What is the next iteration of PBSA?
The residential real estate sector is vast, encompassing a variety of sub-sectors that respond to different demographics, investment strategies, geographical nuances, affordability, and lifestyle preferences. Over time, industry professionals have developed specific terminology to distinguish these sub-sectors, with acronyms such as BtR (Build to Rent), SFH (Single Family Housing), and PBSA (Purpose-Built Student Accommodation) becoming commonplace. But as our society and housing needs evolve, are these names helpful or necessary? Do they provide clarity or constraints?
Residential Sub-Sectors at a glance
Some of the most widely used terms in residential development include.
- Purpose Built Student Accommodation (PBSA) – private/institutionally owned and managed student living, generally with amenity facilities.
- Co-Living – a blend of PBSA and Built to Rent, providing a lifestyle choice with compact apartments and community led amenities with flexible rental options. These are institutionally owned and managed and is a contemporary alternative to PRS shared housing.
- Build to Rent – Institutionally owned and managed rental apartments – also called ‘Multifamily’ in America.
- Single Family Housing – Suburban institutionally owned and managed rental homes. This is challenging the traditional house-builders ‘For Sale’ models.
- Private Rented Sector (privately owned and rented urban or suburban homes)
- Senior or Later Living or Retirement Living – There are many forms of typologies and services for older people which range from community and lifestyle focussed rental to serving the care needs for dependants.
Why Do These Distinctions Matter?
Understanding the various residential sub-sectors helps investors, developers, and policymakers make informed decisions. Each typology has unique market dynamics, risk profiles, and resident expectations. As the housing landscape evolves, clear and consistent terminology can support more effective decision making, improve investment strategies, and ultimately ensure housing solutions that genuinely meet the needs of diverse communities.
Whether you’re an investor exploring new opportunities or simply interested in how housing trends are shifting, recognising these sub-sectors is key to understanding the modern residential market.
Whilst these references appear to matter from a Real Estate investment, Policy and Planning perspective, from a resident’s point of view the picture is less clear. Terms like BtR or PBSA are rarely understood outside industry circles. In the UK, where home ownership remains deeply rooted, rental models are not widely understood, even as preferences shift towards more flexible, community focussed living options.
How could things evolve?
In reality, many of these typologies are beginning to overlap. For BtR for instance now attracts students, professionals, families and retirees.
In response to this terms such as ‘Flex-Living’ and ‘Blended Living’ are emerging. These seem to challenge the notion that people of certain demographics all need to live together and embrace intergenerational, multi need communities built around adaptability and inclusion.
The other important point of distinction here is that residents could change their home preferences within a rental community/neighbourhood they feel part of in a long-term context.
A strong example of this is Birchgrove and Hybr’s 2024 intergenerational living scheme in North London which sees Retirement Homes and Student Living side-by-side.
Research also supports this model; A 2019 UCL study found that increased social contact improves well-being and reduces dementia risk in the elderly. Intergenerational Living boosts older people’s sense of purpose and life expectancy. Conversely younger people also benefit, gaining empathy, wisdom, tolerance, and understanding by connecting with older generations, fostering stronger relationships and mutual growth. Based on this, could more dynamic housing models positively impact some of our bigger society and welfare challenges?
Flexible Housing for Evolving Lives
Could housing evolve with its residents? This concept involves a dynamic development arrangement that adapts to an its residents evolving needs over time. Initially, a student might occupy a bedroom or apartment designed for their specific requirements and budget. As their lifestyle changes, they could transition into a next stage Co-living offer, then progress to a larger shared apartment. They could then transition into a family-oriented home and, later, to a residence more suited to the needs of older adults—offering flexible space options.
How would this model manifest within a building, or arrangement of buildings? Does everyone have a separate entrance? Are the homes stacked vertically or horizontally across the building? Importantly, how would this model work from an investment perspective? Could it be a more effective and optimised investment model?
What’s Next?
As housing needs continue to evolve, it may be time to reassess how we define and distinguish residential sectors. The tension between what residents really want and need, and how that’s labelled and marketed, vs what works from an investment and policy perspective will ultimately determine how ambitious and creative we can be. Personally, I feel societal needs are continually evolving and maybe we need to break some of the silo’s which have been formed to test the provision of resilient and responsive homes for all.
I think the notion of UK PBSA being a defined and distinct typology, as it has been for the last twenty-five years in the UK, could and should be challenged if the sector is to continue to evolve and ensure long-term sustainability.
Nick Riley is Managing Executive Director at Whittam Cox Architects, who are corporate supporters of LD Events. Hear more from Nick on 13th May at the Student Housing 2025 Conference in London. To book tickets please visit www.studenthousingevent.com
Ahead of the 18th Annual London & South East Resi Conference in March, we sat down with Katy Warrick, Head of London Residential Research at Savills, who has spoken at this conference for more than a decade. As a foremost expert in the London Resi Market, we asked Katy for her thoughts:
Q: What are the current challenges and opportunities in the London and SE residential market?
A: The London residential market faces significant challenges, particularly in terms of housing delivery. The delivery of private and affordable housing has been falling, with the number of new homes starting construction down by about 60%. Planning permissions are also falling by a similar amount, and while applications have started to tick up slightly, the overall pipeline is significantly lower than needed. Currently, nearly 36,000 homes are being built each year, but the Government’s Standard Method for calculating housing need suggests that 88,000 homes are needed each year in London. This massive gap highlights the desperate need for more housing.
Developers are facing several challenges in the market. The cost of debt is a major issue, affecting both development finance and purchasers, who may be financially constrained due to higher debt costs. Planning uncertainties and the time required for planning approvals are also significant hurdles. Build costs have risen significantly over the past couple of years, impacting the viability of schemes. This affects London more significantly than other regions, because flats are more expensive to build than houses, with high-rise being the most expensive. 95% of homes built in London are flats, compared to just 5% in the Midlands and North of England. Additionally, some contractors have gone bust, causing delays and increased costs for developers who need to replace them. Supply chain disruptions and new regulations around fire safety and building safety are further complicating the situation.
Despite these challenges, there are opportunities in the market. Interest rates are coming down, which could boost demand and improve development finances. The industry needs to come together to find solutions to the various challenges it faces. Collaboration and innovation partnerships are crucial to navigating these issues and ensuring the successful delivery of housing projects.
Q: How has the industry responded to the new Government and how can they incentivise development?
A: The industry has responded positively to higher housing targets and the introduction of the grey belt concept, which is particularly interesting for London. However, the challenges remain significant, with schemes often not viable in their current form. More money pledged for planning departments and for training planners is a positive step. The industry is also looking for assistance for first-time buyers, as the upcoming increase in stamp duty is not helpful.
Q: Where do innovation partnerships and JVs now fit in?
A: Innovation partnerships and joint ventures (JVs) are more crucial than ever. We are seeing a significant increase in partnerships, even among traditional developers who previously operated independently. These partnerships help share risks and bring together different skills, money, and land to get things done. Examples include the MADE Partnership between Homes England, Barratt, and Lloyd’s, and the new homes accelerator task force driven by MHCLG both targeting to unlock large scale sites. These initiatives are positive steps towards addressing the delivery issues in the market.
Q: What is the role of rental living in an evolved residential development market?
A: Build-to-rent (BTR) is an established tenure and an important part of any large scheme in London. Offering more choices and developing the sector in a well-managed way is crucial. However, BTR faces the same challenges as other developments and as a result we’ve seen limited forward funding deals done in the past year. But investor appetite remains strong, evidenced by investment into operational assets and we expect forward funding activity to grow as interest rates fall further.
Beyond BTR, we are also seeing continued growth of the co-living sector in London, with almost 6,000 homes operational and a further 15,000 in the pipeline. It offers a more flexible and community focused product that compliments existing rental options, increasing housing choice and importantly adding another route to deliver new homes.
Q: What can we expect from the conference this year?
A: The conference will feature policymakers on various panels, providing insights on how they plan to solve London’s problems. Lisa Fairmaner from the GLA, who oversees the New London plan, will be a key speaker. It will be interesting to hear her updates.
As always, the conference will also offer great networking opportunities for attendees and provide opportunity to find JV partners and connect with funders and developers willing to take an imaginative, collaborative approach to solving the housing challenges in London.
To hear more from Katy, as well as leading developers, local authorities, the Government’s Chief Planner, and Homes England, along with leading sector advisors, sign up to London Resi 2025, which takes place on 4th March. To learn more please visit www.londonresidevelopment.com
Ahead of the Affordable Housing Conference in March, we sat down with Helen Collins, who has expertly chaired the event annually since 2019, and returns to the chair for a 7th time on 5th March this year.
Helen is a Principal of Avison Young, heading up the Affordable Housing team and the Birmingham Office.
How have we seen delivery and investment models for affordable housing evolve over the last decade?
Well, let’s go back a bit further. We can break delivery down into three chunk. Until the late 1970s, local authorities led delivery of affordable homes – social rent – funded through government grant. In the late 1980s, legislation changed, allowing housing associations to take on private finance to reduce the level of grant needed per new home. This change saw housing associations lead delivery for the last 30 years. However, with c.£120bn debt on the HA sector balance sheet and cost pressures from stock investment and safety needs on legacy stock, capacity for development is muted. We are now at a cross roads – for-profit registered providers came onto the scene 6/7 years ago bringing fresh capital into the affordable housing market. We need more For Profits to come in and operate at scale. We need Housing Associations to continue to develop – they have decades of expertise and some are looking to ‘go again’ setting up partnerships and their own FPRP vehicles. Local authority estate regeneration and housing supply is important and we need to find ways to unlock this. To get anywhere near 1.5m homes we need a mixed economy, with local authorities, housing associations, for-profit providers, Combined Authorities, developers and investors all playing vital roles.
Why is there so much interest from funds and investors in affordable housing?
Strong demand fundamentals combined with stable and predictable rental streams, plus the obvious societal benefits of providing affordable homes, and sector regulation make the sector an attractive investment option. There is room for value add funds during the development phase, and once built and let the stable long term income profile makes it an attractive investment for pension and insurance Core / long income funds looking for alternatives to gilts. Although the returns are not high, they are generally steady and safe over the long term. Local government pension schemes, UK DB/DC and insurance and overseas funds are all needed to support an increase in supply.
What is the attraction of setting up a for-profit registered provider?
Having an FPRP is a legal requirement of owning regulated social housing. More importantly having an FPRP vehicle and directly owning and operating stock opens up the widest range of routes to market to build portfolios at scale for operating efficiency: direct land acquisition and development, buying completed homes in bulk from developers converting market sale homes to affordable with grant; partnering with Housing Associations to acquire existing stock / development pipeline. Many of the more established funds have multiple FPRP entities to hold different types of stock, and attract different pools of capital – such as shared ownership or rented products. This allows them to manage their investments more effectively.
How are sector partnerships contributing to the delivery of much-needed housing?
Partnerships have always been crucial to delivery. Public-private partnerships have been instrumental in regenerating estates and areas. Local Authority/HA/developer partnership models are well established. For-profit providers are now partnering with volume house builders and housing associations to buy up stock at scale. We’re also seeing new strategic partnerships, such as the joint venture between Legal & General and the Greater Manchester Combined Authority to build 1,000 homes. Looking ahead we see significant potential for regionally based partnerships linked to the devolution agenda and mayoral targets for housing supply. Transport and infrastructure partnerships for housing supply also offer significant future potential.
How can we achieve the government’s target of 1.5 million homes in the next five years, and what is the role of affordable housing?
It’s a tough target, but setting high goals is essential – as is maintaining a high degree of energy and ambition backed up by action. Changes in planning policies, such as the presumption in favour of development and harmonising need calculations, will help. It’s important to not disrupt what currently works well – relationships between Homes England, Local Authorities and Combined Authorities need to effective. Affordable housing can play a massive part in new supply – a strong grant settlement is crucial – as is flexibility to combine gap funding in high cost/low value areas. Housing associations and for-profit providers must see a stable rental income to take on more debt and raise funds.
What can we expect from the conference this year?
The conference has an incredible line up and will offer deep insight into the FPRP / affordable market in context of the wider living sector: government thinking and future opportunities for supply ; market and policy updates and I’m particularly looking forward to the fireside chat with experienced professionals who have decades of experience in the affordable housing landscape.
To hear more from Helen, and the conference panel of market leaders, please join us for the 19th Annual Affordable Housing Conference in London on 5th March. To learn more about the conference and to book your tickets please visit www.affordablehousingevent.com
Ahead of the Care and Retirement Living Conference this month we caught up with property expert and long-time friend of LD Events, Anthony Oldfield. Anthony gave his thoughts on where the markets at and where it’s going at this interesting time….
Q: What is happening in the current Retirement Living property market?
A: We’ve seen quite an uptick in the number of new schemes being delivered as the market has recovered from the 2022 mini-budget, which had significantly curtailed development and investment. There was a real pause, but since then, things have recovered well. A lot more units are being delivered, which is great. However, the Mayhew review, a significant government report from last year, recommended an annual delivery of 50,000 new units to meet housing demand. Currently, we’re only delivering 10,000 per annum, falling well short of that target. This means the demand-supply imbalance is going to be further exacerbated due to population growth and change. The market is heavily development-led, focusing on new opportunities, sites, and units being delivered. There is a strong planning pipeline, and the new government has emphasised house building as a key pillar of their agenda. While there is quite a bit of activity on the development side, more is needed to meet the targets.
Q: What are the investors doing? Are we seeing interest from new investors?
A: There is real interest from new investors, and we are working with them regularly. They understand the demographic story and recognise the sector’s strong ESG credentials. Retirement living is considered the most untapped of the living sectors, which include student housing, build-to-rent, and retirement living. Investors have seen the growth and success of student housing, BTR and single-family housing from a rental perspective. There is a general consensus that retirement living has significant latent potential and is poised to be the next market to take off. Many investors are aware of this potential, but often lack opportunities to invest. We are working to unlock and find these opportunities.
Q: What is the likely impact of the new government on the sector?
A: The new government will definitely impact the sector. There is a lot of legislation that was in progress under the previous government. With the election called earlier than anticipated, it remains to be seen how much of this legislation the new government will pick up and take through the legislative process. For instance, the Freehold and Leasehold Reform Act 2024, which came through on the last day of Parliament, is considered very important for the sector. It defines event fees in legislation for the first time, which is significant for the sector. However, it did not include a cap on ground rents, and the sale of leasehold houses has been banned with an exemption for retirement housing. There is still further work needed, and secondary legislation will be required to implement these changes. The new government’s focus on house building will benefit the Retirement Living market, presenting more opportunities for development, especially around the grey belt, which is suitable for larger integrated retirement communities.
Q: Where are the big growth opportunities in retirement living in the next few years?
A: The biggest opportunity lies in the retirement-for-rent market. Historically, much of the stock delivered has been on a for-sale model. However, in the last ten years, there has been a 200% increase in retirement living schemes offering market rent tenure and nearly a 400% increase in market rental units. This trend is expected to accelerate further in the coming years. Many operator clients report high demand from older people wanting to rent. Current operators are not necessarily set up for this, but changes are coming from the bottom up. The rental model offers flexibility, allowing older people to move quickly if needed and providing a greater level of support without moving into a care home. This trend is expected to grow, with more companies likely to offer 100% rental schemes designed specifically for this market.
Q: Is retirement for rent attracting interest from BTR investors? What is the potential?
A: BTR investors might need to think differently initially. There are many pepper-potted retirement rental portfolios performing well, but they differ from standard BTR, where there is 100% control over the whole block. These portfolios have established substantial and latent demand for older people to rent, which is positive. There is a wide price range with high occupancy rates, presenting good opportunities for consolidation and growth in the rental proportion. We expect to see more investment from BTR investors and new investors in this sector in 2025 and beyond.
Join Anthony and a panel of industry leaders, plus hundreds of delegates from the sector, at the 15th Annual Retirement Living and Care conference in London on 20th November. To learn more about the event please visit www.carehomesconference.com
Ahead of the Build to Rent UK Conference on 27th November, we caught up with Richard Donnell, Executive Director of Zoopla, to discuss what the new Government and the current economy means for Build to Rent and Housing
Q: What does the new Government mean for Housing Delivery and where does Build to Rent fit?
It is positive that the Government is committed to building more homes and is starting with reforms to the planning system, more funding and more planners. This should be seen as just the start as there is much more to do to support housing delivery across all tenures.
I am less sure how much the Government and senior policy makers appreciate the fact that the cross-subsidy model of development is struggling to support delivery. Viability is a big barrier to growing supply and more targeted funding and support is needed.
Building more homes and sustaining higher output needs steady and predictable sources of demand. Corporate investors buying homes to rent out is a key source of demand for homes in future as well as housing providers buying affordable homes and private home buyers.
Q: How has the private rented sector changed in recent years, and what factors have driven this?
The private rented sector (PRS) in the UK doubled in size from 2000 to 2016, driven by private landlords buying homes to rent. Growth has stagnated since then with PRS stock levels static at c.5.5 million homes. Several factors contributed to this slowdown. Changes in tax policy, specifically those targeting buy-to-let landlords, and uncertainties like Brexit, followed by higher borrowing costs have all played a role.
During the pandemic, there was a notable drop in demand for rental properties, particularly in urban centres. However, as the economy reopened, demand surged, especially with the return of international students and workers. Despite the recent influx of renters, the stock of available rental properties has not increased, creating intense competition for housing and significant rental price increases averaging 30% over the last 3 years.
Q: How have higher mortgage and interest rates affected residential property investment?
Higher mortgage and interest rates have undoubtedly increased the risk and complexity for investors in residential property. These rate hikes have a direct impact on the return profile of BTR projects, making investment decisions more complicated. For developers, this means navigating a tougher landscape where the margins might shrink, and affordability becomes an issue, especially for first-time homebuyers who may now be priced out of home ownership.
On the flip side, this creates a stronger rental market as more individuals are compelled to rent, increasing demand for BTR properties. However, this also increases the need for developers to carefully evaluate the balance between private sales and rental housing to ensure project viability.
Q: What is the outlook for rent growth in the BTR sector?
Recent years have seen unprecedented rent growth, particularly in major cities like London. Between 2021 and 2023, rental prices surged by 30-35% in some areas. However, looking forward, many experts, including those in the BTR market, are urging caution. While the pandemic-induced surge may have bolstered rental yields for now, there are concerns that renters’ ability to continue absorbing rent increases is limited, particularly in London and other high-cost cities.
As a result, BTR investors and developers are advised to take a conservative approach, assuming rental growth will more likely track wage increases, which hover around 2.5-3% annually. The rapid upward reset in rents should be seen as a one off and long-term sustainability should be the core assumption for BTR investors.
Q: How does the BTR sector contribute to housing diversity and affordability?
While the BTR sector offers high-quality rental housing, it doesn’t necessarily address the need for affordable or social housing. BTR developments are often built in prime urban locations, offering amenities that command higher rents. This makes them attractive to young professionals and middle-income earners but less so for lower-income households. That said, affordable housing requirements ensure that new delivery includes a range of rented tenures.
However, the BTR sector still plays an important role in the housing ecosystem by providing alternatives to home ownership. It helps professionalize the rental market, often raising standards and offering better-maintained properties with longer tenancies. For the sector to contribute meaningfully to housing affordability, it needs to operate alongside social and affordable housing developments, ensuring a broad range of rental options are available.
Q: What impact could the Renters’ Reform Bill and potential rent controls have on BTR?
The Renters’ Rights Bill currently progressing through Parliament introduces new regulations aimed at improving tenant rights, but it stops short of introducing rent controls, a policy that has caused concern in the investor community, particularly in Scotland. Rent control measures there have weakened investment and increased uncertainty as landlords have potential lost ability for rents to track the market over time. It seems likely that Scottish Government will reverse some of the proposals making Scotland more attractive to investors.
In contrast, England has avoided rental controls, which has kept investors relatively confident about the future of the BTR market. However, the Renters Rights Bill does push for higher standards across the rental market, focusing on improving conditions in substandard properties. This move toward regulation should benefit the BTR sector, which typically offers higher quality, professionally managed homes, thus positioning it as a key player in raising rental standards overall.
Q: How should BTR investors approach the market in the current climate?
BTR investors need to be both realistic and strategic. The recent surge in rents has been driven by a unique set of circumstances, including post-pandemic demand spikes, but this level of growth is unlikely to be sustainable in the long term. Investors should align their rental growth expectations with wage growth and consider diversifying their portfolios to different segments of the rental market. This includes exploring emerging opportunities like single-family rentals or entering secondary markets where there may be less saturation and more room for growth.
Additionally, investors must remain aware of regional market differences. What works in London may not be viable in Leeds or Liverpool, so understanding local demand and the regulatory landscape is crucial for success.
Nick spent over a decade in leadership roles at housing innovator Pocket Living growing the business to a turnover of £70 million and delivering more than 2,000 homes across large and small mixed use sites. He remains a strategic advisor to Pocket Living.
He also formerly served as a Cabinet Member in LB Wandsworth where he led on planning helping to enable the initial stages of the Nine Elms regeneration and Battersea Powerstation redevelopment. He is a chartered planner, land surveyor and former Non-Executive in the London NHS.
At Urban Sketch, Nick leads the team and provides strategic advice across all projects. He is passionate about good placemaking, development and the potential of public private partnerships.
Where is the co-living market right now?
The co-living market is still in its nascent stages, with relatively few operational buildings. However, it’s undergoing rapid growth, fuelled by substantial interest from capital markets. This growth is partly driven by the reduction in rental stock, particularly in Houses in Multiple Occupation (HMOs). As the number of HMOs decreases, co-living has the potential to fill the gap for young people seeking housing options. It’s an exciting opportunity that is yet to be fully realised, which is why events like this conference are so important.
Who is the target market for co-living?
The target market primarily consists of individuals who have transitioned out of the student housing market. These are people likely in their mid-to-late 20s up to their early 40s. Typically, they are singles or couples living in cities with good connectivity, earning reasonable but not high salaries. Currently, many co-living spaces, especially in London, cater to higher income brackets due to limited supply, which has driven rental prices up. However, the market hasn’t yet fully solved how to cater to mid-income earners, though I anticipate innovations in this area soon.
What are the drivers behind this new living asset?
A significant generational shift away from home ownership is one of the key drivers. While my career began in affordable home ownership, the challenges in that sector have become apparent. People today are less inclined to own homes, partly due to affordability issues and partly due to changing cultural views. Flexibility and convenience are also driving factors. People value the ability to move easily without the hassle of managing all the bills and logistics. Co-living meets this need by offering a convenient, flexible living option close to workplaces.
What are co-living’s biggest challenges and threats?
One of the main challenges is that co-living is still not well understood by policymakers. It’s often viewed as a substandard, expensive option, but this perspective overlooks the fact that it’s replacing an outdated model—namely, poorly converted HMOs that push families out of cities. Co-living offers a professionally managed, purpose-built alternative. The biggest hurdle is convincing policymakers that this isn’t a substandard option but rather a necessary evolution in housing to meet the needs of modern generations.
How do the capital markets view co-living right now?
There’s a lot of interest in co-living from capital markets, although core capital, like UK pension funds and insurers, isn’t fully on board yet. It’s likely a matter of waiting to see how the market develops over the next three to five years. I believe co-living should be seen as an extension of the build-to-rent sector, which would make it more palatable to capital markets. Some investors are still cautious about what to do if co-living doesn’t succeed, but with proper appraisal and location selection, the fundamentals suggest it should be a successful investment.
What are the implications for other living uses?
Co-living reflects trends we’ve already seen in the student housing market, where quality and convenience have become paramount. It also indicates that the traditional multi-family housing model is struggling, especially with current debt rates. As a result, we may see fewer multi-family developments and more co-living projects, as people’s preferences and economic realities shift.
What kind of innovations can we expect to see in the future?
There’s potential for senior co-living, which is an area I’m particularly interested in. We haven’t yet figured out how to make senior living work for middle-income earners in the UK, but co-living could provide a solution through smaller, well-amenitised buildings. Additionally, there’s room for innovation in the broader co-living market, particularly in creating a more affordable middle-market offering. This could involve shared apartments with efficient designs that cater to mid-income earners, potentially unlocking a large market of people who currently can’t afford to rent independently.
With our Build to Rent conference returning for a 15th time on 27th November, we caught up with two of our inspirational panel – Marion Baeli and Félicie Krikler.
Marion Baeli is Principal, Sustainability Transformation at 10 Design. Specialising in retrofit techniques, adaptive reuse strategies and low-energy design, she brings in over 20 years of expertise regarding the design and delivery of large-scale, complex projects that span the whole spectrum of housing as well as office sectors.
She is a renowned author on low-energy design decarbonisation strategies and recognised for her award-winning book on residential retrofits and recent research on building performance evaluation of 10 year old deep residential retrofits in collaboration with CIBSE. Additionally, she sits on the board of the UK PassivHaus Trust, contributes to the Westminster Council’s Design Review Panel, serves as a frequent guest lecturer at London Universities (UCL, Imperial College), and acts as an architecture award judge for the RIBA, Architects’ Journal and Architecture Today.
Félicie Krikler is an experienced architect with both French and British qualifications. She specialises in residential-led urban regeneration and has been instrumental in the design of many of Assael’s key projects since joining in 2000. Alongside being one of our Build to Rent experts, Félicie has been leading on several research initiatives including a Social Value Toolkit in conjunction with the RIBA, ‘later living’ design, and the development of Assael’s urban design and landscape division.
Félicie is also a judge for a number of design awards (British Homes Awards, Love to Rent and Building Awards), a member of Croydon’s Design Review Panel, and part of the newly formed ARL co-living committee. She was also elected on RIBA council in September 2023.
Here’s what they had to say about the Build to Rent sector, and more.
To kick things off, could you outline some of the strategic approaches we can take to address the housing shortage?
M: Certainly. There are two main aspects, the densification of urban areas and the repurposing of non-residential buildings into homes. We have seen a pivotal approach in recent years in the densification of urban areas to help tackle housing shortages across the country. This means we need to build up, not out, which helps avoid putting extra strain on rural areas and biodiversity and avoids costly extension of existing infrastructure. Densification is about optimising the urban environment to accommodate more housing, but also being mindful of environmental impacts, like loss of green spaces, the urban heat island effect through increased quantity of hard surfaces and excessive overdevelopment which could lead to overcrowding and stress. The other opportunity at hand is the transformation of existing buildings into homes, especially the underutilised commercial spaces, which could be uses as residential units, and could also aligns with lesser need for central office spaces in a post-covid, remote-work era.
F: Adding to that, it’s important to recognise that no single solution exists for the housing crisis. It’s a matter of exploring multiple development and redevelopment options, from creating new towns to repurposing existing structures, all with a focus on energy efficiency and minimal environmental impact. Even a controversial idea like flexibility of space standards in housing could be considered, as these can make housing more affordable and efficient in the right settings.
What differentiates the Build to Rent (BTR) sector from other housing development models?
F: The BTR sector is fundamentally about the long-term management of assets. Unlike traditional for-sale developers, BTR developers are deeply invested in the operational costs and long-term appeal of the properties because these factors directly impact the asset’s value over time. They focus on creating living spaces that not only look great but foster a sense of community, interaction and neighbourliness . They are designed to be attractive to residents but with maintenance and management costs in mind.
M: On an environmental point of view, the BTR format has a strong interest in the buildings to be energy efficient so that they can be as cheap to run as possible, simple to operate but robust and long lasting, and be comfortable for maximum occupant satisfaction and help with revenue security. There is a real opportunity here to create outstandingly efficient buildings which is unfortunately not always the case with speculative build to rent developments. This is something we observe in building performance evaluation.
How important is retrofitting in the current landscape of building and development?
F: Retrofitting is extremely important, especially given the urgent need to address climate change. By focusing on retrofitting existing buildings, we can significantly reduce the overall environmental impact of the construction sector. This includes updating buildings to be more energy-efficient, which not only helps in reducing operational carbon but also in enhancing the buildings’ long-term viability and desirability.
M: Furthermore, policies could be adapted to encourage retrofitting by emphasising the value of buildings’ embodied carbon. For instance, if planning authorities required new developments to offset their whole lifecycle carbon costs, not just operational emissions, it could shift the focus towards more sustainable practices like retrofitting as the benefit from re-using existing construction would have a cost benefit
Are greener buildings becoming a more significant factor in the attractiveness of rental properties?
F: Yes, there’s a clear trend toward sustainability being a decisive factor for renters. Studies indicate a growing percentage of renters consider energy efficiency crucial due to its impact on living costs. There’s also a significant interest in features like recycling facilities and proximity to green spaces, which are tangible benefits that renters value highly.
M: The rising energy costs have definitely sharpened focus on building’s energy demand levels. Homes that are energy-efficient are no longer just an ineffective EPC sticker on a sales brochure; they have become a prime concern for homes owners. This shift is reflected in both regulatory measures and market demands, pushing developers to prioritise energy efficiency coupled with decarbonisation not just as a marketing tool but as a fundamental aspect of development long term value adding strategy.
Any final thoughts?
M: The value of assets is no longer solely determined by aesthetics and amenities; it is now crucial to provide low utility bills and year-round comfort (including increasingly hot summers). Moving forward, given that the industry accounts for 39% of the country’s carbon emissions, the construction sector must prioritize the existing building stock. These buildings were constructed thanks to the emancipation of fossil fuel energy at the time, and we must avoid doubling these emissions through demolition and new construction. Another realisation is also appearing in the reuse of existing building and the difficulty in turning some into other uses, which is that all buildings should be flexible. This means designing new build or amending existing ones into structures and spaces that can cater to various uses over time, enhancing their longevity and functionality. We should think about buildings as adaptable frameworks that can evolve as societal needs change.
F: Exactly, and emphasising the circular economy in construction will be crucial. This involves designing now for future reuse and considering disassembly in the process; allowing materials to be reused and reducing the need for new resources. It’s about creating buildings that can serve future generations just as effectively, fostering a truly sustainable approach to construction, creating relevant and adaptable urban environments for years to come.
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With our Operational Resi Conference on the 10th September we caught up with one of our inspirational panel participants, Richard Valentine-Selsey.
Richard is Head of European Living Research at Savills. He is primarily focused on providing thought leadership and consultancy advice on the residential investment market and alternative sectors, including student housing, co-living, healthcare and retirement living across Europe. He is also leading on research into modern methods of construction.
Here’s what he had to say about the future of rental living.
Can you tell us about the evolution of rental living as an investment prospect within the UK?
It started 12 years ago when the Montague report was published. There was a realisation that we needed to do something to bring institutional investment into the residential sector. We couldn’t be purely reliant upon individual buy-to-let landlords, which started the thought process in investors minds around bringing living, as a whole, back into their portfolios.
They’d been active in the student sector for some while but the report kick started the desire to enter the build-to-rent and resi sector. Especially with the kind of changes we’ve seen with in the run up to COVID and post COVID and the retrenchment from the traditional commercial sectors. That kind of mantra of logistics, living and life science becoming the key three for investors looking forward. That’s shifted where investors are looking to allocate their investment portfolios.
This has led to a number of people looking to enter this market and come up with stock that they can invest in. Investment into residential really kicked off with the emergence of multifamily towers in London and regional cities but then came the realisation that renters don’t just live in cities and there’s renters across the country. So that’s opened up a whole new spread of areas they can look at.
While that has been going on we’ve also seen the emergence of co-living models that are a hybrid between student housing and multifamily accommodation. This is where investors have been exploring the need to provide buildings with a high level of service but with the compromise of slightly less private space. As a result they can offer a more affordable city centre property in an area that people might not be able to afford to live on their own or have their own private space but still get access to all those amenities whilst offering the flexibility that you don’t get with a six to twelve month tenancy in a “normal” rental property.
The big challenge we’ve got in the UK is there is not enough institutional-grade stock on the market. As a result investors have to go and build it, which means the need to find a contractor to work with and someone to get planning and develop it for them.
This means that there’s more money chasing opportunities than there are opportunities around. The challenge we’ve had in the last 18 months has been that the cost of debt has slowed down the ability for some of these deals to happen or have taken longer to get through. There’s also the consideration that with build costs going up it’s harder to build at a competitive price.
It’s interesting to note that 2023, despite all the issues, was the second largest level of investment into build-to-rent since we started recording it back in 2011.
The other evolution which we touched on a bit earlier is the diffusion of investment across the country. Five to six years ago, the vast majority of investment went into London and then the big six regional cities. Investors were very cautious to go to places where they didn’t know for sure that there was a supply and demand imbalance that would create rental demand and wanted to know that the market was substantial. Half of local authorities in the UK now have some level of build-to-rent or single family housing in operation or the pipeline.
Investors are realising that there are opportunities to move across the country and build portfolios rather than just being stuck and restricted to being in a very large regional centre.
There’s also a generational shift in the type of products that investors are looking to go into. We’ve moved on from the first days of buying stock that was designed for build to sell. Now investors are considering the design, the layout, the amenity space of the building to make sure it is meets the needs of the renter and is optimised for operational efficiency. .
We’re now onto generation two of the purpose built model where we’re seeing the overlaying of a genuine full-service solution where renters are receiving a genuinely different product than just renting from a buy-to-let landlord.
We’re also seeing greater investor comfort with larger schemes. In the early days most investors were testing the water with around 100 units. Now there are schemes of upwards of five hundred units on a single scheme where the investor is no longer concerned about the concentration risk of renting these properties. Investors have realised, and seen in the data, that there is enough demand for the property as long as it’s priced correctly.
Furthermore, a single site with 700 units is much more efficient than operating 7 smaller sites of 100 units dotted all over the place.
What will the next phase of the evolution be?
The next phase will see the true blending of users across sites and a refreshed focus on mixed living rather than “I just do multifamily” or “I just do student accommodation”. A good example of this is Unite, the UK’s largest student housing operator, where they have now diversified and purchased their first of multifamily block in London.
This next phase will see the full life cycle living piece of taking someone from student housing and then all the way through until they need to go into senior living or purchase somewhere else.
Also we’ll see continual change in who it is that’s driving this forward and who the investors are. The UK has been very attractive to overseas investment for many years. We’ve continued to see new interests coming in from US, Asia and Europe looking to enter the UK market and come into the living sectors.
With the kind of rebalancing of portfolios away from traditional commercial investment, the money will go into resi. The challenge will be, can we build enough stock quickly enough to get these projects going? Also will we get the planning permissions through and will the construction be able to happen?
We found in our most recent European Living Investor Survey, which came out in March, that access, stock and scalability were put as high risk factors for people interested in delivering on their investment ambitions. They’re cognizant that there isn’t necessarily enough of the stock that they want to buy for them to become significantly active.
Where should investors put their money?
The $100 million question!
I would probably be putting my money into the single family market. Right now there is a great opportunity for investors to be working with developers and the house building sector to help accelerate the delivery of large sites.
I would also look at student housing. The well-publicised challenges facing many university cities (in terms of housing their students) where they’re hit by both the limited delivery of new PRS over the last decade or so, with the falling number of available properties.
Now, notwithstanding some of the challenges facing universities at the moment, if you choose the right cities with the right university partners, there is significant demand that will continue to be there.
What are your top three pieces of advice for people attending the event?
- Come with an open mind to think about, and challenge, what your preconceptions are of rental living.
- Come armed with questions and issues that you want to find out about and don’t be afraid to put someone on the spot.
- Think about how you and your business can help to drive forward the sector and push out to the wider public what we need to be doing to continue to grow.
Any final thoughts?
We’ve come through the worst of the stormy weather and there is light on the horizon with the economy looking better and interest rates likely to come down this year, which I think will unlock more opportunities. Now is the time to get your ducks in a row to get the market moving through the second-half of this year.
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With the 15th annual Student Housing Investment Conference round the corner, we caught up with the chairperson for the conference, Martin Hadland, to explore the future of student housing.
Martin is the Co-Founder and Managing Director of Student First Group (SFG), a London based specialist advisor, investor, developer and asset manager in the student accommodation and property sectors. Martin and Richard Gabelich founded SFG in 2018 to use their collective, unique and diverse student accommodation and property experience to facilitate transactions and generate innovative solutions. SFG advise on both off-campus/direct let property and on-campus infrastructure partnership models always with the aim of maximising the student experience in both physical design and operating environment.
Martin has over 35 years’ experience working for and advising Universities, property brokers and advisors. He has worked for universities, some of the leading property consultants in the UK and as Commercial Director for a global student accommodation developer/operator..
Here’s what he had to say about the future of student housing.
Where do operators and investors see the market evolving over the coming year?
In the evolving landscape of student housing in the UK, operators and investors are navigating a market marked by contrasting forces of supply and demand, alongside shifting attitudes towards higher education and living away from home. The sector faces a persistent imbalance, with demand outstripping supply in many areas, suggesting that rents are likely to continue rising. However, this trend is juxtaposed with a growing sentiment among UK undergraduates questioning both the value of pursuing university education and the financial viability of studying away from home, which can add significantly to their first-year living expenses.
Amid these dynamics, universities have been required to maintain tuition fees for home undergraduates at a maximum of £9,250 for several years, a policy that initially seemed sustainable but has become increasingly strained as inflation rates have surged. This situation has left universities in a predicament, as they struggle to manage significantly rising costs without corresponding increases in revenue. In response, many have exercised restraint in raising accommodation prices, aiming to alleviate some of the financial pressures on students.
Despite a general consensus that students prefer not to incur higher costs, the market has continually introduced more expensive accommodation options, which have consistently reached full occupancy in most locations. This indicates an historic discrepancy between what students wish to pay and what they are actually willing to pay, with the market gradually moving towards the upper end of this spectrum and uncertainty creeping in as to where we now are. The sector, like others, faces upward cost pressures from construction, land acquisition, and operational expenses, including utilities and labour which means rents are only moving in one direction.
The student housing sector is also affected by changes in the private rental market, particularly the House in Multiple Occupation (HMO) segment, which has seen a decline in private landlords due to regulatory reforms around tax deductibility of debt service costs. The anticipated Renters’ Reform Act introduces uncertainties for landlords, including the removal of fixed-term tenancies and allowing tenants to give 2 months notice, which poses specific challenges for student landlords.
Furthermore, rising mortgage rates have led to a decrease in the number of HMOs, with CBRE estimating 400,000 fewer HMO properties available nationally between 2019 and 2023. The extent to which this impacts student housing is unclear, but the trend suggests a significant shift. The HMO market typically houses returning students, and if there is any election by landlords to move out of the sector, then accommodation pressures will continue to increase. Additionally, the Build-to-Rent (BTR) sector has increasingly accommodated students, with many properties housing a substantial percentage of student tenants.
In summary, the UK student housing market is at a crossroads, influenced by various economic, regulatory, and social factors. The sector presents opportunities for growth and innovation but also requires careful consideration of emerging challenges and changing student preferences. Operators and investors must navigate these complexities to meet demand, manage costs, and align with the evolving needs and expectations of their student customers.
With planning challenges, rising build costs, and an increasing cost of borrowing, are there now concerns about the viability of UK Development?
The landscape of UK development, especially in the context of planning challenges, escalating construction costs, and rising borrowing expenses, is becoming increasingly complex. Planning processes are perceived as both more difficult, longer and costlier, a trend that is particularly pronounced in London. Local boroughs are adapting and responding to the London Plan’s initial iteration by tailoring policies to meet their specific needs, which has added layers of complexity to planning and development.
The sector has faced significant viability challenges due to the increases in the various costs referred to above. These challenges have led to a noticeable slowdown in the pace of planning applications and approvals since pre-Pandemic times. However, there has been a shift in this trend in the latter half of 2023 and into early 2024, with an uptick in schemes being proposed. This resurgence is partly attributed to the industry adjusting to the regulatory landscape shaped by the Building Safety Act and the certainty that now exists around that. The Act’s implications have prompted developers to rethink their projects, especially traditional residential towers in areas like the London Docklands, where new safety requirements such as the need for a second staircase have made some designs unfeasible for mainstream residential use. As a result, there is an emerging trend of these projects being reimagined as mixed-use developments that combine affordable housing, mainstream housing, and student accommodation, which can more easily accommodate the design requirements.
Additionally, demand for development appears to be on the rise, signalling a potentially vibrant period ahead for the sector.
Despite the significant challenges posed by planning difficulties, increased construction and borrowing costs, and the impact of new regulations, there is cautious optimism for the future of UK development. The sector is adapting to these challenges through innovative approaches to project design and a renewed focus on mixed-use developments. This adaptability suggests that concerns about the viability of UK development may be mitigated as the industry moves forward.
How important is ESG and sustainability with each portfolio and how can we repurpose existing stock to meet modern environmental targets?
The importance of Environmental, Social, and Governance (ESG) principles and sustainability within property portfolios has become a central focus in the student housing sector, particularly in how existing buildings can be repurposed to meet contemporary environmental targets. This shift in focus is significantly influenced by the growing awareness of embedded carbon in existing structures, a factor that was less scrutinised in development practices five years ago. Nowadays, there is a concerted effort to retain and repurpose buildings, especially those constructed with materials like concrete that have high levels of embedded carbon, marking a departure from the previous inclination to demolish and rebuild.
Institutions and developers are increasingly adopting and applying methodologies akin to the Passive House standard, which emphasises energy efficiency, to refurbish existing properties. This approach aligns with a broader commitment to the ESG agenda, as demonstrated by initiatives like Unite’s extensive refurbishment projects that prioritise ESG considerations. These efforts highlight a recognition of the importance of sustainability in property development and management.
However, the challenge lies in balancing the environmental benefits of repurposing buildings with their operational performance and financial viability. Buildings from the 1970s and 1980s, for instance, may not perform as efficiently as new constructions, even after extensive refurbishments. This discrepancy raises questions about the cost-effectiveness of refurbishing older buildings, the potential rental income from such properties, and their lifespan post-refurbishment.
The ESG agenda is also subject to an “acceleration curve,” where standards and expectations are rapidly evolving. The belief that the current pace of improvement will remain static over the next decade is optimistic. Standards are expected to tighten further, placing additional pressure on refurbishment projects to adopt cutting-edge sustainability measures to extend the useful life of assets. This pressure is likely to intensify with the introduction of new legislation or mandates from funders requiring compliance with specific sustainability standards.
Moreover, the government’s stance on certain environmental policies, such as the phase-out of fossil fuel boilers by 2030, appears to be softening. This change may impact the urgency and direction of sustainability efforts in the sector.
ESG and sustainability are increasingly pivotal in the student housing sector, driving a shift towards repurposing existing stock to meet modern environmental targets. While this approach presents challenges in balancing performance, cost, and sustainability goals, the evolving landscape of environmental standards and legislation underscores the necessity for forward-thinking strategies in property development and refurbishment.
Students are also driving change through looking at the environmental credentials of the halls they select, although it is too early to assess the extent to which this influences choice of accommodation (is it more important than location and what value is there attached to it in rents) and how does it rank as a selection factor alongside other accommodation facets such as a gym, fast wifi, social/amenity space.
What kind of stock will the UK market demand in coming years in terms of build, design and amenities?
The UK student housing market is poised for diversification in the coming years, reflecting a wide spectrum of preferences in building design, amenities, and overall student living experiences. The current landscape features a vast array of accommodation types, ranging from older stock with shared bathrooms and minimal social spaces to modern developments offering en-suite rooms, studios, and extensive amenity space, some delivering over 1.5 square meters per person. Despite this variety, there is no concrete data pinpointing students’ exact preferences and the premium they are willing to pay for specific features.
Location continues to be a paramount factor for many students, often prioritising convenience to campus over luxurious amenities. Nonetheless, the importance of Environmental, Social, and Governance (ESG) considerations is rapidly ascending the list of student priorities. It suggests a growing expectation for sustainability to be integrated into the operational aspects of buildings rather than imposing additional responsibilities on the residents.
The market is experiencing a period of reflection and adjustment, weighing the balance between amenity offerings and the economic implications of such features, including how they affect the overall cost and pricing of accommodations. This introspection is partly driven by development pressures and a re-evaluation of aspects like the optimal size of communal clusters and the efficient use of building areas to hit a satisfactory price point for students.
As the market matures, it’s becoming increasingly segmented, indicating that students’ choices are becoming more nuanced, with preferences varying widely among specific customer cohorts and individuals. The Property Marketing Strategists have just completed their report on the specific requirements of international students as an example of this. This diversity allows developers and operators to cater to specific segments of the market, offering tailored solutions that align with different budgets and lifestyle choices.
Universities, often advisory clients in the context of student housing, are exploring strategies to optimise their nomination agreements with housing providers to ensure value for money. This involves comparing accommodations with varying levels of amenities to understand how these differences impact rental pricing.
Emerging platforms like Student Crowd, play a critical role in providing students with data to make informed choices about their housing. Such platforms contribute to a better understanding of student preferences and market demands.
The UK student housing market is evolving towards greater diversity and segmentation, driven by a blend of student preferences for location, sustainability, and specific amenities. This evolution is accompanied by a maturing market understanding, enabling students to make more informed choices based on a comprehensive understanding of what they value most in their living arrangements.
Where are the key opportunity areas moving forward, looking both at location and also at the product?
The future of the UK student housing sector reveals key opportunities rooted in partnerships, evolving market demands, and strategic location choices. A significant development is the burgeoning collaboration between universities and the private sector, particularly in the realms of design, build, fund, and operate (DBFO) projects. These joint ventures are becoming increasingly prevalent, driven in part by the influence of the London Plan, which has mandated closer cooperation between educational institutions and developers. This synergy has given rise to what could be humorously termed “university Tinder,” a service that matches developers with universities to facilitate mutual support through the planning process, thereby benefiting both parties.
This growing trend towards partnership highlights a shift towards more integrated and mutually beneficial relationships in the development of student accommodations. Additionally, there’s an ongoing debate about the demand for building more studio apartments within student housing complexes, a trend balanced against the need for diverse housing options to satisfy different student preferences and budgets, and the impact of building less studios on project viability.
Another pivotal area of opportunity is the exploration of new locations for development, extending beyond traditional urban centres to more cost-effective areas. The increasing consideration of projects in locations previously deemed peripheral (we have been approached about locations in London’s zone 6 like Croydon and Dagenham, underscores a broader trend of expanding the geographical scope of student housing investments. This move is partly a response to soaring land costs in central areas, pushing developers to seek feasible alternatives that can still attract student populations. The question around how far students are prepared to travel and still feel that they have the London experience needs constant re-evaluation.
The emphasis on location parallels the maturation of the student housing market, likened to the evolution seen in the hotel industry, where there is always room for new entrants provided they offer something distinct or superior. This dynamic could lead to a redistribution of demand, favouring accommodations closer to educational institutions and potentially impacting the viability of properties in less desirable locations over time.
Furthermore, planning authorities are increasingly playing a mediating role, encouraging developers to consult with universities early in the planning stage. This approach fosters a collaborative environment where educational institutions can have a say in developments affecting their student populations, from influencing design considerations to ensuring developments align with student needs and affordability concerns.
The key opportunity areas for the UK student housing sector moving forward involve deepening partnerships between universities and private developers, exploring new locations for development to navigate economic feasibility, and maintaining a focus on strategic siting relative to educational institutions. These trends indicate a sector poised for innovative growth, emphasising collaboration, strategic location selection, and a responsive approach to evolving market demands and student preferences.
Where are the Joint Venture opportunities in the UK Market?
Joint venture opportunities in the UK student housing market are increasingly centered around sector-specific collaborations rather than specific geographic locations. Our ongoing research, dubbed internally as “the mother of all strategies,” draws insights from 20 university accommodation strategies developed over the last 20 months. This comprehensive analysis reveals commonalities across universities, including a mix of accommodation types, with many institutions possessing older halls that feature shared bathrooms or early versions of en-suite arrangements, large cluster sizes, and halls that are often in suboptimal condition. These findings highlight the financial pressures universities face, compounded by significant academic capital commitments that limit their capacity to invest in residential offerings—a crucial component of maintaining competitive edge.
To address these challenges, universities are actively seeking partnerships with the private sector to inject capital and expertise into their accommodation strategies. Three emerging models for such collaborations include:
- Nomination Agreements. These are becoming more prevalent, encouraged partly by the London Plan, which positively requires collaborative relationships among developers, legal teams, and universities. However, the challenge with hard nomination agreements, which obligate the university to fill accommodation spaces, is their impact on the university’s balance sheet. As a result, there’s a shift towards soft nominations that do not require balance sheet commitments.
- Straight Property Deals. These arrangements bypass public procurement processes if they do not contain service level agreements or other service provisions. This exemption allows universities to consider a different selection mechanism compared to the traditional Design, Build, Fund, Operate (DBFO) projects, which involve comprehensive service agreements.
- Local Authority and Public Sector Landowner Involvement. Ambitious local authorities and public sector landowners are increasingly interested in student accommodation for its stable income and annual inflationary uplifts. This interest is exploring the potential of integrating student housing into their investment portfolios, especially for landowners assessing parcels for suitability for student accommodation developments.
The involvement of local authorities and public sector landowners in inner-city developments signifies a broader trend of joint ventures extending beyond the private sector, incorporating public and semi-public entities into the development process. These collaborations offer a promising avenue for addressing the accommodation needs of universities while contributing to the local economy and urban development.
The future of joint venture opportunities in the UK student housing market lies in innovative partnership models that transcend traditional boundaries. By leveraging the strengths of both the private and public sectors, these collaborations aim to enhance the quality, affordability, and sustainability of student accommodation across the UK, responding to the evolving needs of universities and their students.
Any final thoughts?
In these dynamic times, there are ample reasons for optimism within the UK’s student housing sector. Forecasts suggest a favourable economic environment ahead, with expectations of declining interest rates and inflation. This backdrop is further bolstered by demographic trends, notably a projected increase in the number of 18-year-olds reaching a peak in 2030, which anticipates an additional influx of approximately 100,000 18 year olds in the next five to six years. While international student recruitment has slightly dipped, it remains robust, adding to the sector’s growth potential. These predictions are broad brush national figures and need analysis for regional nuances. Also, student number projections are based on assumptions around immigration policy and participation rate in Higher Education which might change with Degree Apprenticeships and the ongoing debate about the value of an undergraduate degree in certain subjects.
Source: ONS
However, challenges persist, particularly in accommodating the growing student population. Issues of housing availability, especially for second and third-year students, have become pronounced, as evidenced by the housing pressures in cities like Durham. This situation raises critical questions about the roles of universities and the private sector in providing sufficient, affordable accommodation for returning students amidst uncertainties in international student numbers and the burgeoning domestic undergraduate population.
Looking ahead, the sector may experience stability in rental prices, contingent on inflation control. This stability presents an opportunity for developers to introduce more sustainable housing solutions. Yet, hurdles remain, including planning complexities, variable policy landscapes across regions, and the economic viability of refurbishing or repurposing existing student accommodations. The investment market shows a preference for high-quality new builds over older, repurposed properties, reflecting differing levels of risk and expected returns.
An interesting facet of the future landscape is the potential for cross-sector integration within the housing market. Historical models, such as 50-year concession deals, highlight the evolving nature of student housing as part of a broader living ecosystem, which might benefit from more flexible and inclusive planning approaches. For instance, experiences from places like Vienna, where housing developments serve multiple demographics and purposes, suggest that the UK could explore more open planning models. These could include intergenerational living arrangements, blending student housing with other residential formats to enrich community life and enhance mutual understanding among diverse groups.
In summary, the UK student housing sector stands at a crossroads of opportunity and challenge. The path forward involves navigating demographic trends, economic conditions, and planning complexities, all while embracing innovative housing solutions that cater to a diverse student population. The sector’s capacity to adapt and evolve in response to these factors will be crucial in shaping its future trajectory, making it an exciting and dynamic field to watch.
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In the UK, the residential real estate sector is witnessing a significant transformation, driven by the imperative to address climate change and enhance social well-being. This evolution is characterised by a profound shift in Environmental, Social, and Governance (ESG) strategies, reflecting a broader commitment to sustainability and social impact. This blog delves into how developers are innovating to generate positive community benefit and are working tirelessly to reduce the carbon footprint of residential construction through various sustainable practices.
Social impact projects: pioneering positive change
Developers across the UK are increasingly embedding social impact projects into their core business strategies, recognising their role in fostering community well-being and resilience. These initiatives range from affordable housing schemes and community engagement programs to investments in local infrastructure and services. By prioritising social value, developers are not just building homes; they are nurturing vibrant, sustainable communities.
Affordable housing and community engagement
A pivotal area of focus is the development of affordable housing, aimed at addressing the acute shortage of accessible and cost-effective living spaces. By integrating affordable units into new developments, companies are directly contributing to alleviating the housing crisis, making communities more inclusive.
Developers are engaging with local communities through consultations and participatory planning processes. This inclusive approach ensures that new developments meet the real needs of residents, fostering a sense of ownership and belonging. Initiatives such as public spaces, community centres, and local job creation further cement the relationship between developers and the communities they serve.
Investment in local infrastructure
Beyond housing, significant investments are being made in local infrastructure, including schools, healthcare facilities, and green spaces. These projects not only enhance the quality of life for residents but also contribute to the economic and social vitality of local areas. By supporting sustainable local development, real estate companies are playing a crucial role in shaping resilient communities that can thrive in the face of future challenges.
Reducing the carbon footprint of residential construction
The construction sector is a major contributor to carbon emissions, but the tide is turning. Developers are adopting innovative strategies to minimise the environmental impact of residential construction, focusing on embodied carbon, the circular economy, and the reduction of construction waste.
Embodied carbon and circular economy
Embodied carbon refers to the CO2 emissions associated with the materials and processes involved in building construction, from extraction and manufacturing to transportation and installation. By prioritising materials with lower embodied carbon, such as timber or recycled steel, developers can significantly reduce the environmental footprint of new homes.
The circular economy model is gaining traction in the construction industry, emphasising the reuse and recycling of materials. This approach not only reduces waste but also conserves resources and minimises the demand for new materials. Developers are exploring ways to incorporate circular principles into their projects, from designing buildings for disassembly to using reclaimed materials in construction.
Reducing construction waste and innovating construction methods
The construction industry is notorious for generating significant waste, but innovative waste management strategies are beginning to make a difference. Developers are implementing rigorous waste sorting and recycling protocols, aiming for zero waste to landfill. The adoption of pre-fabrication and modular construction techniques is helping to reduce on-site waste, as components are manufactured to precise specifications in controlled factory settings.
Innovation in construction methods also plays a vital role in reducing the carbon footprint. Techniques such as 3D printing and the use of sustainable building materials like hempcrete are pushing the boundaries of what is possible, offering greener alternatives to traditional construction methods.
The road ahead
The evolution of ESG strategies in the UK’s residential real estate sector reflects a growing recognition of the industry’s responsibility to the planet and its people. By championing social impact projects and embracing sustainable construction practices, developers are not only mitigating their environmental impact but also enhancing the social fabric of the communities they serve.
This shift towards sustainability and social responsibility is not just a trend but a fundamental change in how residential real estate is conceived, developed, and inhabited. As we move forward, it is imperative that these initiatives continue to evolve, driven by innovation, collaboration, and a steadfast commitment to creating a better, more sustainable future for all.
The residential real estate sector is at the forefront of a transformative journey, redefining the meaning of home and community in the 21st century. Through the lens of ESG, developers are paving the way for a future where the built environment harmonises with the natural world, and where communities are empowered to flourish. This evolution of ESG strategies is not merely a response to the challenges of today but a visionary approach to building the sustainable, resilient, and inclusive societies of tomorrow.