With the ending of restrictions, more and more students are looking to return to university and attend their classes again, bringing even more hope to the student housing sector for the first time in almost two years.
Your agency could benefit from adding student housing to your property portfolio or solely focusing on the student housing sector as the market is projected to grow exponentially over the next 4 years and presents a number of benefits for your business.
The effect of the pandemic on student housing
The pandemic had a major impact on the vacancy rates of student accommodation and student housing managers initially suffered significant losses as most students moved out, leaving their rooms behind.
During the pandemic, both seminars and lectures took place online. However, face-to-face learning is becoming a normal practice once again, therefore increasing the need for students to have housing available near their university.
Students’ life, especially international students, have been affected drastically as a big part of their lifestyle was linked to and enabled by easy mobility (with no borders within the EU – before Brexit, no restrictions on international flights and open borders).
Measures set in place to limit the spreading of the virus often ended up either isolating these students in countries where they had little support or forcing them to go back to their home countries, leaving their accommodation vacant.
Only 37% of students remained in their UK student accommodation throughout the pandemic. However, it wasn’t all bad for the housing sector as many students still paid rent – even after moving out – due to their tenancy agreements.
Getting ahead of the rush
UK university applications have increased significantly and the student accommodation demand is only set to rise in the coming years.
According to UCAS, applications for the 2022/2023 academic year have increased by 5% compared to the previous year for autumn entries.
Based on figures from Knight Frank, “a total of 320,420 18-year-olds applied for a university place, reflecting application rates in England of 44.1%, 37.5% in Wales and 52.6% in Northern Ireland.”
The rise in international student interest
Although there was a 19% fall in applications from EU students due to the fee changes post-Brexit, applications from international students for the academic year of 2022/2023 are already 4% higher in comparison to last year.
UCAS reported that the number of international students is expected to grow by two-thirds between now and 2026.
This can be attributed to the fact that the upcoming academic year holds more promise for freedom from isolation and lockdowns. With travel restrictions easing and more access to covid vaccinations, the number of applications is predicted to grow even more over the coming years.
International students are more likely to live in student accomodation where many amenities are provided for convenience. This increase, therefore, seems particularly promising for student accommodation owners that rely on international students.
Key benefits of the student housing sector
Consistently high demand
One of the main benefits of student accommodation is the consistently high demand due to the constant need for education. Not only do students attend university during term time, but some also do summer classes and exams. Therefore, the need for student accommodation occurs all year round.
Throughout the pandemic, it was expected that the demand for student accommodation would have declined. Although this was initially true, the decrease in demand didn’t last for very long, with the autumn term of 2020 seeing high levels of demand once again.
According to Phil Greaves, Co-Founder and Director of UniHomes, “despite the pandemic and the restrictions imposed around the face to face teaching for much of the last university year [2020-2021], we’ve seen consistent demand from students looking for properties.”
Fewer void periods
Due to the consistently high demand, void periods are likely to be extremely low – particularly in big cities or within proximity of campuses.
To avoid the summer void periods, many student accommodation providers are offering students 12-month contracts, particularly on their more popular and expensive rooms such as studios and 1 bedroom flats.
With demand for student accommodation being incredibly high and consistent, before the end of a 12-month contract, there is a high likelihood that another tenant will have already requested to move in on the contract start date.
Higher rents charged
Having student housing as part of your property portfolio allows your agency to earn higher revenue as higher rents are usually charged for student HMO accommodation.
According to research conducted by Manor, as of October 2021, “The cost of renting for a student has increased by as much as 26% in some places.”
The study also found that the average student in Britain currently pays £132 per week in rent, and in London, this reaches up to £152 per week.
Even after the higher rates of rent around the UK, the increased cost of renting and changes to student financing have not deterred students from attending university. A record number of students chose to pursue a degree in the autumn of 2021, with numbers only set to increase in 2022.
It is a resilient sector
The investment in student accommodation across the UK rose significantly despite the decrease in demand for accommodation during the year 2020 and the drawbacks imposed by the pandemic. Investments were made by primarily foreign investors that saw the opportunities for large returns.
The quality of the UK’s higher education, and its continued appeal to students from all over the globe, has ensured that investment in the sector is not misplaced.
According to Savills, “At £5.77 billion, 2020 was a record-breaking year for investment in UK PBSA, a 5.7% increase on 2019.”
Using property management software to manage student accommodation can help you to manage an extensive portfolio of properties or rooms within a building. Book a demo with Arthur to find out how your business can save time and money, while easily managing your properties on one centralised platform.