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Could student accommodation shape PRS development?

Thousands of eager students received their A-level results this month and many are now planning their move to a new town or campus and considering what accommodation is available.

When this new generation finally graduates into the housing market, how will their experience shape the housing we build?

Times have certainly changed from my student days.  

I recall the final-year student showing me around my new halls of residence explaining, grimly, that the rooms were modelled on a Swedish prison block but that the dimensions of everything – the bed, the desk, the room itself had been reduced by 25 per cent to save space (and cost).

“Are we starting to see graduates emerging from such accommodation with high expectations?”

While undoubtedly such accommodation still exists, it has been joined by some new, purpose-built student accommodation (PBSA) providing better-quality accommodation, custom-designed for communal living.  

This could be more expensive, but some canny universities may ensure rents are kept low by securing the accommodation on their own land.

Obvious market

There is clearly a market in such PBSA, with universities keen to attract overseas students and with the involvement of institutional investors overseas.

CBRE, Knight Frank and Savills monitor the trends, with CBRE reporting that £7bn was invested in the sector over the five years from 2009 and Savills finding that £4.2bn was invested in the first five months of 2015.

Are we starting to see graduates emerging from such accommodation with expectations that they will be able to find good-quality and flexible accommodation as they take their first steps into the world of work?  

Is it any coincidence that the amount of institutionally backed, purpose-built or redeveloped, private rented sector accommodation in our towns and cities is rising?

The key for many young professionals appears to be maximising flexibility in their choice of accommodation while securing their chosen career – and being responsive to the current labour market while embracing new opportunities.  

Major cities are a big draw but whether it be London, Manchester or Liverpool; moving to succeed in a new job is a distinct possibility.

Sector benefits

The PRS delivers both quality and flexible accommodation and leaves tenants free to move when they wish.  

One manager in the sector reports ambivalence towards providing leases on longer tenures, as her tenants value the ability to move on swiftly.

Her company’s response is to enable tenants to transfer between different locations on equivalent lease terms within the UK and internationally.

As a construction lawyer, I have noted that a distinct feature of PBSA and PRS is the increased use of modular construction techniques.

“Our student population and new, fleet-of-foot professionals may have something to teach about housing”

The attractions are obvious: swift delivery of housing and factories delivering fully equipped bathrooms, kitchens and living areas, with purpose-supplied power and internet cabling and excellent energy efficiency ratings built in too.

However, modular housing has had to overcome scepticism about the quality of the end product and how it is to be assessed.

Nevertheless, one report values the sector at £6bn and it has certainly grown year on year in the UK.

There is an overwhelming consensus that we need to increase the supply of housing in the UK.  

There needs to be space for different housing solutions and build techniques in delivering the volumes of housing required.

Our student population and new, fleet-of-foot professionals may have something to teach us all about the advantages of housing products that deliver what they need, albeit that the price point at present won’t be affordable for all, unless it is PBSA subsidised by a university.

Cathy Ley is a partner in the construction and projects team at law firm Fladgate

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