Overcoming the Challenges Associated with the Development of Student Accommodation

In the last decade student numbers have grown significantly and Purpose Built Student Accommodation (PBSA) has become an increasingly important form of development, which delivers significant economic benefits to the country. Despite this, PBSA completions have been falling in recent years due to various market challenges, as well as the challenges securing planning permission.

There were nearly 3 million students in 2022/23 according to the HESA. Much of the demand is driven by first year undergraduate students and international students. The remaining demand is predominantly accommodated within the private rented sector (PRS), with many second and third year students across the country living in shared houses and HMOs, typically a more affordable product.

The GLA’s newly adopted PBSA Guidance highlights that a lack of supply across London is resulting in higher rents in the PRS: "current indications suggest a lack of PBSA supply relative to growing numbers of students; this is instead contributing to competition and higher rents in the private rental market, especially as this is facing other constraints”.

The Renters’ Rights Bill, which is making its way through Parliament at speed, is predicted to raise costs in the PRS further, if, as predicted, many landlords choose to leave the PRS. This would further increase demand for PBSA.

Despite the anticipated demand, one of the key challenges when securing planning permission for PBSA is securing the use itself, especially when balancing the need for PBSA against competing demands. 

One of the most significant of these is housing, given the pressing need for conventional housing across the country and pressure to meet housing targets. Labour's pledge to deliver 1.5m homes within this parliament and the introduction of mandatory housing targets will further increase these pressures. 

PBSA is an important component of housing delivery, not only because it meets the need for students, but also because it delivers wider benefits to the housing market by alleviating pressures on traditional rented homes.

This is recognised in the Government's Housing Delivery Test Guidebook and the GLA’s PBSA Guidance, which confirm that PBSA counts towards housing delivery at a 2.5:1 ratio, based on the national average number of 2.5 students sharing one self-contained home. Therefore, in effect, the provision of 250 student bedspaces can free up 100 self-contained homes for families to use.

The concept of freeing up HMOs is recognised by many councils. However, in the absence of specific student housing targets, it is not uncommon, especially across London, to see policies prioritise the delivery of traditional housing and restrict the delivery of PBSA.

The significant socioeconomic benefits of student accommodation is not recognised, and PBSA is often seen by councils as a way to avoid providing affordable housing. There are also concerns that the current popularity of student schemes, which is partly driven by the viability challenges of delivering conventional housing, means that councils are losing land which could be developed for C3 (residential) use in the future.

As a result of these concerns, we have seen some very anti-PBSA policies. However, the GLA’s PBSA Guidance emphasises the benefits that PBSA can bring and provides guidance on which locations are likely to be suitable for PBSA; how over-concentration concerns can be identified and managed by councils; and how PBSA developments can be successfully integrated with neighbouring uses and housing types.

This all points to more positively worded PBSA policies and a targeted approach to controlling student accommodation where necessary. 

Introducing specific student housing delivery targets would also assist with a more positive approach to delivery. The London Plan identifies a need for 3,500 student bedspaces per year, however this need is not broken down by borough. Only a few boroughs (such as Camden) have sought to identify their share of the need. 

Elsewhere, whilst many student towns acknowledge the need for PBSA and are generally supportive, specific targets are not common. Developers are generally left to evidence the need themselves, either through discussions with higher education establishments or through preparing their own Student Needs Assessments. 

Student housing targets would flip the onus on the council to identify and proactively meet their need for PBSA, therefore resulting in more positively worded policies and general support for this important use.

Another opportunity would be bringing in Permitted Development (PD) rights for PBSA. As a Sui Generis use, PBSA developments cannot currently benefit from any PD rights. We have seen an increase in PD conversions to residential use due to the recent changes to the General Permitted Development Order (GPDO). Whilst not appropriate for all types of development, PD conversions can be secured rapidly and are successful at bringing buildings back into use.

Given the supply-demand imbalance which is likely to worsen with the changes to the PRS, it’s clear that the current policy approach is not meeting the need for PBSA adequately, and changes must be made to encourage and support the much-needed delivery of PBSA across the country.