Repurposing student housing amid the COVID-19 pandemic
A spotlight on Wales19th Aug 2020
The coronavirus pandemic has caused an unprecedented disruption in the student housing sector, because the number of international students coming to the UK has fallen dramatically. This has left cities like Cardiff with an oversupply of high-end, purpose-built student accommodation blocks (PBSAs).
Student accommodation in a nutshell
Student accommodation is a lucrative component of the UK property sector, worth an estimated £50 billion. A flood of international students, especially from China, has fuelled the frenzied construction activity. Chinese students currently make up 30% of the market, requiring 600,000 additional accommodation units each year.
Since 2017, the local council here has approved more than 7,500 new privately managed student rooms to meet escalating demand. These units were aimed at international students and marketed as investment opportunities pre-pandemic, but now most sit empty, bringing in no rent. While students are exempt from council tax when they vacate a room, the management company must pay.
Student housing and social distancing
The rising costs of empty units has led to fears that these PBSAs may end up being demolished, forcing their developers into administration.
With social distancing here to stay, the property sector has been compelled to relook student accommodation – which is essentially built around the idea of shared living spaces and optimising the use of small areas.
Can student accommodation be turned into social housing?
In the UK, PBSAs are classed differently from other types of accommodation when it comes to planning, and usually need to meet less stringent standards with things like space, for example. As a result, changing them into long-term residential accommodation could be a costly exercise for developers.
The Welsh government had started consultations on changing building regulations so that all new builds, including student homes, would have to be big enough to turn into social housing, but this has been delayed due to the pandemic.
Some developers are bulldozing ahead with repurposing plans that position their serviced apartment models to young professionals instead of students. The owners of the Zenith development, for example, have been granted temporary permission to let their 401 serviced apartments to non-students. Some of these units are going to house essential workers like nurses and doctors, so that they can socially distance from their own families and still be closer to hospitals and transport links.
The success of a mixed-use development with private residents and key workers could make way for a potential alternative for empty student housing.
Housing the homeless
Another option is to use the accommodation for the city’s homeless. Cardiff council have also applied to their own planning committee to change one student development into homeless accommodation for the next five years. The block is currently run by Pobl housing association and would be leased by the authority to provide rooms for 46 rough sleepers.
At the height of the pandemic, the council paid nearly £1 million for 130 rooms in two hotels, in order to keep the homeless safe and off the streets during the national lockdown. As the hospitality sector now starts to open, the council has had to find other ways to help the homeless. But, as many international students are opting to defer their place or partake in remote learning, this may provide the perfect opportunity.
Developers envision this repurposing being a short-term fix, and forecast a positive long-term outlook. But the British Property Federation (BPF) is wary, calling for changes to planning policy to allow student flats to be changed quickly to avoid financial difficulties should the long-term outlook of a bounce back not be as positive as anticipated.
If this pandemic has taught us anything, it is the need to remain fluid and flexible.