UK Student Accommodation Pipeline Growing

By BridgePoint-Ventures.com

While concerns over a lack of purpose built
student accommodation in the UK are not without grounds,
there are indications the pipeline for new projects is expanding.
Managers of the Brandeaux range of funds revealed around £2 billion
of privately built student housing are either already for sale or
are about to enter the market, International Advisor reported.

This comes after Brandeaux claimed there is an “overhang” of
properties in the student accommodation sector and announced it
will be suspending its entire fund range. According to the company,
the perceived excess of properties in the market is the result of
the financial failure of The Opal Group, which was one of the UK’s
largest private student accommodation providers. Brandeaux
explained to International Advisor: “This has resulted in
approximately 19,000 beds historically valued at over £1 billion
recently being put onto the market for sale. Our estimation is that
this represents circa ten per cent of all private (non-university
owned) UK purpose built student accommodation.”

However, Brandeaux stressed that the fundamentals
of the student accommodation sector remain strong and already
“substantial institutional investment” can be seen. What’s more,
strong demand for housing will mean occupancy problems won’t ensue
from the accommodation overhang.

Nevertheless, the supposed saturation of the student market
isn’t recognised by everybody. In fact, the lack of purpose built
housing has been one of the main factors pricing residential buyers
out of the market in many areas. A report from Savills showed the
conversion of family housing into student lets has restricted the
supply of conventional family housing, contributing to inflated
house prices.

According to Spotlight on Student Housing, freeing up 66,000
properties in multiple occupation will help to redress the problem.
To fill the gap, more purpose built student accommodation will be
needed and Savills is calling on councils to recognise the
importance of such schemes through their planning policies.

Savills research analyst Neal Hudson said: “We calculate that
reinstating these student HMOs (houses in multiple occupation) to
homes for non student residents would boost council tax returns by
around £1.5 million per town or city, since student only houses are
council tax exempt. Also, there is the potential for councils to
receive six years’ worth of payments through the New Homes Bonus on
the newly constructed student housing.”

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