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"The Governor View" - Student Accommodation

Governing boards are increasingly focused on the challenge of ensuring a sufficient and affordable supply of student accommodation, aware as they are of its potential to impact student satisfaction scores, and therefore league table positions, as well as engagement, wellbeing and retention, finance, university estates and reputation. 

According to one governor who spoke to Advance HE, “the issue comes up more now than at any moment in recent memory”.

Boards are having to get to grips with an increasingly complex accommodation landscape. Over the last 15 years, universities have become more reliant on private accommodation operators; many institutions now own and operate almost no housing of their own. A growing number of students, both undergraduate and postgraduate, are making their own arrangements with purpose build student accommodation (PBSA) companies.

According to a new Higher Education Policy Institute (HEPI) report, Student Accommodation: The State of the Nation in 2024, by Martin Blakey, former chief executive of Unipol, a combination of growth in student numbers up to 2022/23, alongside longer-term shortages of student-specific and private rented accommodation - particularly in major cities - has put acute pressure on the system.

Although student demand nationally is expected to level off in 2024/25, the supply of rooms is an ongoing concern for many governing boards.

Only 8,760 new beds were brought on line in 2023/24 and the HEPI report forecasts the provision of roughly 10,000 additional bed spaces over summer 2024. But it notes that some of the new beds are in the wrong places, leaving city universities with even modest growth plans struggling.

“We have tons of students and tons of demand,” said the governor at a Russell Group university in a large northern city. “It reflects the popularity of the city as a place to study. As well as us, there is another university and other smaller colleges, private providers and specialist institutions. If you walk around the city, you are very conscious of the huge amount of student accommodation, much of it purpose built student accommodation. When you come out of the station, the first thing you see is a massive student block and there are more student buildings before you even reach the main campus. The same is true around the other university in the city.”

As well as undertaking partnerships with PSBA providers, universities have to maintain and update their old stock to the levels that today’s students expect. 

The route most institutions take to refurbish or rebuild is to borrow money and pay the debt back. However, with higher interest rates the approach is expensive and risky.

A recent Higher Education Policy Institute report on a major redevelopment at Northampton University which began in 2010, points out that over the project phases, interest rates were at an historic low of 0.5 – 0.7 per cent and inflation was stable. It concludes that “it is highly likely that costs would have rendered the project untenable if it had started any time before 2010 or after 2020.”

The chair of governors at a university in the south of England which is in “a growth phase” said the availability of student accommodation in and around the city was “a constraint”.

“Student accommodation is very high on our agenda” he said. “We pretty much use any model under the sun to provide student accommodation.”

Last year the university completed a refurbishment project on some of its older accommodation and other projects are ongoing. As well as its own halls and student blocks, it relies on specialist providers - both through partnerships and in straight commercial provision.

The university is currently in discussions with various providers about building accommodation on land owned by the institution, encouraging them to build elsewhere and the possible transfer of some university-owned blocks to free up capital to spend on new accommodation.

Whatever the supply models universities engage with, high interest rates and soaring construction costs mean new builds are expensive, even with a PBSA partner. High inflation is pushing up costs associated with existing accommodation. Both of these mean higher rents for students. 

As the HEPI’s state of the nation report highlights, average student rent now accounts for the whole of an average maintenance loan. It warns that on the basis of the past five years, there is a danger that the cost and availability of accommodation will shape the socioeconomic profile of the student population, with only the well-off being able to study in certain parts of the country.

“Increases in rent are outstripping increases in student maintenance loans and that is a major problem and concern for us,” confirmed one governor. 

The issue is amplified in London, where real estate is at a premium. 

“If a student can't get accommodation or it is too expensive or low quality, it is not just adversely affecting their wellbeing and how they experience university, it is also now an Office for Students (OfS) equality of opportunity risk factor,” said a governance expert from the Capital. “Governors with oversight of new access and participation plans will be asking the executive ‘what is our exposure to that risk and what can we do to mitigate it?’”

In recognition of the problem, a number of universities have introduced financial support that specifically targets students’ accommodation costs. One London institution has an accommodation bursary scheme aimed at students in the most vulnerable circumstances. Others might offer rent relief to students who are really struggling.

London institutions have the highest proportion of commuter students in the country, partly explained by the cost and difficulty of securing student accommodation centrally.

“This is increasingly the case even for international students, who will try to stay with family, friends or any acquaintances,” said the governance expert.

According to the HEPI report, the traditional pattern of students living in halls for their first year and then renting a shared student house is breaking down. 

Pressure of demand from other renter groups eats into housing supply. Government regulation is making buy to rent less favourable for landlords so some are selling up, while AirBnB is an attractive alternative to renting to students, particularly in areas where visitors take city breaks. 

Governors described students being caught up in an accommodation “rat race” in their bid to secure suitable accommodation.  A governor in a northern city said undergraduates looking to move into private renting in their second year were signing leases as early as the end of the first term in their first year.

The growth in international students has increased demand and adds another element to the mix. More affluent overseas students tend to favour PBSA. But some students coming from India and Nigeria, with fewer resources, are chasing rooms at the other end of the spectrum. Students who are “last in the queue” where accommodation supply is tight, such as clearing students or January intakes, may find rents are higher and choices more restricted. 

Many universities try to maintain a ‘rent ladder’, where students have a choice of differently priced accommodation. The problem here is that the lower cost accommodation tends to be older and in less favourable locations and might not live up to students’ expectations.

“There was some discussion about whether it was worth refurbishing our older blocks with rooms with shared bathrooms,” said the chair of a university in the south of England. “There was a school of thought that was saying ‘knock them down and start again’. Part of the discussion was that you should provide a full range of options and having some rooms at a lower price, with shared facilities and which might not be quite as attractive, was valuable for some students.”

This governor though is surprised that despite cost-of-living pressures, the vast majority of students demand high quality provision with ensuite accommodation and shared social spaces.

His view is echoed by another governor who cites students consulting a review website – a kind of Tripadvisor for student accommodation - to seek out the best rooms on offer.

“Some students demand and can afford the plusher stuff,” he said. “There are also quite a lot of parents who are worried about their child’s safety in a big city and will cover the rental costs, while the student uses the maintenance loan for living costs. The private providers can show you that the places that have shared bathrooms are the last to go and the slightly more expensive, not the luxury stuff, is the first to go.”

As well as working in partnership with PBSAs, a number of governors mentioned the importance of relationships with local councils, which have control of planning permission and, in some cases, regeneration funding. Some recent high-profile examples aside, governors feel the prevailing direction of travel is positive joint redevelopment, rather than “town versus gown”.

“We own a couple of big buildings right in the middle of town and there are a couple of areas of waste land near the city centre and the council are dead keen for the university to grow in some of those spaces. Whether teaching facilities or student accommodation, they just want high quality use of city centre space,” said one governor.

Good council relationships can also help with getting action when privately- renting students report unscrupulous landlords providing poor accommodation to university housing services.

“We want to make sure that the student experience is not damaged by accommodation that does not meet reasonable expectations, whoever provides it” said one governor. “We need to ensure students get good, timely information and advice about accommodation, the right support on site and when it comes to new builds, high quality social spaces so that students are more likely to want to use them and less likely to feel isolated.”

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