Student accommodation is big business – but confused regulation leaves students vulnerable

Purpose-built student accommodation has been growing in the UK for some time and has now become a mainstream investment thanks to the steady income it provides. As a result, private companies, financed by both overseas investors and UK institutions, have joined universities as major providers of student accommodation.

According to one property consultant, in 2018 77% of new student beds were delivered by private providers. The market is dominated by a relatively small number of companies, with the top five owning 24% of the stock. The rents paid by students are high, typically accounting for about 70% of the maximum student maintenance loan. The fact that student maintenance loans are funded by the government from taxpayers’ money makes the high rents and substantial investment returns controversial.

As an expert in landlord and tenant law, I am conducting research into the relationship between accommodation providers, universities and students. This is a particularly topical issue following recent delays in purpose-built accommodation that meant some students were placed in temporary lodgings at the beginning of the 2019/20 academic year.

The regulation of student accommodation and the relationship between accommodation providers and universities can vary significantly between different cases, and new measures are required to protect students.

Regulation issues

Regulation of student accommodation varies between private providers and university providers. Universities that provide halls of residence must belong to one of two codes of practice or be licensed by the local authority. Where this is the case, the accommodation is exempt from the licensing requirements for houses of multiple occupation (HMOs) required by the Housing Act 2004.

Privately owned purpose-built student accommodation, on the other hand, is regulated by the HMO licensing system. This is the case whether or not the provider has agreed to an approved code of practice. HMO licensing is mandatory where there are five or more students sharing a kitchen. This means that studio flats and smaller shared flats would not fall within the regime.

However, local authorities can require a licence for all HMOs. The different treatment of universities and private providers, and indeed the different treatment of different parts of the same building, shows the confused nature of this regulation.

The Accreditation Network UK and student housing charity Unipol have developed a voluntary “National Code of Standards for Larger Developments for Student Accommodation Not Managed and Controlled by Educational Establishments”. It addresses late delivery of accommodation, including the provision of alternative accommodation and payment of meal allowances.

However, this does not prevent students being left living in temporary accommodation for the early weeks of university when key social bonds are formed.

Building requirements

The relationship between universities and purpose-built student accommodation providers can vary. The university may enter into a nomination agreement with the provider to send a minimum number of students into the accommodation each year. In return, the university has some involvement in matters such as rent setting and management.

On the other hand, the university may simply allow the provider to promote their accommodation on campus and have no agreement beyond this. In some cases, the university may actively oppose the development and have no relationship at all with the provider. Where there is no relationship between the provider and the university and the provider fails to deliver, the university is left in a difficult position. It has a duty of care to its students, but also little power over how the provider behaves.

The first weeks of term are vital in establishing social bonds. Jacob Lund/Shutterstock

Local planning authorities could have a role to play here. National planning policy requires local authorities to account for housing need from students. It also allows local authorities to count student accommodation toward their housing delivery targets, as it frees up existing homes for the local population. This provides an incentive for local authorities to develop relationships with student accommodation providers.

The question perhaps is whether local authorities have a part to play in making sure private providers are held to account.

London’s development strategy, known as the Draft London Plan, requires private providers of student accommodation to enter into a nomination agreement with one or more specified higher education institutions.

Another alternative might be that accommodation would have to reach a certain stage of development before being advertised, or that clearer plans should be in place in case completion is delayed. Requirements such as this can be enforced by a planning obligation or agreement.

Clearly some additional accountability is needed to prevent a repeat of the situation faced by students in the autumn of 2019.

Want to write?

Write an article and join a growing community of more than 100,300 academics and researchers from 3,206 institutions.

Register now