Boomtime for lettings market as big student room shortfall predicted

Rising numbers of young people going to university and a relatively low supply of new student housing means that by 2025 the UK will face a shortfall of around 450,000 student beds.

StuRents – which says it’s the country’s largest portal for student accommodation - has calculated that just over 248,000 beds are likely to be delivered between 2017 and 2025. However, an additional 700,000 students will be needing accommodation. 

That means a shortfall of circa 450,000 beds; even current data suggests that there is a shortage of around 207,000 beds this year.

Since 2017, rents in new-build purpose built student accommodation have grown an average of 3.7 per cent per year but - according to StuRents - over the same period, HMO rents have risen by an average of 5.1 per cent per year.

The shortage in supply is partly due to the fact that the number of student beds submitted for planning has slowed dramatically over time. This is also reflected in the number of student beds delivered in the last few years.

Richard Ward, head of research at StuRents, says: “The squeeze in supply is likely due to multiple factors. Planning applications for new purpose-built student accommodation (PBSA) are slowing and low compared to historical levels. This is probably down to multiple factors including availability of sites, oversupply in some markets and construction costs.”

Local councils have also been implementing Article 4 directions, which require landlords to seek planning permission to convert a residential dwelling into an HMO appropriate for students.

Ward adds: “This could be because councils don’t want to be seen to be allowing landlords to reduce the number of properties available for families. Although an Article 4 doesn’t make it impossible for landlords to turn properties into student lets, it does make it harder and creates further barriers to supply growth of student properties. 

“The recently announced Renters Reform Bill, which impacts HMOs could also have a detrimental impact – although the outcome is unclear at this stage.”

Another factor that could worsen the situation is the rising 18-year-old population. 

The number of UK full-time students has been on the rise despite a decline in the 18-yer-old population. However, government data now indicates this trend for declining numbers of late-age teenagers is set to reverse, which is likely to increase demand further still.

Ward concludes: “UK higher education continues to remain attractive to foreign students and there is government policy in place to increase the number of international students going forward. Both factors suggest strong growth in demand in the future – which will further squeeze supply for students.”