Build more student accommodation, free up homes for families – good idea
There seems to be too few easy options for relieving the housing crisis at the moment and certainly too few win-win options.
It’s unlikely we’ll find a single solution to the mess we find ourselves in and the answers may not necessarily be solely found in building more houses, but using those we have better.
So one thought that has fascinated me for ages is whether building more bespoke student accommodation to release rented private homes could be one.
Well it seems the answer is yes. And for that answer I’m extremely grateful to a lovely piece of research by Savills that finds there are 66,000 potential properties across England and Wales that could be freed up for families if accommodation was built for 260,000 students.
What’s more exciting is that this would lead to a potential win-win-win, with families having more homes to live in, local authorities boosting their council tax base and institutional investment money underpinning an increase in housing supply.
Try as they may institutional investors are struggling to make the private rented housing sector stack up as a viable model. But as Savills’s Spotlight report UK Student Housing shows one thing that does work for institutional investors is student accommodation. Average yields in 2012 were 6.3%.
Meanwhile many local authorities with a high population of students are concerned about the impact on their housing markets, the shifting balance of the communities and the loss of revenues. The report notes that households containing only full-time students are exempt from paying council tax.
Furthermore young families in University towns and cities who are struggling to live near their work or their wider families are being priced out of potential homes by student landlords.
So, says the report, encourage the building of more student accommodation and councils would see more in revenue, in council tax and New Homes Bonus, there would be less housing pressure on its community and institutional investors would have a cracking investment opportunity.
Examining the 2011 Census the research found there were 132,000 full-time student households across England and Wales accommodating 500,000 people.
Savills narrowed this down to markets with high concentrations of larger-sized properties and where student households were potentially squeezing out families – this gave the 66,000 figure for potential properties that could be freed up
Interestingly two thirds of this “unlockable” supply is in 25 towns and cities and equivalent to 1.8 years of their recent increase in stock.
So while this move would not solve the housing crisis, it would have a big impact in some towns and cities.
And let’s not forget 66,000 homes is half a year’s production of homes nationally at the rate we currently build.