University Challenge

At this time of the year students have returned home from University, at the end of yet another academic year. Now is the busiest time of the year for landlords wanting to prepare their properties for the new group of students moving in for the next academic year.

Students are becoming more particular about the standard of their accommodation but are unable to afford to pay a premium unless Mum and Dad can help. One wonders how long Councils can afford to hold back on charging students Council Tax too. On the other hand landlords are suffering financially due to their loss of tax relief on mortgages and a propensity towards greater licensing and regulation, creating additional expense.

So it seems both students and landlords are facing a growing financial challenge.

Guildford is the home to the University of Surrey, University of Law, the ACM and Guildford College so has a substantial student population all wanting accommodation. The financial contribution they make is an essential key component to the wealth of the town. For example, in 2013/14 the University of Surrey generated more than £1.5 billion for the UK economy, with over £1.1 billion for  the county of Surrey.

The University created 17,500 jobs of which 10,000 were in the Borough of Guildford alone. The University hosts a range of events and activities that are open to the public, particularly in the arts, and has a range of programmes through which it connects with local schools and colleges. It owns the Surrey Sports Park, a world-class facility open to all and home to a range of local sports clubs and teams.

It is responsible for ensuring that all first year students have access to campus accommodation. There are over 5,500 rooms available on campus, at a range of rents from £71pw (budget rooms at Hazel Farm) to £225pw (studio) all inclusive. These rates compare favourably with market rental pricing.

The university has been building new student accommodation at its Manor Park campus since 2005 and is constructing its second phase of around 1,100 rooms, due for completion this year, to provide further accommodation. This will take the total rooms at Manor Park to around 3,000, but the university has planning permission for 4,000 rooms at the site and says it is therefore "examining the possibility" of building more rooms.

While this may seem encouraging the University is caught in a cleft stick because in order to raise funds, it has to attract more students. Over the last 5 years the full-time student population has grown from 13,500 to well over 16,000. According to its corporate strategy, the university plans to increase student numbers to 18,000 by 2022, and 23,000 by 2027, to place additional pressure on Guildford's housing market.

Second and third year undergraduates, in general, will always be encouraged to find their own accommodation within the Guildford private housing sector.

This means that landlords are buying up property in areas like Bellfields and Park Barn, once designed to house the local working population working on lower incomes. Other areas in prime spots close to both the University and town centre include Guildford Park Road, Woodbridge Road, Worplesdon Road and Westborough. These areas tend to offer comparatively low cost housing so for example, there are currently 136 3+ bed houses for sale in these areas, with prices starting from £300,000 for a 3 bed/2 rec property in Groom Walk, Slyfield, to a 5 bed detached house in Ridgemount, located just behind the university for £897,000. The median asking price for a 3 bed property in these areas is £450,000.

There are also 284 3+ bed rental properties, for family rental in the University catchment area, with a median rental of £2,300. Landlords will typically rent out properties by the room at a average room rental of £650 pcm so having converted a couple of reception rooms into bedrooms, or gone up into the loft or down into the basement to create a 5 bed rental property they can now charge £3,250, compared to the £2,300 for the family house to make an additional £950 per month. This obviously makes economic sense for them to do so, if planning to invest in the property for the long term.

However a recent report called "At The Limit - Student Housing Crisis" stated that over a 5 year period students have had to move further out to the fringes of Guildford town, including Merrow and Burpham, with markedly more students living in Woking due to this continuing issue of lack of property and excess demand leading to increasing rents. This explains why students tend to start their search for next year's accommodation as early as November in the previous year, so that they have a better opportunity to secure better quality homes at a reasonable price.

This issue will never go away if universities need more students to attract funds to finance further education to create skills to enable the working population to compete in the 21st century workplace.

The only solution might be for larger corporate housing developers to build student blocks to be leased back to the university, to provide accommodation for all students, whatever their year. Secondly, technology may help as it now allows for universities to deliver remote learning so that students will not necessarily have to live away from home in order to learn.

Artificial intelligence might also reduce the need to accommodate so many students and university staff in one locality, as it takes over some of the lower skilled roles; and also delivers educational content on demand. The University is currently working with 5G network architects and technicians to make this a reality.

Having considered these challenges Guildford still remains a wealthier and a more pleasant place to live in, for having resources such the University in the town but what price is the local housing sector having to pay to achieve this?

If you should like to have a chat about any matters discussed in this article or about the Guildford property market in general then please do contact me.