British university towns grapple with student housing shortage

Receive free Property sector updates

We’ll send you a myFT Daily Digest email rounding up the latest Property sector news every morning.

University towns in Britain are grappling with a shortage of accommodation as the supply of housing stock fails to keep pace with rising demand from domestic and international enrolments, according to new data.

More than 350,000 purpose-built student beds across the UK’s 30 largest university towns and cities are needed to meet the expected demand for accommodation, according to real estate adviser CBRE.

The squeeze on beds will add pressure to the UK’s already tight rental market against a backdrop of rising rents, pushing up prices for young people, who are particularly vulnerable to rising living costs due to their lack of steady income.

“If you’re in a town or city, rents are going up,” said Tim Pankhurst, executive director at CBRE. “There is [private sector] accommodation available but it’s becoming more and more expensive, the private rental sector has seen a big decline in the number of rooms available.”

The 350,000 gap represents 34 per cent of the pool of the more than 1mn students likely to want student housing in the next academic year, data shared with the Financial Times showed.

In London, where it is most severe, the shortfall in beds surpassed 100,000, equivalent to half of the expected demand — marking a 45 per cent increase on 2017-2018.

“The number of students going into education has grown exponentially,” said Pankhurst. “They don’t even have enough beds to accommodate first years, let alone second and third years.”

Students who cannot find a place in purpose-built accommodation have turned to the residential rental market instead, according to property experts, where prices are rising as higher mortgage costs hit landlords and make buy-to-let investments less attractive.

James Hanmer, accommodation specialist at Savills, said the shortage had become “extreme” in some cities. In Bristol, only 2,900 purpose-built student beds had been delivered since 2018, while demand grew by 8,000 during that time, said CBRE.

Over the same period, 3,400 beds were delivered in Glasgow as demand increased by more than 13,000 beds.

Demand for purpose-built student rooms has soared in recent decades driven by more 18-year-olds choosing to go to university and a rise in overseas enrolments. The UK student population is currently at a record high, according to the Higher Education Statistics Agency.

Richard Ward, head of research at student accommodation data provider StuRents, said the shortage of housing could damage the UK’s attractiveness to overseas learners and deter domestic students from pursuing a university degree.

“The average UK student does not have endless budgets, if the cost of accommodation is going to continue to increase, at what point is the cost of uni going to be prohibitive?,” he said.

Meanwhile, the construction pipeline of purpose-built accommodation had been too slow, said analysts. Councils could be resistant to approving building plans, they noted, while some developers favoured buy-to-let investments that could generate higher rental income.

Richard Smith, chief executive of student accommodation operator Unite, said that planning applications took roughly six months longer to process than they did before the Covid-19 pandemic. “It just does seem to take more time these days to secure planning,” he said.

CBRE’s calculations are based on analysis of its own real-time database of student accommodation combined with other data sources, including the Higher Education Statistics Agency and local authority planning portals.