July 13, 2024

Housing Finance Development

It's Your Housing Finance Development

University expansion drive collides with UK student housing shortage

Queueing overnight outside an estate agent was not what Saphyne Husain expected from her Durham University degree. But on a drizzly evening last month she waited 12 hours to secure a flat.

“There’s been a lot more pressure to get a house sooner . . . They’re going so quickly,” said the second-year music student, whose monthly rent will increase 70 per cent next year. “I hate to say it, but the university is taking too many students,” she added.

Expansion in the UK university sector has collided with a shortage in rental housing, leaving hundreds of students such as Husain struggling to find digs. The squeeze on housing layered over a cost of living crisis is making it more difficult for some undergraduates to live in university cities, threatening the growth of the higher education sector.

Poor student housing and tight rental markets have been a problem for years but during the Covid-19 pandemic an acceleration in student intake turned a concern into a localised crisis.

“Annual accommodation crises are likely to become the norm unless action is taken,” Jon Wakeford, director of engagement at University Partnerships Programme, a student accommodation provider, warned. “There remains a structural undersupply of student accommodation.”

In the worst-affected cities beyond Durham, such as Bristol, Manchester, Glasgow and York, an undersupply of housing has already affected large numbers of students.

This term, first years at the University of the West of England in Bristol were housed in Newport, more than half an hour away by train; those at Manchester Metropolitan University were offered halls in Liverpool, an hour away. Meanwhile, in Glasgow, students were told not to relocate to the city because housing could not be guaranteed.

The squeeze followed a 15 per cent jump in admissions to the most prestigious universities during the pandemic, after a move from exams to teacher-assessed grades meant more students qualified for competitive courses.

The jump was part of a long-term trend following the removal of controls on student numbers, the introduction of tuition fees and other reforms in the past two decades.

Since 2000, annual admissions to UK universities have increased 65 per cent to 562,000, according to data from UCAS, the university applications body. Supply of housing, however, has failed to keep pace.

Currently, the UK has 700,000 rooms in purpose-built student blocks. About 370,000 of these were built by specialist student developers, such as Unite.

Student accommodation in Durham, UK
Student accommodation in Durham, UK. There are about 2.4 students for every room in purpose-built student housing © Ian Forsyth/FT

According to calculations by Cushman & Wakefield, there are about 2.4 students for every room in purpose-built student accommodation. But houses in multiple-occupation residential properties, preferred by students after their first year, are also under “massive pressure” having been left to pick up the excess demand, said Cushman consultant David Feeney.

The imbalance has led to double-digit annual growth in rental prices in some university towns. Nationally, Cushman estimated student private rents had risen 19.3 per cent, and university rents by 14.5 per cent, since 2016-17.

In the small cathedral city of Durham in north-east England the problem is stark. The university is already close to its 2026-27 target student intake, with about 22,000 studying there.

The university said that it planned admissions and accommodation carefully and would recruit fewer students this year after taking more in the pandemic. “There is enough accommodation in Durham for the next academic year, based on current plans,” it said.

Student union officer Jack Ballingham
Student union officer Jack Ballingham: ‘There’s a shortage of housing in the city, which I would put down to university expansion’ © Ian Forsyth/FT

But for those affected this is little comfort. Student union officer Jack Ballingham has been dealing with students who have been forced to live outside Durham.

“There’s a shortage of housing in the city, which I would put down to university expansion,” he said.

Mary Foy, Labour MP for the City of Durham, said that landlords and agents had exacerbated the problem by releasing properties early and demanding high rents.

Chart showing number of full-time students is on the rise

Harringtons, a lettings agent, blamed rising interest rates and the energy crisis for high rents and bills, and said it was “perplexed” that students queued overnight rather than booking viewings online.

It also pointed to legislation that places a cap on student builds. The local council said it had been working with the university to plan accommodation but had a “responsibility” to stop student development adversely affecting residents.

Dan Lonsdale, whose family has lived in Durham for generations, said students understood that expansion was trampling local life and pushing out working-class students with rising rents.

Dan Lonsdale
Dan Lonsdale: ‘We’re being priced out of the city that we’re meant to live in’ © Ian Forsyth/FT

“There’s been a conflict with students and residents and justifiably so,” he said. “We students can’t live anywhere else. We’re being priced out of the city that we’re meant to live in.”

With UK inflation above 10 per cent and mortgage costs rising, the financial pressures on students are set to rise as the cost of living crisis mounts. Although universities including Durham offered hardship funds this year, a longstanding freeze on tuition fee income means institutions are also feeling the pinch.

Increased borrowing and material costs were also dampening developer appetite to build new properties, noted Wakeford. To solve the problem, he said a national response to co-ordinate housing supply with demand was needed.

“Students may find they need to vote with their feet,” Feeney said. “Something has to give . . . these students have to live somewhere.”