New purpose built student housing could free up 66,000 family homes and ease housing crisis

The conversion of family housing to student lets has contributed to the housing boom in many of the UK’s lead cities, pricing local tenants out of the lettings market and restricting the supply of conventional family housing, according to a new report from international real estate adviser, Savills.

In Spotlight on Student Housing, the firm estimates that 66,000 properties (Houses of Multiple Occupation)  now occupied by students could be freed up for conventional family housing through the delivery of more purpose built student accommodation and calls on councils to recognise the importance of promoting such schemes through planning.   In recent appeal cases, London boroughs have recognised the need to free up family housing by moving students into purpose built accommodation which offers a well-managed, controlled environment.

Two-thirds of this unlockable family housing stock is in the top 25 towns and cities across England and Wales, where student demand and housing shortages are concentrated.   Freeing up 66,000 homes would create demand for up to 260,000 student beds, opening up opportunities for developers and investors.

There are an estimated 132,000 full-time student households across England and Wales, many concentrated in high density student areas.  Student lets – often in houses of multiple occupation (HMOs) - have become an increasingly attractive target for private investors, because students are prepared to over-occupy properties, boosting rental returns.

The result is a double whammy for local non student tenants and aspiring home owners.  Not only do students price other tenants out of many family housing areas in major UK towns and cities, credit conditions post downturn have favoured landlord investors rather than less equity rich potential owner occupier buyers.

“Local council coffers would also gain,” says Savills research analyst, Neal Hudson.  “We calculate that reinstating these student HMOs to homes for non student residents would boost council tax returns by around £1.5 million per town or city, since student only houses are council tax exempt.  Also, there is the potential for councils to receive six years’ worth of payments through the New Homes Bonus on the newly constructed student housing.”