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Meeting increased demand

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Demand for Accommodation

 

Over the last 5 years we have seen accelerated growth in the number of students applying for university – student numbers are continuing to rise with a record 44% of 18-year-olds in England applying for a full-time undergraduate course for the 2022/23 academic year[1]. This represented 14,000 more applicants than the previous year and almost 50,000 more than in 2019. This rise in demand for higher education has been accompanied by a greater demand for student accommodation which continues to outpace the supply of available beds.

 

With the population of 18 year olds forecast to continue rising and increasing numbers wishing to attend university it is anticipated that the demand for student accommodation will continue to grow. International student numbers also continue to rise, driven by the weakened pound and the attractiveness of the UK’s excellent academic Institutions.

 

Purpose Built Student Accommodation (PBSA) is therefore an increasingly popular sector, turning the heads of universities, investors, and developers alike. Gerald Eve are working with a number of student accommodation providers and universities to deliver student accommodation across the capital where demand is outstripping supply. This note sets out some of the key issues to be considered when delivering PBSA to ensure the best prospects of success at planning.

[1] UCAS via Rise in university applications from UK 18-year-olds, figures show | Admissions | The Guardian

What is Purpose Built Student Accommodation (PBSA)

 

PBSA is housing that is constructed by private developers designed explicitly for students. In most cases, PBSA developments will offer a range of room types, from groups of clustered flats with shared communal facilities to private studios. This is often accompanied with additional amenities, including facilities such as gyms, cinemas, games rooms and study areas. Most PBSA is either located within close proximity to major universities, town centres or transport systems to allow students easy access to their universities and/or local amenities.

 

The key difference between standard university student accommodation (or student halls) built by the Universities themselves, houses in multiple occupation (HMO’s) and PBSA is that PBSA is managed and operated independently.

 

Historically PBSA has been popular with International Students (from East Asia in particular) who typically have more to spend on accommodation than domestic students who to date have preferred the HMO market. With the cost of HMO accommodation rising in London such that it is almost comparable with the cost of PBSA, we are beginning to see more domestic students choosing PBSA.

 

We know that the student experience is critical and accommodation plays a vital role in this. The quality, number and types of spaces on offer within student accommodation developments is therefore increasingly important. Spaces that were once considered suitable are no longer fit for purpose, with students now expecting a much more holistic experience, with a focus on modern and stylish accommodation, impressive communal and amenity facilities, mental health and wellbeing support and perhaps most importantly, a home away from home. This changing culture has subsequently shaped the student property market and PBSA has proved to be a way to deliver on this.

 

Outside of London, HMO accommodation continues to present the most affordable student accommodation option with many major university cities having been the focus of the boom in premium PBSA attracting international and post-graduate students. As a result, there are identifiable gaps in the mid-price PBSA market in many cities as the attraction of the serviced nature of PBSA grows.

ISSUES AFFECTING THE PBSA SECTOR
  • Affordable Accommodation
  • Nominations Agreement
  • Design
  • Inclusive Access
  • Community Benefits

Affordable Accommodation

Affordable Accommodation

The London Plan requires that to follow the Fast Track Route and avoid any viability discussions, at least 35% of the accommodation must be secured as affordable student accommodation (rising to 50% where development is on public land or industrial land appropriate for residential uses). The definition of affordable student accommodation is a PBSA bedroom that is provided at a rental cost for the academic year equal to or below 55 per cent of the maximum income that a new full-time student studying in London and living away from home could receive from the Government’s maintenance loan for living costs for that academic year. The actual amount the Mayor defines as affordable student accommodation for the coming academic year is published in the Mayor’s Annual Monitoring Report.

Outside of London, a number of UK cities are preparing affordable housing policies for new PBSA development due to the high cost of living. A consistent approach is yet to emerge as individual authorities consider their local circumstances and planning authorities will be mindful of not wanting to discourage investment through setting target provision too high in recognising the benefits that PBSA has on reducing pressure on general housing stock.

Nominations Agreement

Nominations Agreement

To demonstrate that there is a need for a new PBSA development and ensure the accommodation will be supporting London’s higher education providers, the student accommodation must either be operated directly by a higher education provider or the development must have an agreement in place from initial occupation with one or more higher education providers, to provide housing for its students, and to commit to having such an agreement for as long as the development is used for student accommodation. This agreement is known as a Nominations Agreement. In order to ensure that local and strategic need for PBSA is addressed, the London Plan (Policy H15) requires that the majority of the bedrooms in any PBSA development including all of the affordable student accommodation bedrooms are secured through a Nominations Agreement for occupation by students of one or more higher education provider. This means that 51% of the beds available have to be secured through a Nominations Agreement and all 35% affordable provision has to be secured via a Nominations Agreement.

 

Increasingly, we are seeing Higher Education Providers attend pre-application meetings and speaking in support of student accommodation schemes, using their relationships with local authorities to drive support for student accommodation schemes.

Nationally, the requirement for a Nominations Agreement varies from one city to the next. In some instances, an Agreement is a pre-requisite of an adopted planning policy for PBSA development and in other instances (where local planning policies are absent) councils are more reactive to market conditions (for example, a council may not require an Agreement to be in place where a deficit in supply exists; however, an Agreement may be expected where a pipeline surplus exists to demonstrate sufficient demand from a University).

Design

Design

High quality design remains important but increasing focus and discussion is taking place on the size of the bedrooms in particular with officers and members wishing to ensure high standards of accommodation and appropriate levels of amenity space for students, particularly following COVID where internal amenity space was so important for student welfare. Individual student accommodation providers have bespoke room layouts designed to ensure a quality student experience whilst maximising bed numbers and therefore early discussions on room sizes is advised.

In a bid to achieve commercially attractive schemes in dense central locations, PBSA developers are increasingly resorting to taller buildings to achieve scale. This can present challenges for many university cities outside of London where planning authorities can often be resistant to taller buildings.

Inclusive Access

Inclusive Access

As the Building Regulations make clear that student accommodation is to be treated as a hotel/motel accommodation, for the purposes of ensuring provision of accessible student accommodation, in addition to London Plan Policy D5 on inclusive design, the relevant part of Policy E10 Part H also applies to development proposals for new non-self-contained student accommodation.

This requires that development proposals for serviced accommodation should provide either:

1) 10 per cent of new bedrooms to be wheelchair accessible or

2) 15 per cent of new bedrooms to be accessible rooms. This is clarified in the GLA Wheelchair Accessible and Adaptable Student Accommodation Practice Note dated November 2022.

Community Benefits

Community Benefits

Despite the demand / supply imbalance and the NPPF requiring local authorities to plan for the delivery of student accommodation, emerging schemes are often met with resistance as the benefits to the area are not immediately acknowledged and the reputation of students for prioritising partying over studying raising local concern. This is despite the fact that as a result of the cost of tuition for the majority of students in the UK sitting at around £9,250 per annum, the traditional student lifestyle has been replaced with one more focused on studying.

As a result it is ever more critical that planning applications for PBSA include a range of social value and community benefits. What is included and how it is delivered should be subject to discussions with local people but could include provision of study space for high school students living in the area, provision of community floorspace for local community groups, access to mentoring and training programmes and other similar outreach proposals.

 

We are also advising clients to identify clearly the economic and social benefits flowing from student accommodation schemes early in their discussions with Officers.

Engagement with local communities in advance of submission is vital to scheme success. Starting early, being transparent, listening to feedback and addressing points raised will all ensure a smoother determination stage.

What does the future hold for PBSA?

 

  • PBSA will continue to be an attractive form of development for a range of different stakeholders – universities, investors, developers and LPAs.
  • So far PBSA has largely focused on the core university cities as this is where there has been guaranteed demand. In many Cities including London, PBSA supply is not able to keep up with demand and we expect more student accommodation schemes to come forward. Limited examples of over-saturation or surplus in development pipelines are starting to emerge in popular PBSA locations.
  • Smaller UK cities and towns that are often overlooked by the leading PBSA providers may fall into focus as increasing demand in the PBSA format will prove to be more popular. We are likely to see PBSA developments increasingly spread into other areas outsides of the big cities, although design-related constraints such as for tall buildings, may result in challenges for achieving commercially attractive scale.
  • The spotlight will be on affordability due to government pressures and demand for affordable accommodation. Currently accommodation costs account for a significant chunk of a student’s monthly expenditure. PBSA isn’t cheap and low-cost accommodation is reducing year on year.
  • Mix of room sizes are also likely to change. With PBSA having been heavily occupied by overseas student from East Asia, the mix of room sizes in PBSA schemes to date have been heavily weighted in favour of studio accommodation. With more domestic students choosing PBSA accommodation, we expect that emerging schemes will consider new bed mixes to meet the demand from domestic students who prefer to live in larger groups.

Related Services & Sectors

Development Education Operational Real Estate Planning & Development Serviced Living Student Accommodation Town Planning

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