This year’s UCAS data shows overall student application numbers have fallen by 1.6% compared to 2023, but remain 3% higher than in 2019. The 2023/24 period saw the second highest number of 18-year-old applicants in the UK on record.
The supply of suitable accommodation continues to fall short of this growing demand. According to Savills data, there are currently more than 1.3 million full-time students across the UK’s 20 university towns, but only 500,000 beds are in use.
Despite increasing student numbers, the supply of new-build accommodation remains weak given continued challenges to viability, construction cost inflation and financial costs.
At the same time, as supporting student health becomes increasingly important in a relatively short period of time, more and more accommodation is no longer fit for purpose, and those that were best in class are now lacking key amenities. .
Changes in government policy and priorities under Labor could further increase this demand/supply imbalance and further strengthen the foundations of British Private Student Accommodation (PBSA).
The UK remains a hugely popular global study destination for English-speaking countries, and the Labor government is less focused on immigration numbers, in contrast to the Conservative Party, whose visa changes have meant that dependents will no longer be able to study in the UK. It is expected that there will be no As a result, applications from countries such as Nigeria have significantly decreased.
The new government has committed to maintaining the current graduate visa route, which provides international students with the opportunity to work in the UK after completing their studies.
The supply of multi-occupation (HMO) student housing has already declined in recent years due to rising interest rates and tighter regulation. However, with the introduction of expected capital gains tax increases under Labor, this redundancy among private landlords is likely to accelerate, making owning an HMO less attractive.
Despite the positive outlook for PBSA, the higher education sector is not without challenges.
While some universities in the UK are under financial pressure, making budget cuts or ceasing to offer certain courses, this is hardly the case for Russell Group universities.
Lobbying from the higher education sector appears to be aimed at obtaining some form of support from the government, whether it be explicit direct financial support or an increase in domestic tuition fees.
Education Secretary Bridget Phillipson said there was no desire to bail out universities and that universities should be responsible for managing their own budgets.
She recently said, “There are expectations for universities to be autonomous and for how they manage their budgets, and I expect them to do that without asking taxpayers anything.” “There is,” he said.
This means that, if necessary, university mergers are far more likely to be the solution than closure or bankruptcy.
Investec remains focused on providing debt financing for PBSA projects serving the most popular universities in well-connected, well-located, and under-supplied cities. Since 2011, we have supported 24 clients including Harrison Street, Scape, Student Roost and Watkin Jones, delivering over 22,000 beds across 62 schemes in 26 cities.
The long-term fundamentals underpinning the UK higher education sector remain strong and the gap between supply and demand for student accommodation is expected to widen further.
It remains to be seen whether British universities themselves will struggle in the coming years, but PBSA’s prime location means it will continue to thrive.
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