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Local governments closing down student ghettos

Posted by Tom Walker in ,

There is growing appetite amongst some local councils to relocate students into purpose built halls, but what is the motivation behind this agenda?

Some of the impetus driving this local government policy stems from Whitehall's goal of freeing up housing stock for families. Following the Housing Act of 1988 - in which the Assured Short hold Tenancy (AST) was introduced and general rent deregulation occurred - national property investors started weighing into local markets and consequently pushed prices beyond what young professionals and low- to middle-income families could afford. This, alongside the mortgage market crash of the mid-2000s in which essential credit lines for first-time buyers dried up and rents consequently rose (increasing the attractiveness of buy-to-let as an investment), resulted in swathes of university cities' residential plots being dominated by student accommodation. The likes of Lenton in Nottingham, the Viaduct in Durham and Clifton in Bristol are prime examples of established student 'ghettos' that dominate the local neighborhoods.

Local authorities in many cities are now actively trying to free-up the student housing stock that established itself in the wake of the Housing Act; although in relatively early stages, councils are employing measures such as tightening HMO licensing rules, increasing restrictions on modifications to properties for students and relaxing planning laws to encourage the construction of private halls that can house large numbers of students away from residential areas.

Whilst the motivation to shift neighborhood demographics away from student dominance may seem at first hand to be a benevolent gesture aimed at protecting local residents, there is of course a financial incentive for local government. This policy results in an increase in council tax receipts as council-tax-exempt students are replaced by ordinary council tax paying families. On top of this, councils receive payments from central government through the 'New Homes Bonus' on the newly constructed student halls. This 'bonus' is a grant paid over 6 years by central government to local councils to reward the increase the number of homes and their use.

How the government's desire to release student housing stock to the mainstream market plays-out against the likes of landlord associations, local estate agents and students' desires to dip their toes into the real world has yet to be seen. What is clear, however, is that central governments of past who have tinkered with the housing market have usually prompted unintended consequences that solve one issue but rapidly create another. What the next issue is to be borne out of this latest policy is anyone's guess however.

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