This article assesses current student accommodation options and the impact they have on the overall university experience. It also looks at the Purpose Built Student Accommodation sector from the buyer’s perspective, highlighting the key elements that make it such a popular and high yielding property investment.
- Student life in hall of residence
- Alternative accommodation in residential house conversions
- Local licensing restrictions
- The emergence of Purpose Built Student Accommodation
- Excellent opportunity for property investors
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Having decided what degree to pursue, the student’s next important task is to secure a place at their first choice university. Students naturally want to ensure they have the best possible university experience and as such they will want to secure the right accommodation for themselves as a matter of urgency.
All universities have their own on-campus halls of residence. Their limited number means that they are reserved for first year students. This accommodation form keeps costs down and is beneficial for those on a tight budget, but they do have a downside.
Student life in halls of residence
Rooms in halls of residence are notoriously noisy and are not perfectly conducive to studying. Shared kitchen facilities are often left dirty and untidy by uncaring students. Space is cramped and if students have to share accommodation they have little say over who their roommates are.
These accommodation complexes are also outdated by modern standards with limited facilities and are poorly maintained. Their critical undersupply means that universities reserved for first year students, and they are only available during term time.
Alternative accommodation in residential house conversions
Students unable to acquire halls of residence accommodation are usually left with the option of moving into a residential property, legally-termed a Home in Multiple Occupancy (HMO).
HMOs are usually normal residential houses that have been converted into student accommodation. Unfortunately, they also suffer the same problems as halls of residence, being noisy, untidy and unhygienic.
They also have a bad health and safety record since many HMO landlords are more interested in maximising profit than ensuring the well being of residents. Conversions are therefore often poorly done, with little or no soundproofing, and minimal health and safety awareness. It is common to find inoperable fire alarms, poor quality wiring and inadequately maintained gas appliances that emit dangerous carbon monoxide gas. The properties are also often badly managed, leaving students unused to these real world problems unprotected.
Local authorities have adopted much tougher HMO regulations. The Housing Act 2004 introduced HMO licensing, aimed at regulating management, monitoring maintenance, and addressing health and safety concerns. It applies to any properties that are be deemed to be HMOs, the criteria for which are:
- A property that is rented out to 5 or more people who constitute more than 1 household
- A property which is at least 3 stories high
- A property where tenants share toilet, bathroom and/or kitchen facilities
Any HMOs that meet these criteria must, by law, have a mandatory HMO license. In some areas, the criteria for determining whether a property falls under HMO jurisdiction depends on the specificities set out by the local council. To gain a mandatory HMO license that covers the property for up to 5 years, landlords must:
- Ensure that the premises in question is suitable for the number of occupants in terms of its size and its facilities
- Appoint a suitable manager or agent. The landlord can take on this responsibility if he/she has no criminal convictions and has not previously breached landlord regulations and codes of practice
- Supply the local authority with a current gas safety certificate every year
- Have smoke alarms fitted and maintained
- Be able to provide copies of safety certificates for all electrical appliances within the premises
Another issue with HMOs is that they are often located in run-down areas far away from the university campus and any amenities and this isolation reduces the university experience for students.
Local licensing restrictions
The introduction of mandatory HMO licensing has only partially improved the problems with this accommodation form. The issue of some landlords dismissing the requirements of the regulations will always remain, despite the heavy fines and prison time they are risking, but a great many residential properties rented out to students are not classified as HMOs. In these instances, landlords have little legal responsibility to ensure the appropriate level of health and safety for residents.
That is why the Housing Act 2004 also includes a requirement for additional HMO licensing. These additional licenses apply in circumstances where the local authority decides that there exists a risk to the health and safety of residents. This is a welcome move, and means that an increasing number of properties in places like Preston and Leicester are falling under increasingly draconian “Article 4” regulations.
The emergence of Purpose Built Student Accommodation
Purpose Built Student Accommodation (PBSA) is a relatively new development in the student property sector. Given the problems inherent to alternatives, they are popular with students though are unfortunately seriously oversubscribed at present.
They are admittedly more expensive, but the stratospheric increase in tuition fees and the debt they are saddled with after leaving university means that students today have much higher expectations when it comes to accommodation, and a great many have the necessary funds to match.
The image of hard up students living on a shoestring needs to be updated to present-day realities. The modern student’s expectations regarding accommodation include:
- Good location – situated close to campus and close to local amenities and leisure facilities
- Luxury fixtures and fittings
- Conducive study area
- Hi-speed internet via Wi-Fi
- Well maintained
- Good security
- On-site property managers to deal with any problems
Students understand that such an environment helps to maximise their academic potential as well as the overall university experience.
Excellent opportunity for property investors
The rise in demand for top quality PBSA developments is good news for investors. The inadequate number of developments available to meet the sustained demand from students has made it a lucrative investment option. It is now considered a world-class asset category, providing investors with a more reliable income stream than most other asset vehicles. Emerging Property’s Jubilee Court student property investment in Preston, for instance, offers buyers:
- 10% NET income fixed for 10 years
- Immediate income option
- UK’s only NHBC-certified student developer
- Strong capital growth
- Fully flexible resale options
- Professional onsite management – every detail, every day
- Effortless income stream
- Available from £46,950