Deidre Hipwell, wrote in The Times on Monday, 15 July, 2013 ...

Nearly 70,000 homes rented to students are pricing average families out of local housing markets, according to a new report.

Savills has identified 66,000 houses in England and Wales that are homes of multiple occupation, meaning that they are owned by buy-to-let investors and rented to students. The property consultant said that “freeing up” these homes could help to ease the country’s housing crisis and generate demand for 260,000 student beds in the “purpose-built” student accommodation sector.

The report said that most universities were increasingly unable to house all students and that many ended up in the private rented sector. It said that an average university town housed 26 per cent of its students in residence halls, while 38 per cent stayed in the parental home and the remaining 26 per cent in the private rented sector.

The situation has worsened since the credit crunch because the withdrawal of higher loan-to-value mortgages and growing rents had continued to attract investors into the student private rented market, Savills said. This has been at the expense of first-time buyers, while students have also out-priced others in the rental market because of their willingness to over-occupy accommodation and provide higher rental yields.

The Government is consulting on whether to grant councils the power to limit the number of houses in multiple occupation (HMO) in a single area.

The provision of more student accommodation blocks in Bath, Oxford, Newcastle and Bristol could unlock a total of 7,200 homes, Savills said, adding that councils would also benefit from higher council tax revenues. Houses let to full-time students are exempt from the tax.

Savills said that two thirds of the HMO supply was in Britain’s top 25 towns and cities and that councils should take a more liberal approach to granting permission for purpose-built student blocks, especially as intake numbers are rising.

Savills added that some developers were targeting the purpose-built student housing market, previously considered a “niche” development sector, because it had generated stable returns during the downturn. The consultancy is forecasting total returns of 9.3 per cent for the 2013-2014 year and rental growth of 3 per cent.

2.7% Rise in university applications for the next academic year

(Source: Times research)

For more about the Savills' report and other topics relating to student housing, visit:

Student Accommodation