UK once they have finished their studies a priority. Hopefully, this will be recognised by policy makers irrespective of the result on the 23rd of June.

^{Source: HESA, ONS, Home Office}