Commercial Insights - Student Housing: Proven Resilience.
Matthew Bowen discusses Government measures to support students, admissions, and university finances, and reflects on the potential for rising demand from UK-based students.
3 minutes to read
What we know
Government has moved to stabilise university admissions. The government announced a package of measures to boost support for students, stabilise the admissions system and ease pressures on universities’ finances early in May. More than £100 million of existing research funding for providers in England is being brought forward into this current academic year as is tuition fee payments of students in the 2020/21 academic year, expected to be worth £2.6 billion. Both measures will support cash flow for universities. Controls on student recruitment are also proposed as a temporary measure and will mean providers only being able to recruit full-time, domestic and EU students up to 5% above their forecasts in the next academic year. This is designed to reduce volatility and ensure fair and orderly admissions. The government will also have the discretion to allocate an additional 10,000 places, with 5,000 ringfenced for nursing, midwifery or allied health courses to support the country’s vital public services.
PBSA bookings for the coming cycle are on track. The current evidence of bookings from operators in May is broadly in-line with performance at the same time last year. Operators have targeted UK-domiciled students in greater numbers this year with an expectation that there may be lower international student enrolments. As more universities provide clarity on how they will operate in the forthcoming academic year, both international and UK students will firm up their decisions on where to study.
What we expect
Universities will take a ‘blended learning’ approach to teaching. UK universities are planning to deliver ‘blended teaching’ from the beginning of the next academic cycle as a way of maintaining the ‘student experience’ and in a bid to prevent students from deferring a year. Most institutions are hoping to offer a mix of both face-to-face and online teaching and will implement social distancing measures across campus and in student accommodation. The universities of Manchester, Bolton and Edinburgh and Nottingham Trent have already announced that they intend to deliver a hybrid approach from September.
Demand from UK-domiciled students to increase. Applications data from UCAS for new students showed that a total of 568,330 applicants (as of the 15 January deadline) applied to UK universities this year, up 1.2% on 2019. Overall, a record 39.5% of all UK 18-year olds applied to university, with more than 50% of 18-year olds from London applying. The number of 18-year olds in the UK is projected to increase from 2021 onwards, following years of declines, and this is expected to drive a growth in student numbers. Knight Frank analysis of ONS population projections, along with entry rates from UCAS, points to a 15% increase in full-time undergraduate numbers between now and 2030. This would represent an additional 220,000 domestic students.
What we question
Whether student accommodation preferences will be changed. We have seen a trend over the last few years of greater levels of satisfaction with PBSA against mainstream rented accommodation. This has led to higher levels of retention, within PBSA, of students moving between years. In our 2020 Student Accommodation Survey, undertaken with partners UCAS, a quarter of first-year students who were living in private PBSA said that they planned to stay in the same accommodation the following year, rising to 40% among second years. It is likely that the impacts of COVID-19 will see this trend accelerate with further interest by students of all domiciles in PBSA.
The long-term status of UK higher education will be damaged. In its recently announced package of measures the UK government reiterated its commitment to increasing international student numbers. The International Education Strategy, released by the government in 2019, aims to increase international student numbers in the UK by more than 30% to 600,000 by 2030. The government is considering how the International Education Strategy can be updated to respond to the impact of the coronavirus outbreak and will also be launching the new graduate visa route by summer 2021. A stronger offer is likely to boost the UK’s appeal and support institutions to attract overseas students. The UK boasts 11 of the world’s top 100 universities, and these will continue to act as a draw.