EXECUTIVE SUMMARY OF REPORT ON STUDENT RESIDENCE & HOUSING MARKET CONDITIONS IN NOTTINGHAM
A.1: HOUSING MARKET CONDITIONS IN AREAS OF STUDENT POPULATION IN NOTTINGHAM
Housing market conditions in the areas with the largest student populations in the city have changed in recent years. Specifically, there has been a significant increase in the number of households in private rented accommodation and a corresponding decline in the volume of owner occupiers. House prices in these areas tend to be higher than average. While they have reduced slightly since 2008, this has not been enough to make local housing any more affordable.
The restrictions on mortgage lending and the requirement for larger deposits have depressed demand from first-time buyers, who would traditionally have been the main source of owner occupation demand in the areas concerned. For this reason, along with the specific profile of the housing types in those areas, finding alternative demand to shared private rented housing presents a significant challenge.
The continuing problems with access to home ownership and the increasing rent levels have produced growing demand for shared housing from young workers and professionals, as well as from students.
A.2: PURPOSE OF THE STUDY
In Nottingham, as elsewhere, there has been a long-standing debate about the place of students in local communities, including their numbers, the population balance, their contribution and issues of cohesion and tension. In the absence of any reliable body of information, this has often been characterised by conjecture, supposition and unsubstantiated claims. In the context of recent shifts in housing market conditions and the availability of Article 4 Directions, it is important that those engaged in the debate take stock of what is happening and of which solutions might best fit current and future circumstances.
The purpose of this study is to provide a reliable evidence base so that debate can be better informed. In particular, filling the intelligence gap is essential to engaging with the question: what interventions might work in halting and reversing disuse and in supporting ‘balanced and sustainable communities’ – or in countering community dysfunction?
A.3: POLICY AND MARKET CONTEXT
Since 2008 there has been a relative flattening-out in full-time student numbers, following two decades of fast and uninterrupted expansion. In the short to medium term the prospect of significant contraction for many universities is very real, the strongest headwinds being:
•Deep cuts in funding for the sector with a strong likelihood of more to come
•Tighter controls on student numbers
•The stratifying effects of marketisation in the sector
•Possible continuation of the downward trend in postgraduate and part-time student recruitment
•Intensifying global competition for international students at a time when government immigration and visa control policy are compromising the attractiveness of the UK
as a student destination
•The demographic downturn in 18 – 20 year-olds to 2020
•The still-unknown consumer response to the question of investment in higher education during an unprecedented squeeze on the budgets of middle and lower income households.
Student Accommodation: Supply and Demand in Nottingham
The numbers of students entering higher education in Nottingham have declined. Between 2010/11 and 2012/13 (disregarding the aberrant interim year) there was a significant drop in the key segment of full-time home undergraduates entering Year 1 in 2012/13, down 1,330 (17.7%) on the previous year, but, more importantly, down 633 (9.2% on 2010/11) and the lowest intake since 2007/08.
A fall in home undergraduate intake numbers (down 586 (10.2 %)) was also a factor in an overall drop in intake of 758 (6.9%) at the University of Nottingham.
The combined planned intakes show a strong plateau effect for the period until 2017/18. This is largely an expression of high uncertainty about the future in a volatile environment. This feeds through to student population forecasts as the recent peaks and troughs pass out.
By 2016/17 full-time student numbers in Nottingham are set to fall by 2,422 (4.8%) from their current level. From their high point in 2011/12 numbers are projected to fall by 4,069 (7.8%).
These percentages will feed through to student residential demand in direct proportion. For illustrative purposes, if seven out of every 10 full-time students in Nottingham had a residential need, demand would reduce by about 1,700 in the period to 2016/17.
Supply of Student Accommodation
Provision in Nottingham has undergone major transformation in recent years. Since 2008 the number of bed spaces in purpose-built accommodation has risen from 15,012 to 17,553. Of these, 4,590 (26.15%) are directly provided
by institutions; 5,889 (33.5%)are operated under lease (UPP); and the remaining 7,074 (49.3%) are let directly in the market by commercial providers. This new level of provision has taken market share from the off-street sector.
Added to this, Nottingham City Council has on its books planning applications or pre-applications for further developments amounting to a further 3,000 bed spaces.
The proportion of new students living in purpose- built accommodation (university-maintained and leased from, or directly supplied by, private providers) grew only marginally between 2008 and 2012. The major increase in students moving from off-street shared housing to purpose-built accommodation took place in the years between 2002 and 2007, during which time the number of students in purpose-built accommodation doubled. The growth in purpose-built accommodation continues in 2013, outside the main scope of this study.
In Nottingham, from the turn of 2001 and since, the institutions and the local authority managed the supply of purpose-built accommodation effectively to meet the increasing residential demand created by rising full-time student numbers with the universities taking the lead in supporting construction. This has led to a slow, but steady contraction of student houses in multiple occupation (HMOs) in residential areas.
Recently, however, purpose-built student accommodation has been developed outside any direct arrangement with the universities and after 2013 all the purpose-built accommodation planned is being let straight into the market in competition with other suppliers.
It is difficult to estimate the number of surplus bed spaces within the market because both larger and smaller suppliers are reluctant to report voids. An analysis of properties advertised on the Unipol database in 2011 showed that there were 2,890 bed spaces still empty in the Nottingham market as at October that year. This compares with 1,777 at the same point in the cycle in 2008. There is no doubt that, with static or declining student numbers and an increased supply of student bed spaces (particularly in new purpose-built accommodation), the surplus is increasing year on year.
University of Nottingham students are concentrated in Lenton, Beeston, Wollaton and Dunkirk and are 10 times more likely than Nottingham Trent students to live in the Lenton area in off-street housing. Proportionally more University of Nottingham students are accommodated in purpose-built residences than NTU students. Nottingham Trent University students are more likely to live close
to the city centre (in the city centre itself or in Arboretum, Forest Fields/Hyson Green or Radford) or on the two satellite campuses.
The numbers of students living in Lenton, West Bridgford, The Meadows and St Ann’s reduced between 2008 and 2012.
Students living in the city centre increased from 5,210 in 2008 to 9,988 in 2012. The majority of this growth was absorbed in mainstream city centre flats. The new purpose-build developments entering the market in summer/autumn 2013 are likely to effect a further shift in the balance of accommodation types.
Returning Students and Purpose-Built Accommodation
Of the students living in privately provided purpose- built accommodation, 28% were returning students or postgraduates, indicating why providers are increasingly targeting returning students as a potential market. However, only 11% of all returning students and 9% of postgraduates live in purpose- built accommodation, suggesting that returning students in the main prefer to live in off-street housing for the majority of their time of study.
These changes in student preferences are being recognised in rental structures in the purpose-built sector as a number of purpose-build providers lower their prices to compete not only more effectively within their own sub-market but also directly with rent levels in the off-street sector.
Those opting for purpose-built provision tend to cite important factors as the more functional aspects associated with this accommodation type, such as on-site management, new facilities and value for money/inclusive bills. They also refer to the social opportunities that larger developments have to offer.
It is likely that the supply of shared housing will need to increase as a result of welfare reform measures to restrict housing benefit for claimants under 35 to the cost of a room in a shared house.
The Localism Act 2011 enables local authorities to fulfil their duties to rehouse in private rented housing. This may exert pressure on landlords, unable to let to students, to consider letting to homeless families and other households in housing need.
The Housing Nottingham Plan aims to:
•Deliver 11,500 net new homes from 2008 to 2020
•Ensure an appropriate mix of dwelling types and sizes and increase family housing to at least 35% of all housing stock
•Ensure that the supply of required HMOs is maintained but does not dominate in particular areas
•Meet the city’s housing investment requirements and priorities, including new housing provision with mixed tenure and affordable housing
•Encourage more purpose-built student accommodation to meet what is seen as a shortfall in supply against demand.
While the authority recognises in the plan that many students wish to live in off-street shared housing, it seeks to ensure that further units of family housing are not lost to student HMOs. Integral to the plan is the importance it attaches to making new student developments sufficiently attractive and affordable for students in all years of study to be persuaded that the purpose-built market is a better option than shared housing in communities.
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