The impact of student housing on rental markets in the UK

by Benedict Wiggins,

Over the Summer, I spent a week living in a sizeable 8 bedroom house in one of the UK’s major cities, Bristol, in which a room was being rented by a friend of mine who currently attends the University of Bristol. Staying here made me question the impact of such a large property being given to students who already had a home elsewhere – in my friend’s case, North London. To contextualise, by 1997, the year of the Dearing Report, the student population had reached 1.6 million following four decades of expansion in the higher education sector. Over that time, however, the housing needs of students have never been subjected of any form of national policy or strategy, and this continues to largely be the case (Rugg, 2000). This essay will examine the state of the UK housing market with consideration of both the reasons and impacts of student housing.

With regards to why student housing is impacting rental markets, it seems clear at first glance that the expansion of the higher education sector has occurred with limited attention being given to housing the ever-increasing student population (Rugg, 2000). At the time of writing, there are approximately 2.5 million students in UK higher education, with an extra 30,000 places having been created this year alone (Wiles, 2014). Bristol’s economy, for example, has blossomed in the past few years, fuelled partly by its proximity to the strong London economy and ‘overheating housing market’ (Partington, 2017). The city’s two universities have also led to 10,000 students being ushered into the local population of 450,000 people over the past decade (Partington, 2017). As a result of this economic success, plus the fact that houses in the capital are bought as investment assets and left empty, house hunters are then forced out of London, and Bristol is an obvious alternative for these London émigrés. This has therefore created a vicious cycle of ever-increasing housing demand in desirable central areas.

This escalation in demand has therefore had significant economic impacts on the housing market in both Bristol and numerous other UK University cities. For instance, Bristol now has the highest private sector rental costs outside London, according to the Resolution Foundation think tank, (D’arcy, 2017), with typical house prices also being more than 10 times the average salary (Partington, 2017). From a more spatial perspective, one of the repercussions of the increasing student demand for private rented housing is that there is a propensity for students to ‘cluster’ in specific areas. For instance, in Cardiff, the expanse encompassing two of the city’s University campus’ and close to the city centre is known locally as ‘student land’. Some interviewees believed that some nine out of every ten of the properties in this area of Cardiff were rented by students (Rugg, 2000). To further heighten the impact of student demand on these areas, landlords often specifically move into areas desired by students in a process known as ‘niche letting’, as students are reliable tenants (Rugg, 2000). This is because they tend to have a comparatively high permanent income, due to either parental loans or consistent student loans (Oger, 1973).

It is clear, therefore, that student demand has an impact on the state of the housing market, but the real-term implications of this must also be considered. In desirable locations, a study has revealed that students are more likely to be willing to live in poorer quality accommodation to either save money or to be located in the classically desirable section of the city. It was also discovered that these poorer conditions were either caused or worsened by the students themselves, through littering or a lack of cleanliness, for example (d60). As a result, locals may suffer due to the student ‘ghettoisation’ of local amenities, which usually then cater more strongly to the student market. Furthermore, student housing demand may also have an effect on house-buyers in the area – a factor particularly prevalent in a city in as high demand as Bristol. Significant demand for investment properties from student landlords are increasing house prices, thus making it more difficult for house-buyers to enter the market. Savills, an estate agency, predicts “£2.5bn will be spent on student housing schemes this year, a great deal more than the Homes and Communities Agency invests in affordable housing” (Barnes, 2014). To highlight this around the UK, in Cambridge, since 2006, 4,501 student bedrooms have been built and a 2,335 more have received planning permission, compared with only 2,480 family homes over the same period (Wiles, 2014). Furthermore, almost every student has two homes – their term-time home and their holiday-time home – so student housing doesn’t actually help the UK with its housing needs (Wiles, 2014). As a result, it appears that student demand for housing has both had a negative impact on locals due to the damage to residential areas, and also resulted in house-buyers being priced out of housing in desirable locations.

It must, however, be noted that student housing does not necessarily impact all the potential residents of a city, as groups such as young professionals and/or low-income households rarely compete with the same properties as students (Rugg, 2000), thus the actual impact of student housing could be limited to a few certain specifically targeted sections of cities. In addition, the impacts may shrink in the future due to £10bn being allocated the Tories’ help-to-buy scheme, a subsidy programme for those looking to buy in these areas (Partington, 2017)

Overall, upon my visit to Bristol I was surprised at the extent to which the central area of the City (nicknamed “The Triangle) was dominated by students, particularly in terms of their domination over the local housing market. It is clear therefore that colleges and universities affect local housing markets in a unique way (Ogur, 1973), by increasing private sector rental costs, creating clusters of student-dominated areas, and reducing the availability of affordable housing for house-buyers in these areas.

References

 Barnes, Y., The UK’s student housing sector, Savills UK [online], Accessed on 4/9/2018 : [https://www.savills.co.uk/research_articles/229130/176510-0]

D’Arcy, C., 2017, A western union: living standards and devolution in the West of England, Resolution Foundation [online], Accessed on 2/9/2018 : [https://www.resolutionfoundation.org/publications/a-western-union-living-standards-and-devolution-in-the-west-of-england/]

Ogur, J., 1973, Higher Education and Housing: The Impact of Colleges and Universities on Local Rental Housing Markets, The American Journal of Economics and Sociology Vol. 32, No. 4

Partington, R., 2017, Bristol’s housing crisis: ‘The idea you would own a home is ridiculous’, The Guardian [online], accessed on 2/9/2018 : [https://www.theguardian.com/business/2017/nov/20/bristol-housing-crisis-property-prices-rents-young-people]

Rugg, J., 2000, Students and the private rented market, Joseph Rowntree Foundation [online], accessed on 7/9/2018 : [https://www.york.ac.uk/…/Financial%20Resiliance%20and%20Security%20Report.pdf]

Wiles, C., 2014, Increased student numbers are worsening the housing crisis, The Guardian [online], accessed on 2/9/2018 : [https://www.theguardian.com/housing-network/2014/sep/01/student-numbers-worsening-housing-crisis]

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