- This blog has been kindly written for HEPI by Martin Blakey, the Chief Executive of Unipol. In 2020, Martin co-authored HEPI Student Accommodation: The Facts (HEPI Analytical Paper 2) with Sarah Jones. Unipol publishes the long-running Accommodation Costs Survey with the National Union of Students.
Recent trends in admissions (from UCAS and HESA data)
According to UCAS, applicants accepted by providers for full-time undergraduate study remained level in the autumn 2022 cycle. Within the headline figure, accepted applicants from the UK fell by half a percent and EU numbers slumped by over a quarter. By contrast, acceptances for applicants from outside the EU (and UK) rose strongly (+15 per cent).
In 2022/23, growth in non-EU acceptances has been fuelled by strong overseas demand for UK qualifications from taught postgraduate (PGT) programmes. This follows similarly rapid increases in international PGT numbers for the two preceding cycles.
UCAS acceptance figures are not equivalent to registered student numbers. However, in the absence of available HESA data on actual student numbers for the current year, they are a strong indicator that the upward trend in PGT recruitment has not only continued in 2022/23, but accelerated, as Covid restrictions have fallen away.
In June 2022, the Public Accounts Committee reported that the number of universities with budget deficits continued to rise – the figure for the 2021/22 financial year stood at 80. This trend is largely attributable to the declining value of home tuition fees relative to rapidly rising inflation. In 2021/22, funding for teaching was 78 per cent below the 2010/11 figure in real terms. Further erosion is anticipated as the maximum tuition fee level is set to remain frozen until at least 2024/25.
At higher-tariff providers where capacity is limited, many institutional leaders believe their only option for shoring up the unit of resource is to keep home intakes in check in order to provide room for higher numbers of higher-paying international students. For middle and lower tariff universities with spare capacity, leaders are simply focused on recruiting more students, but international students where possible.
During peak Covid restrictions, the two cycles of teacher-assessed A-levels produced grade inflation resulting in higher-tariff providers having to accept unplanned-for extra numbers of home undergraduates. The autumn 2020 admission round – when the calibration of offers could not have factored in this eventuality – was particularly affected. In the 2022 cycle, it is evident from the UCAS acceptances data that many of the affected providers took steps to try and return intakes to pre-Covid levels – or in some cases to their planned growth trajectory. These corrective measures appear to have helped boost home undergraduate recruitment in middle- and lower-tariff institutions.
How international recruitment affects housing demand will depend on how important international students are to a given market. For example, in London, 40 per cent of students are from overseas, compared to a figure of 28 per cent for the rest of the UK. In London, there is a high proportion of commuters among home students. The lower level of demand among UK-domiciled students means that international students account for a greater proportion of the city’s overall student housing need. This currently stands at 58 per cent.
The profile of the UK’s international student population is shaped by the following trends and factors:
- growth in numbers of students from China are slowing and they are consolidating in higher-tariff universities
- increasing numbers from India and Nigeria account for most PGT growth and tend to be concentrated in post-92 lower- and middle-tariff universities
- the number of international students arriving with dependents and entering the non-student housing market is on the rise
- students from Nigeria and India are generally looking for lower-cost accommodation.
The ‘old faithfuls’ in the higher-tariff grouping may no longer be the primary force in determining levels of student accommodation demand.
Top increases in full-time PGT numbers 2021-22 (1000+)
Changing patterns of accommodation demand
The big driver of growth in accommodation demand is growth in PGT international intakes. Much of the expansion in this segment is taking place in universities that have in recent times suffered dwindling UK undergraduate populations. Now, though, these mainly middle- and lower-tariff providers are also taking more home students, displaced by tightening intake requirements at higher-tariff universities. For this set of providers, successes in the domestic market are, however, dwarfed by the hectic rate of growth in the export market. The effect is radical change in the shape of their intakes – a slowing of growth or reduction in their UK-domiciled undergraduates (where often a sizeable percentage would be commuter students) to international students (all of whom need accommodation).
In many localities, growth in demand is far outstripping growth in the supply of student accommodation. New bed spaces entering the supply of purpose-built student accommodation (PBSA) are slowing, as higher land values, high inflation and rising capital costs take their toll. (The only exceptions are host cities where there have been ‘spades in the ground’ over the last two years.) Further inertia has been exerted by the temporary decommissioning of a significant volume of PBSA for building safety remediation works.
Off-street student housing stock continues to contract, as more and more providers are drawn to markets serving other rental groups and the tourism industry.
A recent poll by CUBO members showed that:
- 43 per cent of institutions had an overall shortage of accommodation in September 2022
- 26 per cent expect a shortfall in September 2023
- 30 per cent say they ‘do not know’ if there will be a shortfall at the start of the next admissions cycle
No less striking is the finding that, although 59 per cent of institutions had an accommodation strategy, 89 per cent of CUBO members said their institution had factored accommodation into their recruitment plans ‘very little or not at all’.
These survey responses need to be understood in the context of the rapidly changing recruitment and admission patterns already described. Universities are seizing market opportunities as they arise, but are not confident they will last beyond the short or medium term. Many institutions view the mismatch in demand and supply as a temporary problem worth riding out in pursuit of the higher goal of corporate viability.
The changing role of universities and accommodation provision
Change in accommodation demand across tightening supply means that universities will need to re-interpret what their role is in the provision of accommodation.
Hitherto, the standard institutional commitment – sometimes a guarantee – has been to provide accommodation for full-time Year 1 undergraduates, either directly or through referrals to approved PBSA providers. In times of shortage, the commitment has been cut back to exclude students coming through Clearing. The scope of the sector standard was predicated on the acknowledged need to help young students transition between home and university. It included international undergraduates, but this was an obligation picked up incidentally; it was not the core aim.
Under this model, the institutional accommodation offer to postgraduates was often limited – including at universities with large portfolios or firm allocations arrangements with partners. By and large, even Russell Group members housed only around a quarter of their full-time postgraduates. Support for these students went no further than signposting them to other suppliers of PBSA, who absorbed the demand.
Accounting for a large chunk of international postgraduate numbers in recent decades, Chinese students were willing to pay high rents for good quality accommodation. Other students – largely from North America and Asia – were often willing to do the same. Private sector providers of PBSA served this sub-market by building higher-specification, small cluster flats or studios. This type of demand tended to be concentrated in higher-tariff universities where there were significant volumes of international postgraduate students. (Indeed, postgraduates more generally were in much lower numbers in middle- and lower-tariff universities.)
Today, four things have changed:
- UK-wide numbers of international postgraduate students have increased quickly and dramatically
- many institutions with little direct housing provision now have large full-time postgraduate populations
- many international cohorts feature a lot of less well-off students from India and Nigeria, for whom affordability is more important and so, even where a nominated room is available this may no reflect what those students want
- recruitment from these newer markets is taking off in lower- and middle-tariff universities, unused to dealing with large numbers of postgraduates.
The challenge is not just about having more students with a housing need; it is about a different type of need that many universities have never catered for.
Three other complicating factors are now adding to the mix:
- many students have brought dependents (families) with them and they need family accommodation. This need is plainly not met by existing student housing supply which is dedicated entirely too housing single students in cluster flats or studios. (Most studios are too small for a couple and certainly for a couple with a young child.)
- some of these students will remain in their housing post-study to work, further compounding the supply issues.
- a secondary study cycle is gaining traction in many universities. This is organised according to the calendar year and based on January admission. Even for single students, the student accommodation market is not yet geared for New Year entrants, except where there is over-capacity/voids.
Why are international students, studying for only a year, bringing their families with them? Firstly, many of them intend to make the most of the most of post-study work entitlements. Accordingly, their plan is to stay for around three years, not just one. Secondly, shifting recruitment grounds mean shifting cultural norms: in contrast to China, families in India and Nigeria are generally larger and students in their mid-20s normally expect to be beginning a family.
It is inconceivable that students with young children planning to spend several years in the UK would simply leave them and their spouses behind. It is difficult to get data on growth in students with dependents. However, the ONS published figures in September 2022 showing that, of the study-related visas issued, a fifth were for family members of students (116,321). This compares to six per cent (16,047) in 2019. From these figures, it is reasonable to conclude that there has been a rapid increase in the number of students requiring family accommodation, something which the traditional student accommodation sector does not cater for at all.
Finally, there is strong evidence that the entrant profile for January intakes is different to the profile for standard autumn intakes. At many institutions, more of the students arriving in January have their families with them. There is also evidence that these students do not move into normal PBSA accommodation, even where it is readily available. Several universities have tried to ensure some accommodation capacity for their January intake, but students taking it up (known in the jargon as ‘the conversion rate’) seem to be running at between 12 and 15 per cent. The big question here is: what has happened to the rest of them? In terms of traditional student housing demand, some January intakes seem to have simply melted away.
What is actually happening?
Plainly, international PGTs all have an accommodation requirement, regardless of the conversion rate, and they will be living somewhere. On the safe assumption their accommodation need is 100 per cent, if they are not living in the traditional student accommodation sector, they must be living ‘in the community’.
For January intakes, in areas of shortage there is evidence single students are living with friends: sofa surfing. But this can only be a short-term fix, because it is difficult to sofa-surf across an entire year. Some students are living with friends in towns miles away from their place of study, and are commuting in. Illustrating the point, stories have emerged of students studying in Bradford or Manchester, but living with friends in Birmingham.
What is clear is that where accommodation is tight in their host city, students are living in nearby urban centres that have capacity. This is producing some interesting effects. Many universities are seeing a small number of students sleeping overnight in their libraries. This can sometimes consist of long-distance commuters who find it easier to stay at the university overnight for, say, one night a week, in preference to making the arduous and expensive commute but in some cases this reflects a standards issue with students finding the library spacious and warm – much better than where they are living
For students with dependents, life is a good deal more difficult. They need family housing but often cannot afford it. Many are self-funded without access to student loans and they are generally looking to pay no more than £400-£500 a month. Getting suitable accommodation on this kind of budget is impossible in virtually all towns and cities in the UK. Until ongoing work produces results, it is hard to know where these families are living. Long commutes and families ‘doubling up’ are beginning to look like common outcomes.
Other family challenges arising from precarious living arrangements and budget shortfalls are emerging. There is growing incidence of students bringing their children onto campus and leaving them in university buildings with, at best, informal care arrangements with whoever is around. Students without an address find it difficult to place their children in a school. Even access to healthcare is much easier with a stable address. These are real issues that will not be resolved until more permanent housing is secured.
Many institutions are advising students not to arrive with dependents until they have found accommodation. This is good advice, but often hard to follow: even the best laid plans to coordinate visas, funding and travel can be frustrated, and all three end up being concertinaed together. (Unpredictable visa waiting times in Nigeria are a case in point.)
Some evidence is emerging of students withdrawing from their courses as a fee instalment becomes due because they have already used their funds on expensive short-stay accommodation.
What should universities do?
Universities need to redefine their relationship with accommodation and what is expected of them. Here are three questions to help scope the issue:
Should universities house all of their students? The answer is obviously no, because they never have and cannot be expected to.
Are universities a houser of last resort? Where there is a housing shortage, this may amount to the same as the first question. Universities cannot hope to plan for an overspill of accommodation when they do not know what the capacity of their local market is.
Should universities help out? Of course, they should. However, international postgraduates are not to be equated with more vulnerable 18-year-olds transitioning from school to university: these are older students, some with families; they are fully adult and have higher levels of personal responsibility than much younger and inexperienced students. International postgraduates should be treated as the adults they are, with adult responsibilities.
Some universities have provided limited grants and bursaries to help with affordability. Others have made short-term accommodation available. These measures may work for the here and now, but cannot produce enduring solutions for a systemic long-term problem.
The most important thing a university can do is give these prospective students accurate information about what accommodation choices they have; what difficulties they may experience; and how much accommodation actually costs. On that basis, these students can make good choices. If institutions are concerned that accuracy may damage their recruitment, they should reflect on their practices: in withholding accurate information, they are playing a dangerous and irresponsible game. Truthfulness is important and, if adopted as a working principle across the higher education sector, is unlikely to place any single institution at a competitive disadvantage.
At the moment, many universities do not know how their accommodation market is working or what its capacity is – or what the capacity of other nearby commutable markets is. This intelligence deficit is not sustainable in the context of the rapidly evolving HE market. These institutions need to chart the landscape and review available services and processes with a view to making effective strategic and operational interventions:
- Each university town needs to undertake work on supply and demand on a co-operative basis between institutions who share a single housing market. The analysis must address all student housing demands, not just those for first-year students
- Working with the local authority is important because the demands of student accommodation on a city have to be balanced against other housing needs in order to build a clear assessment of the availability, quality and affordability of housing stock
- Institutions need to review the current service and recruitment offer made to students to ensure it is relevant. Information geared to first-year home students does not address postgraduate housing needs or a non-traditional academic cycle
- Institutions need to improve their own internal communications across their accommodation office, their faculties and their admissions and marketing functions to ensure that the whole institution knows how many students are being recruited and what their accommodation load actually is. International offices need to give accurate numbers, and not just ‘we are close to meeting our targets’ waffle
- The sources of help on accommodation provision and support for students living outside university accommodation should be clearly summarised, so that students know where to get advice and help, virtually and in-person. (Sources are likely to include specific functions within institutions, students’ unions and specialist agencies.)
- Institutions should concern themselves with student accommodation standards in the private sector. Their engagement should extend to accreditation schemes, local authority initiatives, the role of HMO licensing, the National Codes for PBSA and student complaints processes.
- In the medium term it will be important for institutions to manage and prioritise recruitment and housing allocations in order to control supply and demand as effectively as possible
- In the longer term, this may entail the development of wider institutional housing strategies in collaboration with other agencies in order to grow housing stock, improve affordable options and support the rebalancing of supply and demand either through direct new provision or through partnerships with private providers.
There are significant housing shortages throughout all segments of society within the UK. There is a point where students will also be affected by supply problems – why would they be exempt?
Universities need to be clear about their own obligations and where they can provide accommodation and where they cannot.
They need to treat postgraduate students in a different way to undergraduates, and give them the facts so they can make their own judgements: the facts have to be accurate and free of marketing spin.
Finally, Vice-Chancellors need to know that student accommodation is a sleeping giant that when roused can loom large over their plans for recruitment, development and expansion. A small investment of extra resources into developing expertise and linkages with suppliers and local government will pay dividends. These suggestions are not quick fixes, but they are designed to:
- meet rapidly evolving accommodation challenges effectively
- achieve outcomes that properly support students’ educational attainment.