A REVIEW OF THE ACCOMMODATION COSTS SURVEY 2021
The Accommodation Costs Survey 2021 was released by Unipol and NUS, and we have written the following summary to highlight the key points with relevance to the PBSA sector, and perhaps provide us with some direction as to what the future holds.
As the report accurately points out, the student experience has transformed over the last 50 years against the backdrop of social, economical and political upheaval. And the last two or three years were perhaps the most poignant yet. With disruptions to living arrangements, international students returning home, and reports of, even further, mental health deterioration, the pressure is on accommodation providers to implement the necessary support services, and deliver a more cohesive package that reflects the broadening requirements of students. The experience of the pandemic has accelerated the trend of providers having a bigger role to play in student wellbeing.
If we look back to the 2018 report, it concluded that “it is important that educational institutions again take the lead in linking the importance of good accommodation with academic and personal development: the residential experience is inseparable from the academic experience.” A statement that perhaps rings truer today.
The live-in experience has been cited for greater social control and moral development of students. But after the student population expanded beyond the elites of Oxford and Cambridge, private halls have bridged the gap between the paternalistic and disciplinarian culture built by catered halls, creating a space that reflects student preferences. By offering shared cluster flats with en-suites built to a higher specification, they built their own market. This trend continues to proliferate, manifesting itself in a demand for greater variety, and often unnecessary facilities.
Pricing and affordability
In 2021/22, the average annual rent for PBSA in the UK is £7,374. An increase of £309 on last year. Since 2011/12, that increase has been 61%. But we should note that purpose built student accommodation rent almost always includes utilities and internet.
The national average price tag for university-owned rooms is £6,227 in 2021/22, while the mean rent for private beds incorporated into institutional portfolios is £7,059.
In 2020/21 and 2021/22, the pandemic shook the market, impacting occupancy levels and the provision of educational and accommodation services. Private providers had to demonstrate innovative ways to fill empty rooms by discounting rents and offering incentives such as cash back and vouchers. The university sector failed to display the same agility, with 84% reporting they made no such changes to pricing tactics.
However, after the pressure grew on the sector in the midst of the pandemic and lockdowns, private providers were less likely to offer refunds, and where they did, it affected their rent roll to a lesser extent than institutions.
Growing demand
The report goes on to talk about the future demand for higher education and the affordability implications that brings. It’s estimated that by 2035, an additional 358,000 extra places will be needed in England. A lot of this extra demand will come from lower income groups, to whom higher PBSA rent costs may be out of reach. This could mean more students favour the commute to their local place of study, or deter from higher education altogether. But the case for living in the place of study does remain as strong as it always has been.
An affordability strategy needs to be considered by both private operators and universities. Of those surveyed, 89% of universities offer a hardship fund and 59% offer a bursary, compared with 75% of respondents from the private sector offering a nil return on lending financial support to tenants.
The challenges presented by affordability has caused less concern however, for private providers. But that doesn’t mean they aren’t focused on innovating in this area. The main objective is to serve the mid-market and think about the next generation of students who are likely to be from different international and non-traditional backgrounds.
Two fifths of private operators let over 50% of their provision to students from overseas. And providers rely on large numbers of wealthy international students to fill beds, particularly in London, as the report states.
The affordability issue will be brought into the limelight even more as the student population starts to pick up momentum from a growing segment of international students on a tighter budget. But international students are those who will benefit more from longer letting terms.
And while most students do not receive a full maintenance loan, what is deemed affordable for postgraduates may not be for international students. So the question is, how can private providers cater better to international students in terms of pricing and affordability?
The report talks about making information about the disparity of students' expected income, actual income and real cost more readily available, so that families are well informed on the financial pressures to help meet student living costs. This will help families better prepare, whether UK students or international.
Having an affordability strategy in place could be an effective way to widen participation and improve the retention of students. So it is likely more private providers could embrace these efforts moving forward.
A holistic package
The report may raise questions among providers about whether shared study rooms and gym facilities are ‘necessary’, when affordability presents one of the biggest challenges yet. In short, while such facilities are not essential, and with rising expectations of students, the onus is on private providers to maintain reputation and retention levels.
It is not a bad idea to think about more inclusive facilities, such as improved disabled access or support for those with learning difficulties, as a starting point.
The survey closes with comments from respondents when asked what things they have done that they consider good practice, as well as what pandemic measures they would absorb into routine operations. Some of the answers included:
Improving ready access to expertise in supporting students. Examples cited include appointing an onsite nurse; procuring the services of professional agencies to provide wellbeing support; promoting the use of apps such as TogetherAll and Safezone; and a 24/7 helpline for students struggling with their mental health
Creating more diversity in ResLife programmes and continuing to develop and exploit outdoor spaces – something which first became necessary during lockdown
An early start programme for students with autism; pre-arrival phone calls to students who have declared mental health conditions; plus arrivals staggered over a longer period
Developing bespoke support packages for some minority groups. Groups referred to by respondents were: under-18s, care leavers and members of the LGBTQ+ community.
These comments may help generate some innovative ways in which private providers can expand their packages, helping to solve the mental health crisis, future-proof against COVID-19 restrictions, and become more inclusive - without the need for fancy or unnecessary facilities that have costly implications with little reward.
The market for PBSA is continually expanding and diversifying. As concluded by the survey, the future of the industry looks set to rely more on targeted subsidy models that are favourable to students, as opposed to the one of investment focusing on infrastructure only. This is one of the simplest ways to open up affordable options for students, while retaining a diverse student population.