UK Student Housing Shortage Set to Worsen in Upcoming Months

Introduction

In what appears to be a worrying trend, the student housing crisis in the UK is "set to worsen" in upcoming months. According to International Student News, students across the country struggle to find a place to live. The main driving factors are:

• lack of new student room availability,
• increasing international students,
• high interest rates,
• stringent government regulations, and
• declining student income. 

Martin Blakey, the CEO of Unipol, a charity for student housing, mentioned that numerous university students will face challenges in finding affordable housing this year. "In certain situations, the availability of housing will simply dry-up". As universities prepare for the start of the academic year, we'll explore the causes, effects, and possible solutions to this pressing problem.

1. The alarming situation

According to PBSA news, fewer new bed spaces are available for students this year. According to the Unipol report, around 13,543 new bed spaces in PBSA were created in 2023, till now, while there were 14,551 bed spaces in 2022.

In addition, out of 13,543 bed spaces, only 9000 beds are new as many rooms return to the market for refurbishment or building work. Furthermore, for 2024, a similar situation is expected, and the HEPI report predicts that very few new housing will be available in 2025 and 2026.

According to Mr. Blakey, "Building projects are unlikely to happen unless construction work has already begun.” Developers are finding it difficult to proceed due to the unpredictable costs of construction and funding.

2. UK's cities with the housing shortage

According to student news, HEPI's report highlighted the substantial lack of student housing in Brighton, Bristol, Durham, Glasgow, Manchester, and York. In 2023, HEPI predicted a housing shortage in Cambridge, Bath, Cardiff, Edinburgh, Lincoln and Salford.

In these areas, the increase in PBSA availability is marginal at best and unlikely to eliminate current shortages.

It is difficult to forecast supply shortages in such a volatile market. However, based on 2022/23 intake growth trends, Unipol anticipates shortages in these regions in the upcoming months.

Only Edinburgh has seen a significant rise in supply compared to level intake. As international postgraduates continue to outnumber undergraduates, there will be a drop in the number of undergraduates. The additional beds in Edinburgh may alleviate some of the city's current shortage.
In addition to the supply shortages forecasted, the following are considered by Unipol to be 'amber risks'. Moreover, shortages could occur easily in these cities if intake is high in 2023.

According to university news, some are 'linked' markets, such as Salford / Manchester, Aston / Birmingham, Cambridge University / Anglia Ruskin, and even the 'Huddersfield'/ Manchester market. PBSA news stated the increased PBSA bed space in Leeds / Liverpool could lead to a 'crowding' rather than a 'shortage'.

There's always a housing shortage in London. However, postgraduates make up a larger percentage of students (34%), and there are more home commuter students than the average. It results in international students comprising 67% of the housing requirement. According to PBSA news, in 2020/21, London saw a 2.7% point increase in new PBSA beds compared to the rest of the UK. New PBSA beds fell from 3,655 per year in 2021 to just 2,622 per year in 2022 and are projected to fall to 537 per year in 2023.
An early survey by CUBO had listed the number of institutions named as 'shortened out' or 'potentially shorted out'. In the survey, 45% of respondents stated that they could end the gap in supply, and 23% thought it could be marginal that of 200+ rooms. 

However, there is some evidence that PBSA bed space growth is continuing in areas where supply is already sufficient: 

• In Coventry, 1,136 new beds will be added in 2023/24 in a market with an estimated surplus of 6,000 beds, and
• In Nottingham, an additional 1.632 beds will be added to an already oversupplied market – although the surplus could be reduced in 2024 if the University of Nottingham decides to remove several of its beds for renovation.

3. Rising International Student

The main driver of growth and rising accommodation demand is growing student interest in International education. According to Knight Frank's research, the number of international students increased by approximately 276,110 from 2019 to 2022, showing a 72% growth. Among them, 63% were postgraduate students. 

According to university news, data from UCAS covering the academic cycle 2022/23 showed that over 560,000 new undergraduate students were placed in UK universities. It is predicted that this number is set to rise further by 16% by the end of this year. In real terms, this equates to a further 263,000 new full-time undergraduate students. 
Furthermore, another UCAS data predicts that at the end of the decade, upto one million students will apply for higher education. UCAS predicts a 60% rise in international student applications, showing that UK higher education attracts international students, with 75% more applications expected from non-EU countries.

As per Students News, the increasing number of international students has had two main effects. 

• First, it has increased the demand for housing, causing pressure on the already limited housing resources. 
• Second, many international postgraduate students face difficulties finding suitable housing when they arrive. In addition, they have to stay in temporary accommodations, which can adversely affect their studies.

HEPI's director, Nick Hillman, said, "It's important to remember that the current shortage isn't caused by students or accommodation providers."The issues arise from high-interest rates, which make it more difficult to afford to construct new accommodation. Moreover, excessive regulation (most notably in Scotland in recent years) and a decrease in students' actual incomes make it more challenging for them to pay rent.

4. Projection of required PBSA beds

There are many different estimates of how many PBSA bed spaces are required to accommodate student demand. Knight Frank's report predicts that a 16% increase or 263,000 PBSA bed spaces will be required by the end of the year.

Supply will need to grow to meet this projected demand. Currently, the UK's pipeline comprises approximately 132,490 beds, 22% under construction and 44% of which have been granted full planning permission. London has the highest pipeline, with Nottingham, Leeds, Bristol and Birmingham coming in second and third respectively.

5. University Responses

According to University News, the Universities of the UK understand the seriousness of the housing problems students face and its impact on their well-being and studies. Normally, eligible students are guaranteed accommodation for their first year. However, due to the worsening housing shortages, universities find it more difficult to fulfil this guarantee.
To address the impact of the housing crisis, the Universities of the UK have released guidelines on good practices. These guidelines aim to assist universities in working with local authorities and private accommodation providers to improve the management of housing challenges. These guidelines are expected to relieve students dealing with the housing crisis in the UK.

Conclusion

Finding affordable accommodation will be a challenging year for many students – especially those at the back of the queue –. According to last year's student accommodation news, many institutions are navigating their students in this challenging time. But student services aren't magic. The facts are simple, higher prices, a real-term decrease in maintenance loans/fees, more international students, a demand-supply gap, and stringent government regulation.

Furthermore, UK universities, determined students, and housing providers are working hard to address the student housing crisis. Their commitment gives hope that every student can access safe and affordable accommodation throughout their academic journey. We at amber believe in a brighter future for the global student housing market. Join us and discover the wide range of opportunities available.