Purpose-built student accommodation (PBSA) and student housing: research

1. Executive Summary

Key Messages

• Student accommodation in Scotland is a complex, interdependent system interacting with local housing systems and communities.
• Student numbers and accommodation demand are rising. However, there are strains emerging from external shocks, such as the Covid-19 pandemic, from internal processes, such as landlord retreat from student housing in the Homes in Multiple Occupation (HMO) private rented sector (PRS), and political risk from ongoing housing and educational policy developments.
• There is considerable variety to be found among student HMO private renting, university-owned PBSA (student halls) and the growing private PBSA sector.
• Student experiences are also varied, in large part because the existing stock of student accommodation dominates total provision and the average quality of this changes slowly.
• Private sector PBSA is market-driven, which evokes a range of divergent perspectives. The sector should approach PBSA in a joined-up way, so that diverging views can be reconciled and compromises sought.
• New PBSA developments continue to move upmarket and, with the signalled decline of mainstream PRS, there needs to be a wider range of accommodation provision. The sector should work together to deliver more mid-range, lower cost PBSA.
• There is limited data on variations in student housing affordability. The sector needs robust and regular, data on students' economic circumstances and the affordability of different types of accommodation throughout Scotland.

Challenges and Considerations

We have tried to keep recommendations directly relevant to the needs of the plural interests of the sector and, especially, for students. There are six key challenges and considerations.

• Demand for student accommodation is high and growing. There will continue to be large numbers of international students and also a high probability that, in future years, more home students will come from lower income widening access backgrounds, thereby increasing affordability pressures across student accommodation provision.
• There appears to be gaps in the market provision associated with developer and investors moving up-market (and declining numbers of university halls). This supports the argument in favour of more modest, but sufficient quality, mid-range PBSA supply.
• Student voices and their representatives (as well as other stakeholders) argue for better provision of accessible housing for disabled students without higher cost penalties. There is also concern expressed by students and their representatives about the effectiveness of redress measures.
• There is debate around the future of student rights in PBSA and whether they should remain exempt from aspects of private renting tenancy law.
• Rented housing reform is underway and a recent consultation exercise found considerable support for rent control in the PRS and for students to enjoy the same rights as other private tenants, including PRS renting students. This presents a challenge for the PBSA sector.
• For some stakeholders, PBSA has shifted from being a modern solution to 'studentification' and poor quality PRS student accommodation, to becoming a key part of the problem of perceived new forms of neighbourhood dominance. The challenge is how the sector can work more effectively with planners and local authority housing strategy teams to address this.

We recommend the PBSA Review Group considers the following ten points when developing recommendations to Ministers.

The Current Model of PBSA Provision

Private sector PBSA has achieved success in providing accommodation for students where universities could not. The potential extension of tenants' rights, notice periods and the recent introduction of a rent freeze across student accommodation by the Cost of Living (Tenants Protection) (Scotland) Act 2022, presents a challenge to the current business model. Retaining the present PBSA approach is to continue to set it apart from the mainstream PRS accommodation of students. Doing so requires compensating actions on regulation, redress, affordability, rent setting and the supply offer made.

Student Housing, Local Housing Strategies and Needs Analysis

Both the National Planning Framework and local housing needs demand assessments should consider the impact of demand for student housing on local housing systems. Future growth in demand should be a consideration for development plans and housing strategies.

Affordability and Evidence

We cannot make recommendations around rents and affordability without up to date evidence on renting costs and student finance. Representative and robust data should be a priority if the sector is to evidence levels of affordability and financial circumstances (and do so at HEI and local authority levels).

Cost of Living

High costs and financial precarity are a reality for students now. In September, the Scottish Government announced plans to introduce a rent freeze until, in the first instance, the end of March 2023. This will apply to PBSA, social housing and the private rented sector (though rents are already largely set for the period). Student accommodation cannot be wholly separated from these debates. In the short run, PBSA providers should move more to consistent cost-based index-linking of rent increases. Students have the full benefit of any energy cost supports offered by government or others passed on to them. There should be a sector wide review of both how rents are initially set and how they are increased each year.

Maximising Partnerships

In order to utilise the information generated by the better data gathering recommended in point 3, there should be a more consistent relationship between the pastoral duties of the HEI in situations where students are living in private PBSA. There is good practice from both sides of the sector that can be emulated (as indicated by ASRA and CUBO) There also should be more consistent engagement over how to seek redress.

Working with the Traditional PRS

In parallel to these proposals for the PBSA sector, there should be concerted action to maintain and improve the quality and experience of the large number of students in the traditional HMO PRS. It is undoubtedly challenging to understand the atomised and highly variable PRS, but this is why HEIs and providers should work more closely with local authority housing planners and strategy teams.

Moving with the Times

PBSA provision is not uniform or monolithic, but constantly evolving. There is, for instance, an opportunity to re-use existing vacant properties in good locations. However, the refit of the property must be good quality and of high enough standards to compete with the best quality in its class.

Widening the Offer

There was much interest in and claims of underlying substantial demand for a cheaper and 'less frills' budget accommodation offering, akin to a 'Premier Inn' mid-market hospitality model. We suggest that the Review Group and Ministers consider more fully how different interventions (e.g. soft government loans) and re-positioning, for instance, of refurbished student halls or other refitted properties might achieve similar ends. Regulation is also an important dimension in protecting standards and quality. However, the sector needs to better understand why developers and investors are not filling this gap and what needs to be done to encourage that investment.

Quality and Design

The study highlighted a range of student preferences and concerns in relation to the design and layout of accommodation. We strongly encourage new PBSA developments to include user-testing and post-occupancy surveys to help with design work, including their suitability for disabled students.

Future Proofing

The HE sector planning assumption appears to be that future housing demand from domestic students will include increasing numbers of lower income students from widening participation backgrounds over the next decade or more. When the sector is responding to rising student demand it needs to recognise the greater financial insecurity of a larger part of its market and provide a wider range of accommodation.