Permitted development

Sevi Rixson explains how student accommodation is changing the face of the high street in university towns

It is fair to say that quality education significantly changes the lives of all those fortunate enough to access it but equally, university students have a significant impact on the local communities where they study. Here Sevi Rixson, of investment and property management specialist Urban Student, looks at recent developments and how a large influx of students into any UK university town can change the shape, nature and size of a high street and local retail businesses; how they impact services and recreational facilities; plus importantly how they influence the supply of appropriate housing. 

This autumn, the first year intake is expected to exceed 500,000 for the first time – resulting in a record 2.3m+ students descending on university towns across the UK. They bring with them specific demands for services and accommodation but also have considerable influence and spending power, which will ultimately find its way into local economies and impact the face of the high street.

With town centre retail vacancy rates doubling between spring 2009 and 2011 and total consumer spending on the high street halving in the same period, action was needed, so the Government asked Mary Portas to conduct an independent review into the state of our high streets and town centres. The subsequent report, published at the end of 2011, advocated the high street be reestablished as a destination for socialising, culture, health, wellbeing, creativity and learning. It found that with the rise of retail parks and a phenomenal growth in online and mobile retailing, how we shop as a nation has quite simply changed beyond recognition and suggested that the only hope for our high streets to survive was to deliver something new.

University town high streets are noticeably different to other ‘traditional’ towns and tend to still be busier. Yes, you’ll find many of the same retail brand chains, banks, fast food and specialist outlets, vacant shops plus independents; but student towns also have a significantly more diverse mix of retailers with proportionally more qwerkie and specialist retailers, coffee shops and fast food outlets – all targeted towards and catering for specific student needs and so making a living from them. But there is now also quiet a revolution going on above the high street. 

Students tend to stay in quite a tightly defined locale and in addition to studying in the area they also tend to socialise and buy goods and services locally. This is because they don’t typically have regular access to cars so are less likely to go to the large out of town retail parks or superstores for daily requirements like groceries; instead frequenting local stores. This trend has helped fuel the resurgence of mini-supermarkets with retailers like Tesco reporting that over half of its 3,000 stores are now “Express” outlets and other retailer like Sainsbury and Morrisons are also expanding in this sector.

Another significant factor is that because of the revolution in distribution, many retailers have moved to the ‘just in time’ delivery model, and no longer have to hold large quantities of stock. This means that the stockrooms connected to the premises are now largely redundant but are still part of the rateable space, so have become an expensive addition. Others outlets like coffee shops simply don’t have any need for storage as what they sell takes up little space anyway; and they only need the tables and chairs. 

So with this in mind and with such demand for new quality student accommodation in many of the prime ‘Russell Group’ University locations, Urban Student has been working with property owners to maximise potential by using Permitted Development (PD) and converting these redundant spaces from B1 Office into C3 Residential, typically without needing to apply for planning permission. 

In one instance in Durham two redundant floors of storage space above a high street store that had laid idle for quite some time were identified and a plan worked up to convert the space into nine studios with communal areas and independent access. This was subsequently done to a high standard in less than ten weeks and the units were all let off-plan in advance of the construction work even starting and well ahead of the new term starting. This gave the investor certainty of income and the students got great, purpose designed and affordable, modern accommodation that was within easy walking distance of both the university and many local facilities. What’s more the shop is still open for business but what was previously a cost centre now has a market value close to £1m with circa £60,000 gross rental income per annum. 

Elsewhere, a vacant office building has been converted, creating a number of stylish “pod” style units that are popular with students. And there are many other instances where B1 property has been successfully converted into C3 residential but there is a tight deadline. Any project implemented under the PD scheme must have tenants in place before the May 16 deadline so vendors and property owns need to seize the day to comply with current legislation. With the right knowledge and experience a permitted development scheme could take as little as six weeks to complete but extenuating circumstances like highways access, contamination and listings, to name a few, could easily restrict this. So, with relatively no time for individual landlords to acquire this knowledge, Urban Student is increasingly being consulted and providing its expertise to deliver the desired results.

“We use our market knowledge, management expertise and buying power to identify and acquire properties which will be good quality accommodation that appeals to students as well as deliver good yields and good asset value growth for investors,” explained Sevi Rixson. “We then oversee all aspects of the purchase, including legal compliance and HMO (House of Multiple Occupancy) licensing as required; redevelop and decorate the property to meet today’s living requirements. We even take on the long-term management as required. This means the university towns in which we operate can better meet the needs of increasing student numbers plus have a better reputation for having good, affordable property. This in turn attracts more students and investors – together bringing more money into the town.” 

This ‘end-to-end’ expertise also enables individuals to successfully invest in the student buy-to-let market through a Fully Completed Income Producing Investments (FCIPI) scheme as it removes almost all uncertainties. Investors benefit from strong income from day one; don’t have to be hands on; can have direct freehold ownership; and can resell the property through estate agents should they ever wish but as strong income become the norm, investors rarely seem to want to sell! The students also get a quality, well appointed, managed, maintained and conveniently located property that’s not overpriced.

So with more students than ever attending universities; fueling demand and wanting quality accommodation, student property remains a strong investment that achieves good levels of return. Universities remain busy, towns flourish and students spend their grants in local shops and on local services; so positive outcomes all round. There’s also a glimmer of good news for our old high streets as they evolve to meet our changing needs both above the shops and at street level.

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