Unipol Student Homes Nottingham Owners' Briefing
The text below summarises the main points of the Owners' Briefing given by Martin Blakey, Chief Executive of Unipol Student Homes, in Nottingham on 15th December 2012.
Introduction
This briefing is designed to inform owners about trends and developments in student housing including; the national picture of supply and demand, estimated student numbers in Nottingham, information about Unipol's operations in Nottingham, developments in accreditation and the Unipol DASH Code and observations on the Nottingham student housing market.
The National Picture of Supply and Demand
Demand
UCAS, the central universities admissions body, at the time of the briefing, has not released the full breakdown on information on intake for the current 2012-2013 year. However since then, final intake figures for the 2012 - 2013 cycle have been released.
These final figures from UCAS show that overall applications for the current academic year fell by 46,524 (6.6%) and acceptances were down 27,120 (5.5%). Within the acceptances, EU acceptances were down 12.9% and Non-EU acceptances were down 5.4%.
However, the actual number of undergraduates starting a course in September 2012 was in fact much lower, because deferral patterns have been disrupted by the introduction of high cost fees, meaning fewer students who secured a place in 2011, decided to defer their entry until 2012. When this reduction in deferrals is taken into account, 53,900 fewer students started an undergraduate course in the UK in 2012, a fall of 9.3% on 2011.
Whilst the introduction of higher cost fees has been the main factor influencing the fall in demand, a few other factors have also impacted on lower undergraduates numbers.
Acceptances from students from EU countries fell by 12.9%. This can be attributed to the economic downturn taking place in most EU countries, with acceptances from Greece and Ireland in particular having fallen.
The government allow universities to compete for the very best students - those students achieving AAB in their A’levels. Universities are allowed to recruit as many of these students as they are able, with no cap on numbers. In 2012, however, there was a smaller available pool of these students to recruit. As a result of exam boards taking action to combat perceived ‘grade inflation’, 14,100 fewer students (14 per cent) achieved the top AAB grades, and these students were simply not there to recruit.
Other factors were also significant. There have been reports that several Russell Group (of which the University of Nottingham is a member) universities under-recruited this year. It is difficult to know the full extent of this at this stage as students numbers are released by the Higher Education Statistics Agency 12 months after the year in questions. With the supply of AAB students declining this year, it appears that some institutions have decided that they simply would not accept students with lower grades, due to fears about dumbing down. However this has resulted in a situation for many institutions where poor recruitment will result in a significant income fall, and it remains to be seen whether these institutions will continue with this strategy next year.
The drop in undergraduate numbers resultedin a fall in demand for purpose built or institutionally provided accommodation around the UK in September 2012.
There are 450,000 purpose built bed spaces in the UK[1]. We know that around 80% of students require accommodation, so this equates to a fall in demand of 43,200 across the UK. Most of this 9.5% fall will be felt in purpose built accommodation during the current academic year, but that will then feed into the off-street market in the 2013-14 letting cycle.
This has resulted in some universities not renewing nominations agreements or failing to ‘buy-in’ extra bedspaces from private providers in the summer of 2012 as they had in 2011. This has meant that much of the shortfall has been born by private sector purpose built accommodation. There is evidence of significant voids in this sector currently, and some providers offered serious discounts on rent to sweep up the few students in the system in late September, with Opal offering en-suite, all-inclusive rooms for £50 or £60 per week.
International Student Numbers
There has been a fall in the number of international undergraduate students recruited into UK institutions this year. This is against a global increase of international student study of 8% a year.
Country20112012% change
China7,5687,273-3.9
India1,6011,447-9.6
Nigeria1,4731,273 -13.6
USA1,4601,419-2.8
Malaysia2,6012,556-1.7
Hong Kong3,2413,916 +20.8
Singapore1,5881,769 +11.4
Canada1,0571,076+1.8
All overseas60,759 57,519-5.4
Up until 2012, year on year, the UK has increased its recruitment of international students. However numbers fell in 2012-13, as increasing visa restrictions and anti-immigration rhetoric from the UK government has meant that students have gone elsewhere to study.
Student Numbers in Nottingham
The impact of the national and international picture has been felt in the Nottingham market, in combination with a number of local factors:
- Growing supply of purpose built accommodation with static or falling demand from students
- Increasing competition for the available students
- Lower priced purpose built developments
- Institutional competition with the off-street and purpose built market for returning students
University of Nottingham
The University of Nottingham had a small decrease in students accepted through UCAS (mainly undergraduate courses) of 27 students. The University did not provide any details on intake of postgraduate students so it is not known whether there has been a fall in numbers overall this year.
In terms of supply of accommodation, the University still houses the majority of its first year students in its own accommodation and Unipol is not aware that there have been any changes to provision this year.
Nottingham Trent University
Nottingham Trent University had a fall in intake of 1,023 students this academic year (10%).
In terms of supply of accommodation,Nottingham TrentUniversity still houses the majority of its first year students in its own or nominated accommodation and Unipol is not aware that there have been any changes to provision this year.
Overall in the city of Nottingham there has been a fall of at least 1,050 students this year. This is a fall of 7% on the previous years intake. This directly affected demand for purpose built accommodation in September 2012.
The full effect of this downturn will have been felt by the purpose built market in 2012-2013, with this passing on to the off-street market in 2013-14. This will be compounded in the 2014-15 letting year, when the bulge in intake experienced in 2011-12 will work its way out of the market.
Future Supply and Demand from the Institutions
It is not known if the University of Nottingham are planning any change in their residential offer in the future. However there is some evidence of increased marketing to returning students to encourage them to remain or move back into halls.
NottinghamTrent Universitywill be opening Byron House in September 2013, with an additional 900 bed spaces being added to the market. Nottingham Trent are also undertaking marketing to current residents with the intention of attracting more returning students.
Future Demand for Higher Education
Following the introduction of higher fees and the fall in student numbers in 2012-13, it is widely anticipated that there will be no growth in student numbers in 2013-14.
For medically based courses such as medicine and dentistry, applicants must have applied by 15th October 2012, and for these courses applications are slightly up on the previous year:
200950,670
201055,450
201156,082
201255,618
201356,753 + 2%
Applications for other courses with a January application deadline are down on the previous year:
UCAS application figures for 2013(as of 19th November 2012)
A note about end of November figures
In the 2012 application cycle around 30 per cent of the applicants recorded at the 15 January 2012 deadline had applied by November 2011. The proportion who have applied by November varies from cycle to cycle. Percentage cycle to cycle changes in November each year have historically been a poor guide to percentage changes in applicants at the 15 January deadline.
Supply of Accommodation in Nottingham
The supply of new student accommodation in Nottingham is steadily increasing, with more in the pipeline.
2012 / CRM Russell View / 210CRM Talbot Studios / 98
Mansion Studios / 80
Study Inn / 200
BSP, Equitable House / 52
640
2013 / NTU Byron House / 900
Odeon, Angel Row / 449
Salisbury Street / 76
Experian building on Talbot Street / 389
Catherine House, Woolpack Lane / 47
1861
By September 2013 there will be an additional 2,501 bed spaces in the Nottingham market. The growth in supply in 2012 coincided with a fall in student numbers. For 2013, the additional 1,861 bed spaces will likely coincide with at best static demand, but possibly lower student numbers.
In addition to this there are other developments that Unipol is aware of that may or may not progress to construction:
BSP Holdings, Browne Jacobson offices, Castlegate (120 beds)
DMC Estates. Former Adult Education Offices, Shakespeare Street (52 beds)
EAD, Flats in Sneinton (100 beds)
Muchof the proposed new development in Nottingham is being undertaken by smaller operators or investors who are new to the market. The established larger providers (Unite, Opal, Liberty etc) are developing less at the moment and there is evidence of the rationalisation of some portfolios for the more established developers.
NottinghamHouse Hunting Pattern 2012-13
The house hunting season started on 23rd January 2012. Web search activity was higher in January, February and March than in the previous two years. In the first four weeks of house hunting 2012 there were 77,928 searches (+29%) on the Unipol website compared to 55,394 in the previous year.
Search levels weresteady throughout the summer, with fewer peaks or troughs in activity. There was less searching activity on the website over the summer, reflecting lower demand from students in a surplus market.
Bed Lets on the Unipol website 2010 - 2012
House hunting got off to a good start with similar levels of activity to 2010. Lettings were strong in March, April and May but over the summer lettings were quieter. There was a small upsurge in activity in September, with some off-street landlords reducing rents to attract the few remaining students in the system. Lower levels of activity in September and October reflect the fall in new student intake as any new students were snapped up by the institutions.
Where these empty properties are is of interest:
Empty Properties / Total BedspacesLenton / 67 (23%) / 334 (21%)
Arboretum / 14 (4%) / 116 (7%)
Clifton / 18 (6%) / 39 (2%)
Dunkirk / 15 (4%) / 44 (2%)
Interestingly there are more empty properties in Lenton than any other area, with 21% of bed spaces in this area failing to let.
The increase in supply in the purpose built sector has resulted in significant surplus in this type of accommodation. On 1st October 2011 there were only 54 rooms of this kind available on the Unipol website, with 640 available on the same date in 2012.
During 2012, Unipol displayed 12,592 bed spaces (5,989 in off-street properties) on the website. 5,564 of the off-street property bedspaces (93%) were let in 2012, demonstrating that the Unipol website has proved highly effective in helping landlords let properties in a more challenging year.
The speed at which good quality properties let will be of interest to landlords and it can be seen in the table below that properties with 3 or more stars let significantly quicker than non-code or no-star properties.
A 5 star property took just 47 days to let on average, whilst an unaccredited property took on average 138 days, demonstrating the effectiveness of accreditation in highlighting good quality properties to potential tenants.
Properties / Beds / Av.Rent / Days to LetNon Code / 304 / 1,170 / £68.49 / 138
Code / Properties / Beds / Av.Rent / Days to Let
No stars / 90 / 340 / £68.75 / 165
1 star / 583 / 2,283 / £68.18 / 109
3 star / 446 / 1,853 / £70.37 / 82
5 star / 34 / 146 / £76.90 / 47
Website Statistics -
The Unipol Nottinghamwebsite continues to be well used.The number of hits for 2012 is 13,660,433.
Total Property Searches in Nottingham
- 2010:289,808
- 2011:271,810
- 2012:266,966
Total Unique Visitors (monthly average) in Nottingham
- 2010: 6,286
- 2011: 6,727
- 2012: 7,165
The number of searches on the website fell by 2% on the previous year, however there was a much faster start to the house hunting year with searches up 29% in the first 4 weeks. The number of people visiting the site each month on average increased by 6%. The website continues to be well used by an increasing number of students.
Unipol has plans to totally redevelop the website, and the new site is due to be launched in summer 2013. Landlords will be given further details of this in spring 2013.
Market Surplus
At each briefing Unipol makes an estimate of the number of surplus bed spaces in the Nottingham student accommodation market based on student intake numbers and supply in the market.
Academic year / Estimated Surplus in market2008 – 2009 / 4,500 (original estimate)
2009 – 2010 / 2,000 (rapid growth in student numbers)
2010 – 2011 / 2,600 (reduced intake and Opal)
2011 – 2012 / 3,586 (increased intake, Clifton Campus)
2012 – 2013 / 4,154 (CRM, Mansion, Study Inn)
2013 – 2014 / 6,015 (Byron House, Odeon, Experian building)
It is anticipated that the surplus will grow to 6,105 bed spaces in the 2013-14 academic year, with rapid expansion of the purpose built market against static demand from students.
Rents in the Nottingham Student Market
Each year Unipol collects information on rents in purpose built and off street properties.
Purpose Built Rents
The graph below shows rents in the purpose built sector. To aid comparison, all contracts are averaged to 44 weeks and allowance is made for inclusive utilities and services. The average rent for a room in a shared house is inserted for comparison purposes - this is the black bar two from the left hand axis.
In Nottingham, off street housing is still one of the most affordable accommodation types in the city. However when comparing off-street rents with rents in the purpose built sector, there is evidence that the gap between off-street rents and purpose built rents is narrowing. There is an increasing supply of purpose built accommodation in Nottingham, and evidence from other cities that as competition increases in the purpose built sector, rents fall.
A larger version of this graph is available to download from the Unipol website:
Average Rent Levels
The average rent in 2012 was £70.46 compared with last year’s average rent of £66.38 (+6%). Other changes include; 29% of bed spaces can be let individually, 56% of properties offer a summer rent concession, and 59% want a rent guarantor (down from 60% in 2011).
Average Rent Levels by Type of Accommodation
Type 11-12 12-13 % Change
Bedsit£n/a£86.00n/a
Small house£64.82£68.86+6.2%
Self-contained flat£76.96£75.26-2.2%
Shared flat£71.49£73.78+3.2%
Shared House£67.30£69.28+2.0%
Studio flat£119.00£142.00+19.3%
Large developments£106.98£118.14+10%
What Will Happen Next to Student Accommodation? The National Picture
In summer 2012, in partnership with the National Union of Students, Unipol undertook the Accommodation Costs Survey. The survey charts the development of the purpose built accommodation market, and this time it covered over 360,000 bedspaces, estimated at 81% of the national market.
The survey revealed the growth of the private sector as a provider of student accommodation:
2003 - 4%
2006 - 19%
2009 - 22%
2012 - 39%
2013 - 42% (predicted)
Whereas in 2003, the majority of purpose built accommodation was provided by universities, the private sector now accounted for 39%, and this is set to grow to 42% in 2013 with a further 15,595 bedspaces set to open in September 2013.
The Full report can be downloaded here:
The Unipol DASH Code
As of December 2012 the Unipol DASH Code covers 2,132 properties and 9,789 bed spaces in Nottingham, owned or managed by 396 landlords or agents. In addition to this there are in excess of 15,000 bed spaces in the ANUK/Unipol National Code for Large Developments.
79% of properties advertised on the Unipol system are from accredited landlords. Both Universities in Nottingham, and Unipol itself, recommend to students that they rent from an accredited landlord.
There are 9 managing agents who are full members of the Unipol DASH Code and 10 agents who are working towards full membership and are currently Supporters of the Code.
Full Code
Broadgate Property Management
Comfort Letting Agents
Cunningham Lettings
GO Property Services
Grant Property
Megaclose
PAD Student Lettings
Shields Student Homes
Tomlinson Estate Management
Supporters of the Code
CP Walker
Elite Lets
Hutchins & Butlin
Lets2Let
Martin & Co
Purple Frog
Rent in Notts
Student Cribs
Student Living
Tetris UK Sales & Lettings Ltd
There is no reason why a good landlord would not join the Code;
- its profile is high and the Code has the respect of many students and parents
- Code landlords receive the endorsement of all the institutions in Nottingham
- the inspections are helpful and transparent
- for agents it provides an opportunity to look at the best in their portfolio
- it has reduced bureaucracy with three year membership
Unipol now writes to all Code properties twice a year reminding students that they are protected in a Code house and highlighting the benefits of living in a Code property.
Other initiatives include:
- More merchandising
- Three tabloids a year, only open to Code owners
- Specialist briefings (on market conditions and legislation)
- Access to the Tenancy Deposit Scheme being run by Unipol
Local Authority Initiatives
Additional Licensing
Nottingham City Council took a decision at the Executive Board on 18 December 2012 to proceed with the implementation of Additional Licensing in most of the areas where there is a high concentration of student HMOs. All HMOs in the affected areas would be required to have a license. Before Additional Licensing can be implemented, a full consultation must take place. The consultation closes on 20 May 2013 and full details can be found here:
Research on Student Accommodation Market in Nottingham
Unipol has commissioned the regeneration consultancy re’new to undertake some research on the shape and size of the Nottingham student accommodation market. Historically there has been an information deficit on the tenure and occupancy of properties in areas popular with students, and this research will provide information on trends in student occupation of off-street and purpose built properties. This research has the support of the University of Nottingham, Nottingham Trent University and Nottingham City Council.