Nottingham Owners' Briefing
The text below summarises the main points of the first Owners' Briefing given by Martin Blakey, Chief Executive of Unipol Student Homes, at the University of Nottingham on Thursday 24th January 2008
- Introduction
- The National Picture of Supply and Demand
- Demand
- Supply
- Estimated Student Numbers in Nottingham
- University of Nottingham
- Nottingham Trent University
- Student Residential Demand in Nottingham in Purpose Built Buildings and Off Street Properties
- Unipol in Nottingham
- Use of the Site
- Checking for Search Numbers
- Accreditation
- Early Observations on the Nottingham Student Housing Market
- Location and Patterns of Occupancy
- Early Observations on the Nottingham Student Housing Market - Off Street Properties
- Number of Students Sharing
- Summer Rent Concessions
- Guarantors
- Letting to Students on Individual Contracts
- What is Included in the Rent
- Amenity Levels
- Rent Levels
- Rental Spreads
- Legislation - Licensing
- Legislation - Deposit Protection
- The Development of the Unipol Service
Introduction
This first 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 initial information and observations on the Nottingham student housing market.
The National Picture of Supply and Demand
Demand
The figures, both national and local, given at the briefing g in January have, as promised, been adjusted and updated following the detailed figures about University applications and admissions becoming available in February 2008. It is still too early to give information about the house hunting pattern because the season is still in its infancy
2007-2008 was the second year in which top up fees were charged and the year saw a more settled pattern of admissions with less turbulence than 2006-2007.
Final figures for 2006-2007 show that in England and Wales there were 2,362,815 enrolments, an increase of 1% on 2005-2006. These figures deal with all enrolments within higher education. Undergraduate enrolments were down by 1% whilst postgraduate enrolments were up by 3%. EU student enrolments increased by 6% to 112,260 and non EU students increased by 7% to 239,210. The figures for 2007-2008 will not be available le until January 2009.
Within Nottingham both universities have a strong postgraduate and international student intake.
The increase in EU students saw Polish student numbers up 25%, students from France were 16% up and German student numbers increased by 10%.
The figures for 2007-2008 (the current academic year) will be available from February 2008. It is expected that enrolments are likely to be up by 1%% to 2%.
UCAS, the central universities admissions body has released its latest figures for applications for 2008-2009. On 14th February 2008 the number of applicants were up 8.9% up, although for the first time nursing and midwifery figure were included in these figures so the real rate of increase was 6.7%. EU applications were up 10.4% and other overseas applications were up by 11.0%.
Looking specifically at Nottingham, Nottingham University's applications were 1.8% down but Nottingham Trent University's applications were 10.3% up.
Applications from China were up 20.5% and up 26.8% from Singapore with applications from Canada seeing a rise of 30.9%.
These figures will be updated in April 2008.
In summary, although the overall application figures are healthy, local figures reveal a more cautious market and the actual growth of student numbers within higher education has slowed with a small increase of around 1%-2% a year being likely. Most universities have only limited plans to expand and much of that expansion rests on hopes that additional international and postgraduate students can be recruited within a competitive market place.
Supply
Looking at the supply, the NUS Unipol Accommodation Survey published in 2007 showed that nationally the supply of student accommodation continues to increase by around 3% a year, mainly in purpose new build student residences. Around 12,000 bed spaces a year a being constructed, normally in en suite self-catered cluster flats. There is still some evidence that in the off street (smaller house) market, numbers continue to increase with the growth of buy to let properties. Buy to let, however, is slowing and the recent credit crunch may result in a general slow down of new student accommodation except in London and the South East where capital values are being maintained and where earlier expansion has been limited because of the cost and difficulties inherent in developing there.
Estimated Student Numbers in Nottingham
Overall student numbers do not reflect students with residential need because some students live at home and others, although registered in Nottingham, study away from the City (sometimes abroad).
University of Nottingham
Although the University has 32,620 full time students, the estimate of those students with residential needs for 2006-2007 was 27,300.
The University gives an accommodation guarantee to most of its first year students and to some postgraduates and international students and also allocated a limited amount of accommodation to returning students
In 2007-2008 the University housed 7,907 students either directly or in partnerships with others: 3,939 in its own accommodation and 3,968 in partnership roughly a 50:50 ratio.
In 2006-2007, the University (in line with national trends) fell back on intake by about 400 students with residential needs. In 2007-2008 it saw an estimated rise of around 400 students. In 2008-2009, the University are planning a limited increase of 320 students
Nottingham Trent University
Have an estimated residential need of 18,893 and offer a similar accommodation guarantee.
The University houses 3,373 students directly with 2,768 of those being in partnership with others.
In 2006-2007 the University fell back on intake by about 900 students with residential needs, considerably worse than the national pattern. In 2007-2008 the University saw intake recover all lost ground and also saw a further increase of around 200 students. In 2008-2009, it is currently assumed that no further growth is planned.
There are clearly two markets for student accommodation in Nottingham between the two universities but some of those markets overlap in the central areas of Nottingham and in certain purpose built complexes - so how separate are they?
In theory, there may also be a separate market between those students that want to live in complexes and those that want to live in of-street properties. Research being undertaken over 2008 will seek to provide information in this area.
Student Residential Demand in Nottingham in Purpose Built Buildings and Off Street Properties
Because the institutions house first year students the reduction in residential demand of around 1,300 bed spaces caused by a shortfall in intake in 2006-2007 was not felt by the private sector housing mainly returning students until 2007-2008. Because the shortfall has been made up in 2007-2008 the 2008-2009 letting market should now see demand recover by around 1,600 bed spaces.
According to the figures given above there is a total student residential need in Nottingham of 46,193 with the institutions housing 11,544 students themselves with 6,707 of those (58%) in partnership with others and, on these preliminary figures the private sector direct demand would therefore be 34,649 bed spaces.
In Unipol's scoping survey undertaken in October 2006 and working to Nottingham City Council's estimates of a total load of 39,724 it was estimated that 18,809 bed spaces were in purpose built complexes (47%) and 20,915 were in off street properties (53%).
Unipol now has fairly accurate estimates that there are 15,068 purpose built student bed spaces in use at the present time with a further 1,000 bed spaces to come on line in 2009-2010 after which growth will have all but stopped.
These differing figures mean that there is an off street property market of either 31,125 bed spaces (taking the higher estimate) or 24,656 bed spaces (taking the lower estimate). Unipol will continue to work with the universities to get a more accurate figure. For planning purposes, at this stage, the middle point of both estimates is being taken giving a total residential load in of street properties of 27,890. Unipol suspects that in the higher estimate there has been some double counting (which has certainly occurred in estimating the higher figure of purpose built student bed spaces).
There is little doubt that there is a sizeable surplus of student accommodation in Nottingham although its size is currently difficult to estimate. There is evidence from the larger providers of void levels and there were clearly some empty off street properties that were not let by November and December 2007.
The rapid growth of over 10,000 purpose built private sector bed spaces over the last 5 years means that demand for off street properties (particularly for first year students) will have fallen by an estimated 8,000 over that time.
Unipol in Nottingham
On 21st January 2008 the Unipol web site had displayed 11,631 bed spaces with 4,739 of these being in off street properties (an estimated display rate of 40% of the available market) and 6,892 being in larger developments (an estimated display rate of 85% of the available market).
Graph: bed spaces by property type on Unipol site
Unipol's target for displaying bed spaces in its first year was 4,000 by January 2008 rising to 8,000 by August 2008. Unipol anticipates a further 2,500 off-street bed spaces will be displayed on the site before June 2008. The aim of having a big central site is being achieved.
Unipol is likely to implement charging owners and agents displaying off-street properties for using the site from March 1st 2008. For those that have registered to use the service for off street properties before that date the service will remain free to use until July 31st 2008. Those displaying details of purpose built complexes are already paying a fee for using the service.
Use of the Site
From 1st August 2007 to 18th January 2008 there have been 1,900,719 hits, 445,293 pages hit, 57,233 page requests and most importantly 3,729 hosts (users) who together have undertaken 34,662 searches.
On Monday 21 January 2008 Unipol had our highest daily search total of 2,349 searches and searches generally are running at an average of 1,000 a day.
The main users are Nottingham University, followed by landlords and then students from Nottingham Trent University.
Unipol has experienced delays in placing a display area in the Nottingham Trent Students' Union building and publicity to NTU students was been delayed but this is being addressed by the end of January 2008 and usage by Nottingham Trent University students should increase after that time.
Checking for Search Numbers
It is possible for users to see how many searches there have been over the past week. Users should go to he home page and click on Property Search and then look at the bottom of that page where search numbers are displayed in small black type:
Accreditation
Part of the Unipol mission was to link central marketing to standards through accreditation
- accreditation has been rebranded the Unipol DASH Code
- existing standards (now 12 years old) are currently in force
- the Code is to be reviewed so that new standards come into effect in August 2008
Accreditation was previously run separately by the two universities with the Local Authority undertaking inspections and this has made it difficult to work out:
- who was accredited and who was not
- when their properties, and which properties, had been inspected
- to which standards they had been inspected
Unipol is committed to:
- landlord accreditation
- a sampling on inspections on the basis of 1:5 unless there are problems in which case sampling increases
- following up complaints (and the establishment of an independent Tribunal system for unresolved complaints)
- inspecting on the sampling methodology once every three years
Unipol are now receiving full co-operation from both universities and will soon be in a position to determine how many properties need inspecting (any that have not been inspected within 3 years) between now and July 2008
At present inspections are giving landlords information about whether they meet the current standards but also what higher standards they may wish to meet in the future. Those standards will be decided by a review group that is almost established consisting of all stakeholders, including landlords.
The Nottingham Code Review Group membership includes: Ann McCarthy, April Harrison, Carole Rice, Dan Lucas, David Gell, David Turton, Eleanor Millard, Faye Powell, Inspector Sean Anderson, Josie Tanvir, Karen Knight, Lisa Lewis, Liz Hodgen, Lorraine Raynor, Louise Green, Lynette Tomlinson, Lynne Walker, Martin Blakey, Melanie Futer, Maya Fletcher, Ollie Casper, Peter Short, Rebecca Haroford-Clarke, Tina King, Tom Toumazou
A new set of accreditation standards will be decided following consultation and will be active next year .
There are some important principles in reviewing the standards. The new standards must reflect the risks:
- inherent in the student HMO sector
- the particular age range of the majority of those being housed
- the higher standards of care that parents of students expect and that many landlords are already meeting
- accreditation is not the lowest common denominator
- higher standards will always be recognised
- Unipol would never advise a landlord to meet a higher standard without reflecting the value of making this investment
Since November 2007, Unipol have inspected 162 properties and have verified most major suppliers under the National Code since mid November 2007. A further 38 inspections will take place before the end of January 2008 and Unipol expects to inspect a further 300 properties before June 2008.
From the 162 inspections carried out Unipol wishes to recognise the helpful and co-operative nature of owners who are keen to meet higher standards.
In off street properties 75% of owners are either already accredited or have expressed a desire to be accredited and Unipol welcomes this desire for self improvement and for engagement with higher standards and is sure that by the next house hunting season for 2009-2010 a clear link can be established between higher standards and consumer preference. Students renting in Nottingham deserve the best and Unipol wants to help those to rent who are providing just that.
The main physical and management issues that were identified during recent inspections are:
- no heat detector
- no thumb turn locks
- inadequate fire detection systems (e.g. LD3 for a 3 storey 7 bedroom house, or in some cases battery detection only)
- lack of fire doors
- no overhead closers on fire doors
- no handrails to basement
- missing fire blanket
- gas/electrical safety certificates not provided at the inspection
Of the large developments 93% of bed spaces are accredited under the ANUK/Unipol National Code
http://www.anuk.org.uk/LargeCode/
Early Observations on the Nottingham Student Housing Market
Location and Patterns of Occupancy
The maps below plots where student houses and developments are in Nottingham. The orange Code signs show where those houses accredited under the Unipol DASH Code are located and the blue signs show those houses that are not in the Code.
The green square Code signs indicate where the larger developments in the National Code are located.
Several conclusions follow from this mapping. Firstly, there is little physical separation between complexes and off-street properties in Nottingham. Secondly, some of the lower levels of interest in accreditation come from houses nearest the University of Nottingham (the Lenton Blvd area) and New Basford. Finally, there is a significant central overlap of houses and developments being occupied by students from both universities and then clearly defined separate university areas
Unipol will address the issue raised in respect of Code membership and double its efforts to get property owners near the University of Nottingham and in New Basford, to join the Code.
Early Observations on the Nottingham Student Housing Market - Off Street Properties
Number of Students Sharing
Graph: bed spaces by property size
Properties with six bedspaces house the largest single number of students - 29% of all students. 75% of students are in houses with between 4 and 6 occupants and only 15% students live in houses with between 7-9 other occupants.
Summer Rent Concessions
There is a high rate of owners offering summer rent concessions with 55% of properties offering this. It is important when offering a concession to be transparent about what this is. It is also clear that there is not a single cycle of house letting in Nottingham, so Unipol's initial advice about signing up on contracts that go beyond 30th June is inappropriate and has been changed.
Guarantors
There is a high rate of guarantors being used with 55% of students being asked for one. Unipol has changed its guidance on guarantors to stress:
- that in exceptional circumstances landlords should be prepared to waive the need for a guarantor
- that academic staff should never act as guarantors
- that care should be taken by parents not to guarantee a joint obligation that may exceed their own student's rent level
Unipol has produced a downloadable recommended guarantor form where an upper limit of liability can be written in to protect parents and others from guaranteeing third party non payment and restricts liability to their son or daughter's contribution of the rent.
Letting to Students on Individual Contracts
There is a low number of landlords willing to let individually, with only 13% of owners in Nottingham willing to do this (compared with 21% in Leeds). Many postgraduates and international students prefer to let singly and because the larger complexes let singly there is a growing expectation that the market should allow this. Owners with off-street properties letting houses over the summer (when the shared house market for returning students has all but ended) may find that letting rooms singly is the only way of tapping into the remaining student market.
Unipol has produced a model tenancy form that can be used for single lets and where joint and several liability for the common parts of the house are maintained (you can find more about them here). Some owners have raised a particular concern about how letting singly may make them liable for Council Tax payments and advice is being sought from Nottingham City Council on this point and will be reported here once that has been received (expected in early March 2008).
What is Included in the Rent
Most rents do not include water charges (81% of lettings do not include this), gas (96% of lettings do not include this) and electricity (96% of lettings do not include this).
Student complexes normally include utility charges within the rent (see below)
Amenity Levels
The amenity levels in both off-street properties and complexes are compared below and, for information, amenity levels in off street properties in Leeds are also provided for comparison.
Off-Street Properties and Complexes |
|||
|
|
Nottingham |
Leeds |
|
|
Amenity Levels % |
Off Street Properties |
Complexes |
Off Street Properties |
|
Security |
|||
|
Essential Security Standards |
79 |
59 |
97 |
|
Heating and Hot Water |
|||
|
Central Heating |
93 |
1 |
97 |
|
Gas Water Heating (tank) |
20 |
-- |
4 |
|
Instant Hot Water |
71 |
10 |
94 |
|
Electric Heating |
-- |
87 |
-- |
|
Glazing |
|||
|
Full Double Glazing |
58 |
64 |
78 |
|
None |
14 |
0 |
7 |
|
Smoke Detection |
|||
|
Battery Smoke Detectors |
15 |
0 |
4 |
|
Mains Interlinked |
59 |
3 |
64 |
|
Zoned |
15 |
97 |
30 |
|
Burglar Alarm |
81 |
19 |
89 |
|
Microwave |
70 |
100 |
72 |
|
Washing Machine |
97 |
4 |
96 |
|
Washer Dryer |
27 |
4 |
44 |
|
Dishwasher |
23 |
0 |
13 |
|
Off Street Parking |
32 |
58 |
27 |
|
Double beds |
|
|
|
|
All |
56 |
7 |
83 |
|
Some |
29 |
46 |
14 |
|
None |
14 |
46 |
3 |
Particular importance is given in the of street property market to good fridge/freezer provision, having a washer/dryer (not provided in larger complexes who have central laundrettes) and 4' or double beds.
Rent Levels
(all figures as of January 2008)
In the 2008-2009 Letting Year (as of January 2008) the average rent for a shared house on the website was £63.42 a week.
Average Rents Across the Letting year are (per week):
- Large Developments £80.18
- Shared House £64.18
- Self Contained Flat £75.92
- Studio Flat £90.00
- Owner Occupier £73.18
It should be noted that these are unadjusted averages. Many student complexes include utility charges with 85% including water charges, 63% including gas charges and 85% including electricity.
There is little difference in rental structures between postcodes for both larger developments an off-street properties.
Average rents only tell part of the story because the spread of different levels of rents between different types of property can be very substantial. The rental spread by type of property are given below.
It can be seen that rental spreads within the shared house market are particularly wide whereas the spreads between large developments is considerably narrower.
Rental Spreads
|
|
Rent £ |
|
|
Type |
Minimum |
Maximum |
|
Large Development |
65.00 |
92.00 |
|
Shared House |
34.00 |
107.00 |
|
Self Contained Flat |
54.00 |
127.00 |
|
Studio Flat |
85.00 |
111.00 |
|
Owner Occupier |
46.00 |
105.00 |
Legislation - Licensing
A progress report was given on licensing. In Nottingham it is estimated that 3,900 properties are licensable but only 990 applications have been received. In Broxtowe it is estimated that 50 properties are licensable with 46 applications being received and processed. In Rushcliffe it is estimated that 187 properties are licensable with 187 applications being received.
Legislation - Deposit Protection
Deposit protection for all tenants on Assured Shorthold Tenancies (ASTs) is now a legal requirement and landlords have to use either the custodial scheme or one of the two insurance schemes to protect any deposits levied. Details of the schemes can be found here. As part of protecting the deposit it is also a legal requirement to give tenants an amount of "prescribed information". Those landlords using the Unipol model tenancy will find that most of the prescribed information (apart from the leaflet that is required from each scheme) is contained within the tenancy.
Where a joint contract has an annual rental income (excluding any service or utility charges) that exceeds £25,000 then this is not an AST but a Common Law Tenancy and deposits do not need protecting under the current legislation. Campaigning is currently underway for the Government to lift the £25,000 ceiling from the level set in 1990 to an indexed level with RPI since that date (estimated at £52,000).
Unipol is currently examining the possibility of being able to offer accredited landlords (members of the Unipol DASH Code) an option to join a special bulk insurance scheme through Unipol at a much lower cost than is available on the general market. Details of this scheme, if possible, will appear on the news site as soon as possible. The scheme is expected to operate from July 2008 and so will not cover the majority of this year's lettings.
The Development of the Unipol Service
Unipol are continuing to develop a number of services for both landlords and tenants.
Three Model Tenancies have been developed (a joint tenancy, a single tenancy, a tenancy for a self contained property and there is also a tenancy for those living in an owner occupiers' house) and Code members can access these on line and generate their own bespoke model tenancy. The agreements can also be bought in hard copy from the Bureau. Details of the three Assured Shorthold Model Tenancies can been found here.
Unipol has initiated a number of drop in services at their main offices. The Police are available for both landlords and students on Tuesdays between 11am and 12 Noon to give advice on crime prevention, burglary, personal safety issues and any police-related matter.
There is a drop in solicitor service for students only on Wednesdays between 2pm and 4pm and this alternates between the campus office and city centre.
Unipol is launching a Landlord Consultative Group that will enable landlords using the Unipol service to feed their views directly into Unipol's management processes. This will be up and running by March 2008.
Unipol will launch a training programme with DASH for student housing management issues and will increase its assistance to landlords about how to use the Unipol system and download photographs and floor plans.