New Student Cities Take Money From Local Economies

In the news today I saw an article written for (or possibly by) a property news web site.The article was about how students can be an ‘untapped source’ for investment opportunity.

I found myself quite irritated by the article which stated inaccurate facts and was based purely around one set of figures from a single study of a very minimal amount of target research. That is very lazy article writing.

Some Quotes

Quote 1:

According to recently released statistics, 88% of Britain’s 1.2 million undergraduate university students live in flats and houses rented from private sector landlords.

There are in fact over 1.9 million UNI students. Out of 1.9 million students only 1,100 were surveyed and this is supposed to be a balanced snapshot?

Quote 2:

A survey conducted by AccommodationforStudents.com, with the participation of 1,100 university students, shows that most undergraduates prefer flats or homes with two bedrooms and with a relatively spacious, eat-in kitchen.

Well! blow me down with a feather, people prefer living in spacious accommodation. What a finding. (Wonder who paid for this report??)

Governments Step In (again)

Over the last couple of years there has been a rash of new student ‘cities’ being built by local councils.In my view this has had the effect of deadening the local economy in those areas. Students bring money into an area. They shop locally, use buses/ trains, need accommodation and entertainment. In short they spend money.

To me it s no surprise that local councils have looked at this untapped source of revenue and decided they want a piece of it. Effectively, by building huge tower blocks for students to live in, and providing on site shops, wi-fi and entertainment, they have removed a huge chunk of revenue from the local econonomy and into their own coffers.

Sheffield

A friend of mine in Sheffield (a huge university town) says many landlords are having to sell up because they now can’t rent their properties. These properties are very large old Victorian villa style-not easy to sell in any market. Usually they are 6 bedrooms or more, like the one pictured at the top of this post.

The demand for this type of house is limited. Many are landlords are going bankrupt. It has also put people out of work as landlords employed cleaners, gardeners, builders and removal firms. Lots of them are really noticing the lack of work in an already depressed area. The council also made the new student blocks cheaper than local rentals-effectively forcing out local landlords.

Packing them into expensive halls of residence neither gives them the experience of independent living, nor integration with thriving communities. It will create student ghettos. Lets be clear here, once again this is about councils lining their own pockets. It’s not about helping the wider community at all by ‘removing student ghettos from the streets.’ as was quoted by a prominent MP recently. This is NIMBY in action. (Not in my back yard.)

New Legislation Overturned

There are over 100,000 properties in the UK’s professional private rented sector. After 6 April 2010 the government set in motion that planning permission would be needed if a landlord wants to rent what has been a family house or flat to three or more unrelated people such as nurses, students, young professionals, immigrant workers, a family with a lodger and even the elderly. This would have been the final nail in the coffin for student landlords in the private rented sector. The new coalition govt says it will not happen. Thank god for some sense at least.

**UPDATE**Since this post was written, the local council in Sheffield is forcing the removal of students out of their previous areas by not allowing planning permission  or conversion to any form of multiple housing or flats. They are attempting to get those huge houses back as single dwellings. Our question is this: Where is the market for that style of property now, who will buy them?

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