New development in student housing in Newcastle has been rising in recent years. It has been claimed one in every 15 homes in the city of Newcastle is a student property, one of the highest rates in England [Chronicle report 5 Sep 2018].
A few decades ago, unless you could get into the often spartan halls owned by universities, students often ended up in cheap but less than salubrious digs (rented rooms). It was temporary and part of the whole student experience.
Changed days. New privately-funded developments have joined what universities offer and universities have had to up their game. In the 21st century purpose-built student accommodation has gone upmarket and hotel-style facilities attract those students able to pay (or willing to incur the debt).
For example Vita Student Westgate pitches itself at an international student market (the website has a Chinese language button). Studio rooms start at £170 a week for a double bed, an en suite shower room, a 40″ SMART TV, a basic kitchenette and a desk to study at (more if you want to pay in installments). To be fair, the price does include utility bills, housekeeping, insurance and WiFi as well as free-to-use bikes. Not forgetting the weekday grab and go breakfast (muesli bar or bacon stotty I wonder?). For comparison, Northumbria University offers student accommodation starting from around £70 a week and Rightmove has a wide choice of one-bedroom flats available in Newcastle under £600 a month (£138 a week) [Northumbria accommodation 28 May 2018;Rightmove May 28 2018].
There are lots of examples of these private developments in Newcastle. A £60m scheme on land above St James’ Metro station between Strawberry Place and Gallowgate on an “underutilised public car park” is intended to create two apartment blocks capable of accommodating a total of 390 students according to planning consultants Lambert Smith Hampton (press release 2017). Albert Place, The Quayside, Barrack Road and Newgate Street are also the focus of new privately-funded developments.
Alongside these the universities have been building higher-grade accommodation too. For example Newcastle University has a £75 million development of 1,261 self-catered en-suite bedrooms from £134.33 a week at Park View village (Richardson Road). At Northumbria University newer rooms cost from £127.75 a week.
The student population in Newcastle more than doubled from 25,271 in 2001/02 to 42,565 students in 2014/15 according to Newcastle Council which approved these schemes [Chronicle news April 2017]. Some of the increase came from international students studying postgraduate one-year Master’s courses; the number of non-UK students studying in the UK in 2016-17 was 442,375 and 42% of students studying at postgraduate level in the UK are from outside the EU [UKCISA statistics 3 April 2018]. However, the number of international students choosing to study in the UK is stagnating, “the number of international students has barely changed since 2010–11”, and further growth seems unlikely [Eleanor Jubb,Universities UK 11 Jan 2018].
International students in the North East of England are estimated to generate £0.98 billion a year according to a prominent policy institute [HEPI 11 Jan 2018]. The HEPI analysis indicates that the contribution to the UK economy from the 2015-16 cohort of international students in the parliamentary constituency of Newcastle upon Tyne East stands at approximately £192m, which is equivalent to £2,010 per member of the resident population [HEPI report pdf p xi, table 20 on p43].
So, Newcastle’s student growth benefits the city and it can be argued the city needs safe, secure, attractive student accommodation to compete in the market. But, note that students do not pay council tax – the benefits for the council, are largely indirect. Also, student accommodation is exempt from business rates – unlike hotels. It is also often argued private purpose-built student accommodation releases dwellings used as houses in multiple occupation back into the property market, but this is unlikely if there are housing shortages and increased numbers of students [Chronicle news Jan 2017].
“Property reports suggest that the north-east has the lowest ratio of rooms to students in the current climate, meaning that a property is very likely to attract tenants once listed. … with the two Newcastle universities homing around 9,000 international students every year, the ongoing demand for upscale accommodation is also high. These types of student, particularly from Asia and North America, typically have higher budgets to spend.” Hopwood House 27 May 2018
There are risks for investors if the UK, and Newcastle in particular, fails to remain attractive to international students on one-year courses. Privately-funded purpose-built student accommodation is not instantly suitable to let to families; student developments are exempt from regulations on room space standards for residential property. If the supply of students dried up these rooms would have to compete in the open market (probably at much lower rents than now). A Guardian investigation claims some developers have been cashing in by using offshore companies and avoiding paying tax. It seems not all of the benefits are being realised.
“More than 20,000 students are paying for rooms owned by companies based in places such as Jersey, Guernsey, the British Virgin Islands and Luxembourg but that figure is likely to be an underestimate given the surge in building in university towns in recent years.” Guardian May 27 2018 One example featured is the Vita development in the Westgate.
There are concerns about Purpose-Built Student Accommodation (PBSA) blocks destabilising communities by introducing too many students into the social mix in some areas of the city and Newcastle City Council has taken steps to address this. There is also a risk oversupply might result in empty rooms if international students go elsewhere.
‘In January last year, the council approved a tougher new policy designed to put new PBSA under greater scrutiny, forcing developers to prove that they won’t lead to an over-concentration of such blocks “that would be harmful to that area’s vibrancy, environmental quality and residential amenity”. … The policy made it a requirement for developers to make properties easy to transform into homes for non-students, but in the meantime Newcastle continues to reap the economic rewards of having two attractive and growing universities.’ [Chronicle 1st July 2018]
The ‘tougher policy’ is the revised Supplementary Planning Document (SPD) on Maintaining Sustainable Communities which sets out criteria against which planning applications for HMOs and other forms of shared housing are to be assessed (adopted by Newcastle City Council on 16 January 2017).
“Policy SC2 covers all new build and conversions for all forms of residential use within the urban core of the city. The twelve listed criteria include the need for future housing development to maintain the areas vibrancy by preventing an over-concentration of shared accommodation, is designed to be adaptable in its design to allow properties to be easily converted to other uses and provides for a high quality design with good standards of amenity for existing and future residents.” Newcastle City Council SPD Adoption statement Jan 2017
- Newcastle University facts and figures: https://www.ncl.ac.uk/sage/about/factsandfigures/
- HESA – university statistics official agency: https://www.hesa.ac.uk/
- What Uni commercial search comparison site https://www.whatuni.com/
Update June 25th 2018: The empty Technopole office block at the city’s Kings Manor Business Park is to be demolished and two tower blocks built in a £40m project for student housing (plans approved Friday 22nd June). These will house 535 students in 162 apartments. The plans include a gym, games room and cinema room and were approved without debate [Chronicle 25 June 2018].