In 2015, the government lifted the cap on the number of places that universities can offer by 30,000, leading to increased competition between institutions and more places on offer.
According to UCAS, the number of university applicants has reached a record high, with recent figures showing a 3% increase in the number of applications, year on year.
Non-European Union students have been the fastest growing segment, with numbers increasing by 50% over the last 10 years. There has been extraordinary growth in UK student numbers over the past 20 years and while UK students have now stabilised, international student numbers are set to rise dramatically in the next decade,
According to house share site SpareRoom.co.uk, up to 22 professionals and students competed for every room available in university towns and cities in 2015. Just 40% of rooms in existing house and flat shares in the UK’s university top 25 cities are available to students, because some landlords are unwilling to let to students.
Competition was at its most fierce in Edinburgh, where 22 people were hunting for every room available and in Oxford, where a hundred students had no accommodation for the start of the academic year and 15 people were searching for every room available.
Mish Liyanage, Managing Director of The Mistoria Group comments: “Unfortunately, university managed accommodation has not kept pace with the growth in student numbers and this is driving increased demand for HMOS and PSBAs, in many UK towns and cities.
Traditionally universities were responsible for providing good quality student accommodation. However, over the last ten years, demand for university accommodation has outstripped demand and the private sector has supplemented some of the shortfall.
According to a report by property firm JLL, direct investment in the UK student housing market surged over the past two years, rising from under £500 million in 2010, to £3.8 billion over the first half of 2015 and £1.5 billion in London. However, this investment is simply not sufficient to meet the growing numbers of international students attending UK universities, over the next ten years. Private sector investment in student property needs to dramatically increase to solve the severe shortage in accommodation.
The student property is a robust asset class. Since 2011, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK. It has also continued to be one of the most resilient investment sectors, with rental incomes and property values remaining stable, or increasing. The attraction of the student accommodation sector has been driven by structural undersupply and positive rental growth year on year.
Without doubt, the student rental market is the most financially lucrative for investors and landlords if it is managed well. An investor can currently can buy a four bed HMO in a good location for students and professionals, fully refurbished and furnished and tenanted for the coming year, for less than £150,000 in the North West based on 2015 prices.
Investing in student HMO accommodation offers a long-term investment option, as the property is highly likely to be in constant demand throughout the calendar year. Typical rents are significantly higher for student properties, than a comparable buy-to-let property in the same city.”
