Student housing: dorm storm means young ones are the stung ones

Receive free UK property updates

We’ll send you a myFT Daily Digest email rounding up the latest UK property news every morning.

UK school-leavers are enjoying a few weeks of relief after their exam results. Yet for many planning to go on to university, a fresh struggle awaits. 

The 1980s British sitcom The Young Ones satirised life in squalid student digs. Quality may have improved since then. But finding affordable rental property has become extremely hard, reflecting a wider crisis in the sector.

London-listed university accommodation business Unite Group says the need for new student rooms is now at the greatest level for “several years”. The charity Unipol has warned of a chronic student housing shortage in certain cities.

Unfortunately for the UK’s 2.9mn student population, high demand is unlikely to trigger greater supply.

Unite’s 70,000 beds in purpose-built student blocks were nearly all booked by July. In a normal year, around 10 per cent would still be available to rent.

Growth in student numbers is down to demographics and near record application rates. The number of UK youngsters turning 18 will increase by 19 per cent by 2030, according to official forecasts. Demand among overseas students remains strong, particularly for postgraduate degrees.

Insufficient student housing supply partly reflects problems in the wider buy-to-let sector. Higher interest rates and planned regulatory reforms are pushing landlords to sell.

Developers of purpose-built student accommodation are also building less. The so-called PBSA sector accounts for around 700,000 beds. Until 2020, PBSA developers added more than 30,000 student beds each year.

Construction slowed because of the pandemic. More recently financing and supply chain costs have acted as barriers. New additions are expected to dwindle to 12,000-15,000 beds over the next few years.

Build costs for student accommodation developers are today around £95,000 per en suite room, according to Cushman & Wakefield. These have risen from £60,000-£65,000 in just a few years. To make their numbers stack up, developers need to charge rents of £185 a week or more per room, the property group says. In most locations, save for cities such as London, Edinburgh, Bristol, Glasgow and Manchester, this is above wider rental prices, which are already at record levels.

Already there are stories of students starting university life in hotels or rooms 30 miles from lecture halls. Some may even be forced to keep living with their parents. Unless there is a significant let-up in developers’ costs, freshers will continue to find there is sometimes no room at the dorm.

The Lex team is interested in hearing more from readers. Please tell us what you think of the UK’s student accommodation crisis in the comments section below.