Is this the end of student accommodation as we know it?
At the end of 2019, Manchester City Council’s (MCC) Executive Committee met to discuss a report from the Strategic Director of Growth & Development, signalling the start of a Local Plan review process, and in particular, recommending a review of Core Strategy Policy H12: ‘Purpose Built Student Accommodation’ (‘PBSA’). Is this a trend that we will start to see elsewhere in the UK?
There are five universities within Greater Manchester, home to over 90,000 students, a growing proportion of which are international. Students are attracted to the city for a variety of reasons but perhaps most strongly for its leading institutions in the health, education, scientific and technical sectors. This status continues to be strengthened by the Oxford Road Corridor and the commitment of its main landowners to deliver a vision which will see businesses and educational institutions in the knowledge-intensive industries grow.
Despite the clear benefits that Universities bring, the report finds that as a result of students being exempt from paying Council Tax in their occupation of HMOs (House in Multiple Occupancy), particularly in South Manchester, MCC forego almost £17m per annum in tax revenue.
To further capitalise on the Oxford Road Corridor and recoup Council Tax losses, MCC are aware of the need to encourage a shift in the location and culture of the student accommodation market – a trend that other cash strapped Councils may bear in mind when considering future PBSA applications.
The good news for the MCCs purse is that there has already been a small shift from HMOs to PBSA, with an increasing number of students now opting for the lifestyle of city centre living. However, the challenge remains to coax the majority of students away from traditional, cheaper HMOs to PBSA, freeing up these homes for much needed family housing. This task is twofold: there will need to be a perceptible difference in the quality of PBSA to justify higher rents, and there will need to be a cultural shift to see students transition out of HMOs.
So how do we further encourage this shift? The most obvious answer is price, with more affordable accommodation being attractive to students – should Manchester therefore take an example from London policy whereby at least 35% of units within new PBSA schemes are required to be affordable? Quality and convenience are a close second, with quality accommodation and associated facilities in locations close to both campus and amenities appealing to students. Also tipping the balance will be an offer to enhance wellbeing and ensuring that accommodation has a positive impact on student mental health.
The report signals to developers that they may need to tune into the shift from HMOs to PBSA. Developers may consider incorporating affordable units into future PBSA schemes, outperforming HMOs by creating quality places for students to reside, and being proactive in providing wellbeing initiatives, thinking beyond the basic provision of communal spaces and gyms.
Iceni’s Manchester office continue to monitor the Council’s PBSA review, along with other planning policy changes. If we can assist you with any student accommodation schemes or Local Plan representations, please get in touch.