PBSA, COVID AND THE NEXT GENERATION
Last week, the 11th Annual LD Events Virtual Student Housing Conference took place and the sector gathered to discuss numerous topics which largely focused on recognising the impact of COVID-19 on the world of Student Accommodation including the importance of student wellbeing during these challenging times.
As we are all too aware, the Higher Education headlines are changing at such pace, even the most observant amongst us are struggling to keep up. As predicted at the conference, recent media captions depict dissatisfied students struggling with online teaching approaches, feeling isolated in their halls, and questioning their decision to attend university in 2020.
We have gathered some key points from the conference discussing them below as they may ring true in the future.
International students have always been an essential part of the student housing sector, with many universities becoming more financially reliant on them choosing to study at their institution. PBSA developers, particularly in London, have often focused building more higher-end luxury properties specifically to house this cohort believing them to have greater means to support a more affluent way of living.
Online booking/travel agencies have consistently reported a higher rate of PBSA bookings from international students compared to their domestic counterparts. However, a number of challenges, including VISA application complications, financial issues and physically being unable to get out of their country have arisen. As a result, the sector is eagerly anticipating whether these students will arrive and check into their accommodation (regardless of whether a booking was made).
There are investors and operators in the sector who argue they do not have an over reliance on international student revenue but we are likely to see how accurate that proves when the data is gathered later this year. Regardless, a diversified portfolio and ability to pivot to domestic or even non-student market if there is less international demand will come under the spotlight.
Student Demand for PBSA
Over 25 PBSA transactions took place worldwide between April and August 2020 and there is no strong evidence to suggest the student housing market will decline anytime soon. Over the next decade, a demographic change is on the UK horizon bringing with it the prospect of several tens of thousands more 18-year olds applying to university which the industry holds out as a panacea to longer term demand and supply concerns.
Responding to the student voice over the argument of continuing to pay rent during the early stages of the pandemic, several operators chose to follow in the footsteps of Unite Students and universities and issue refunds. Interestingly, Unite chose to categorise this decision as an investment in their brand. As Unite control and operate all of their own beds this was an easier decision for them compared to some of the operators who manage for several different investors who could not so easily follow suit. As a result, many have faced significant criticism from students when compared against the Unite response.
The response has highlighted to students and investors the maturity of operators and their improved focus and understanding of the needs and experience of students. Demonstrating that unlike HMO’s, PBSA’s are more flexible and have the ability to amend contracts if and when necessary.
Approaching this academic year, there is a sense that students expect a higher level of consideration from PBSA’s to amend contracts to fit in with their circumstances should they swiftly change. When opting to release students early from contracts, operators need to balance their own requirements with those which may negatively affect their residents (e.g. mental wellbeing and family financial hardships). We ponder whether bespoke contracts will become the ‘norm’ in future years as the market is potentially forced to adapt to housing students who may not necessarily require student accommodation when the majority of their learning will take place online?
In addition, PBSA appears to be favoured over university halls. StudentCrowd reported PBSA surpasses university halls when competing against the things students most value when selecting their accommodation. The data outlined a 5% decrease in students researching university halls in 2019/20 compared to a 27% increase for private accommodation searches in same year.
Source: StudentCrown LD Events Virtual Student Housing Conference
So, the question arises, why the rise in private accommodation searches? The likelihood is, as students will spend more time in their rooms, there is an increased demand for en-suite rooms or studio flats. The majority of PBSA’s already offer these facilities and room types and were built more recently to accommodate modern students’ desires. As a result, it may be no surprise that 12% of private accommodation is sold out this year. In recent years, PBSA came under criticism for building studio flats for their association with prioritising high rents over loneliness and poor student wellbeing. At the time, sector critics signalled to operators to put a hold on building these room types. However, given the pandemic, it appears these options, for the moment and, due to hygiene or safety concerns may prove to be more popular in the short term.
The (Virtual) Student Experience
It is predicted, 80% of universities will opt for blended teaching delivery during the 20/21 academic year and cases of poor mental health and wellbeing are expected to increase due to lack of social interaction. StudentCrowd has recorded a 19% increase in UK users researching and making informed decisions on how to get the most from their student experience.
It goes without saying, creating a programme of activity for everyone to partake in is crucial. However, operators are reminded not to assume that everyone is a digital native, or that all students have the necessary technology to participate with. Many students chose to continue living in their student accommodation during the outbreak of the pandemic because of they didn’t have the Wi-Fi resources to continue studying from home. We must also remain cognisant to the accessibility needs of all residents. As an example, this includes thinking about how those with visual or hearing impairments can participate virtually without the aid of assistance.
Those who attend will not always engage, but you will reap the benefit of respect from those who see that effort has been made in a response to their welfare.
Rebecca O’Hare, our Head of Partnerships & Resident Experience presented at the conference and, highlighted the value students place on receiving clear expectations, clarity on what is required from them and what life in their accommodation will truly be like. We have witnessed some PBSA operators and universities devise community agreements, requiring students to sign them and signalling they understand the duty they have to play their part and the negative consequences which may arise should they break the agreement. Students are well versed in understanding how to prevent the spread of COVID and assumptions not made that they have no idea how to play their part.
Clear communication and relevant updates regarding COVID will be paramount and while it has always been a challenge to ensure students read what you communicate, short, to the point comms favour emails which upon inspection closely resemble an essay. This applies to Universities communicating their expectations towards outcomes of student work. Reporting frustration and confusion with advanced autonomy learning, students appreciate clear criteria on how their assessment will be graded. Utilise many platforms. Email and put up posters, schedule tweets and create Instagram posts, make use of digital screens and place an importance on word of mouth. Communicating with students should be as diverse as the student cohort itself.
Keep calm and carry on?
Students have voiced their disappointments loud and clear regarding their perceived value for money and the student experience they have received thus far. Universities claim to be using all resources available to deliver a meaningful learning experience so may not feel obligated to issue refunds any time soon. You have to feel for both sides and we are only just getting started for the academic year. There will no doubt me more dissent to come and more to consider and respond to for universities and operators. Already, some universities are granting rent rebates and there is lobbying to the private sector to follow suit where lockdowns have been forced upon accommodation blocks.
Despite these opinions, a recent YouthSight questionnaire captured that 80% of the UCAS pre-application audience are committed on attending university in 2021. Realistically what choice do they have when the options are a gap year with major travel restrictions or to seek employment when 10m jobs have been furloughed. It seems clear to us that demand isn’t going to drop provided that people adapt to the different experience that we are all grappling with.
Semi self-contained accommodation has always been a priority for students, and with the outcome of coronavirus still unknown, it is expected the need for PBSA’s to provide these facilities will only increase. We believe that if the significant challenges that are being faced by the sector as the academic year commences are addressed properly then there is no reason to panic. There is a lot to admire in the response so far. We are all in this mess together so it is a time for calm heads and to take each day as it comes for now.