Tuition Fees Increases Approved by Parliament

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Legislation allowing universities to increase tuition fees has been pushed through parliament ahead of its dissolution in the run up to the general election.

The higher education legislation had been intended to make higher fees dependent on improved teaching. However, this will not come into force until 2020-21 and up until then universities can increase fees in-line with inflation, without a link to teaching quality.

As a result, students will face fees of £9,250 a year at almost all universities. This is on top of sudden increase in interest rates that student loans are subject to, which have increased from 4.6% to 6.1%.

The Higher Education and Research Bill faced a large number of amendments in the House of Lords, but after a number of compromises the legislation was passed prior to Parliament shutting down.

Although a framework to link teaching quality to tuition fees will be introduced, in won't be for at least three years. In the meantime, universities signed up to be part of the plans to measure teaching quality are free to increase fees in line with inflation.

An independent review of the proposed teaching excellence framework will begin in 2018, with the aim to introduce annual increases in line with teaching quality from 2020-21.

Universities have also argued for overseas students to be omitted from migration targets, although so far, this proposal has been rejected.

Universities are hopefully that the status of overseas students could be reconsidered as part of wider reviews of migration during the Brexit negotiations.

European Students Eligible for Loans and Grants in 2018-19

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The government has announced that Europeans studying in the UK will remain eligible for grants and loans in 2018-19.

Even after the UK leaves the European Union, those students from the EU will remain entitled to receive grants and loans for the 2018-19 academic year.

Ministers said attracting talent from across the globe was key to success and the announcement will go some way to easing concerns over EU students' rights post Brexit.

Separately, the government had already guaranteed financial support to those starting courses this year, but the latest announcement was welcomed by vice-chancellors.

University UK's deputy chief executive, Alistair Jarvis, said: "Students from EU countries can now apply for places on undergraduate courses starting in autumn 2018 with the confidence that they will not have to pay up-front tuition fees and will remain eligible to receive government-backed loans to cover their tuition fee for the duration of their courses.

"This announcement also means that EU students commencing courses in autumn 2018 will continue to pay the same tuition fees as UK students for the full duration of their courses, even those years past the point the UK exits the EU."

Mr Jarvis suggested it was now vital the government communicates the change in policy to prospective students across Europe.

Meanwhile, acting director of the Russell Group of top research universities, Dr Tim Bradshaw, suggested the announcement gives EU students the certainty they need when considering the UK and provides clarity to universities.

University of Bath's Student Union Supports Cut the Rent Campaign

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The University of Bath has endorsed a 'Cut the Rent' campaign aimed at fighting the increasing costs of student housing.

The announcement comes as the University of Bath seeks to raise additional income from student accommodation and other areas to counter cuts in public funding.

According to campaigners, the university has increased the proportion of luxury student accommodation while at the same time admitting more students. As a result, demand for student housing has increased while the supply of affordable bed spaces has fallen. Luxury accommodation on the University campus now costs over £150 per person per week to rent.

Since 2001, when the current Vice Chancellor came to office, university-owned accommodation rent has reportedly increased 150%. Due to these increases, just two student halls, namely Osbourne House and Eastwood, provide students with beds which cost lower than 50% of the maximum maintenance loan a student can receive.

The National Union of Students are worried that higher rents, along with the rise of private purpose-built student accommodation, will lead to more financial pressure on students.

The Cut the Rent Campaign is arguing the University of Bath has exceeded its target operating surplus each year since 2012, meaning it could reduce rents in University managed accommodation.

The student union has now adopted the policy and the campaign has demanded the union becomes active in seeking reduced rents.

Student Debt Levels to Increase yet Further

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Students are set to face a sudden increase in the interest rate applied to their tuition fees and maintenance loans.

The increase will impact millions of current and former students in England and Wales, with interest rates rising by around a third.

For students taking out loans since 2012, the applicable interest rate is based on the retail price index (RPI) measure of inflation in March, plus 3%.

The latest RPI was recorded at 3.1% compared to 1.6% last year and 0.9% in the year before. This will result in an increase rate charged on tuition fees and maintenance loans of 6.1%.

The resulting increase will lead to students facing higher costs before they've even graduated.

Students will also be impacted by an increase in tuition fees this year, with universities in England set to charge £9,250 per year.

The Intergenerational Foundation's latest report on tuition fee interest was dubbed "The Packhorse Generation", reflecting the increasing levels of debt that students face.

The foundation estimated that prior to the interest rate increase, students earning £41,000 per year will make repayments of £54,000 on tuition fees alone. Many students also take out loans to cover living costs, which place an additional financial burden on students.

The level of debt owed by students for tuition fee and maintenance loans rose to £76bn last year, compared with around £34bn in 2011.

Commenting on debt levels, the National Union of Student president, Malia Bouattia, said: "Graduates wanting to access the housing market, save and start pensions after university are already struggling to do so and this step will only disadvantage them further."

Ms Bouattia added that the rising levels of debt would "cast a long financial shadow over young people's lives."

Empiric's Portfolio Increases to £721.3m

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Empiric Student Property has reported an increase in its property portfolio of 37.7% over the past 6 months to £721.3 million.

The student accommodation specialists have released their latest financials for the six-month period ending 31 December 2016, during which operating profit was recorded as £20.2 million.

During the period 14 new assets were contracted, totalling 1,142 beds, taking the group's portfolio to 8,504 beds across 89 assets in 30 UK towns and cities. The company aims to maintain its expansion to meet its IPO target of 10,000 beds within five years.

The company reported an average valuation yield on its portfolio of operating assets at 31 December 2016 of 5.9% compared with average yield on acquisition or cost of 6.5%.

During the period they saw its Hello Student brand manage 3,075 beds as at 31 December 2016, while the group is targeting a rental uplift of 2.5% for the 2017/18 academic year.

In the past 6-months 143.4 million of new debt was raised through two new facilities, resulting in a Loan to Value ratio of 31.1%, compared to a target of between 35-40%.

The company also made a substantial change to its investment policy in December last year, increasing the type of student accommodation investments the group can make. This included the lifting of the restriction that developments must be forward funded. This change is expected to allow the company to develop additional purpose-built student accommodation, whilst reducing its third-party developer risk.

Empiric also noted it will work more closely with higher education institutions to assist them in addressing the accommodation needs of the student population and is targeting a dividend of 6.1p per share for the 12 months to 30 June 2017.

Unite Group Reports Quarterly Increase in Fund Valuations

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Unite Group Plc has announced its quarterly property valuation of the Unite UK Student Accommodation Fund (USAF) and its London Student Accommodation Joint Venture (LSAV).

As of 31 March 2017, USAF's property portfolio was valued at £2,084 million representing an increase of 0.5% during the quarter. The portfolio consists of 24,176 beds split across 68 properties in 23 University towns and cities in the UK.

Meanwhile LSAV's investment portfolio was valued at £1,079 million, an increase of 0.6% over the previous quarter on a like for like basis. The LSAV portfolio comprises of 8,477 beds across 13 properties in London as well as the recently acquired Aston Student Village in Birmingham.

Unite attributed the increase in valuations to rental growth with yields remaining stable in the quarter. The overall USAF portfolio achieved an average yield of 5.6% and the LSAV portfolio 5.0%.

The company has reported record levels of reservations for the 2017/18 academic year with 77% of rooms booked compared to 74% reported at the same period a year earlier.

Reservation rates support the company's full year rental growth outlook of 3.0-3.5% and Unite suggests the strong performance reflects the company's continued focus of working alongside the UK's strongest Universities.

Commenting on the results, Joe Lister, Unite Students Chief Financial Officers, said: "Unite Students has delivered another strong performance in the first quarter of 2017, with reservations at record levels for this time of year and supporting our rental growth outlook of 3-3.5%."

Cornerstone International Reports Growing Interest in UK Student Property

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Reports indicate that interest in the UK student accommodation market from Malaysian investors has remained strong even after the EU referendum.

Cornerstone International (CSI) is an agency and consultancy specialist in overseas property for Malaysian buyers and has reported interest among its clients for UK student property continues to grow.

The company indicated that for 2016 it saw sale volumes grow 60% year-on-year, with UK properties accounting for more than half that. The agency attributed the growth to the lower value of the pound following Brexit, which has created favourable exchange rates for Malaysian investors.

According to CSI, the majority of UK property investments are targeted towards student accommodation and accounted for over 65% of all UK property sales the company handles.

The student property market has shown to be anti-cyclical in nature, offering resistance to recessions. CSI expects the same principles to apply when the impact of Brexit is fully known and predicts it will do little to discourage students from choosing to study at popular UK institutions.

CSI is not the only Asian property specialist to issue a vote of confidence in UK student housing. A number of Asian institutional investors have recently invested significant amounts of money into the sector. Singapore's GIC recently invested £227 million into a joint venture with UK student specialist Unite.

Real Estate Investors Henley Purchase Student Portfolio from Liberty Living

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Reports indicate the UK private equity real estate investor Henley has snapped up three student housing assets from Liberty Living.

Henley purchased the sites for £50 million from the Canada Pension Plan Investment Board-owned student housing specialist.

The three sites are located in Preston, Sheffield and Stoke and total 1,519 student bed spaces.

Commenting on the deal, Henley's chief executive, Ian Rickwood, said: "Henley has been committed to capitalising on the opportunity currently available in the student accommodation space since Autumn 2016 and we plan to further increase our holdings in this market over the coming year."

The company also owns a portfolio of student accommodation properties through Henley Ark. Situated in Dundee and Salford the properties are worth £25m.

Liberty Living has been expanding its business outside of the UK with the purchase of several assets from Blackstone.

The company was reported to have paid 460m for 13 student accommodation residences in 12 separate cities across the UK, Germany and Spain. The portfolio consisted of 6,484 beds and formed part of the Union State student accommodation brand.

Client Money Protection Could Become Mandatory for Agents

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The working group set up by the Department of Communities and Local Government to consider Client Money Protection rules, has suggested the scheme should made compulsory for all letting agents that handle client money.

The housing minister Gaving Barwell has subsequently accepted the findings, and a formal government announcement is expected today.

The working group was put together last August with the remit to decide on whether it would be appropriate to recommend making client money protection mandatory (CMP) on letting agents in England.

After gathering evidence on the matter and a consultation period, the working group suggested that 85% of interested bodies, including letting agents, were keen to see mandatory CMP.

A statement released from the group said: "This would improve the reputation and professional standards in the industry as well as giving consumers the financial protection that they want and deserve. It would also bring the sector into line with others where client money is held, for example the legal profession and travel operators."

The group went on to say: "It is presumed that it is those agents that dot not have CMP voluntarily that are more likely to abscond with or abuse client money in their custody. Mandatory membership of a CMP scheme would help to drive up standards across the sector."

The group also suggested those existing agents which fail the due diligence requirement to access CMP cover should not be able to continue to handle client money.

Furthermore, to give agents time to adjust, the group recommends a transitional implementation and those seeking to obtain CMP cover should not be required to join a professional body.

Crosslane Property Group Seeks Funding Partner for 3,300 Student Beds

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Crosslane Property Group (CPG) is seeking a partner to put up £325 million to forward-fund its entire student accommodation pipeline.

The portfolio, which is being sold under the name Project Echo, consists of more than 3,300 student bed spaces across 10 cities in the UK and Ireland.

It's estimated that once constructed, the assets will produce a net operating income of £20m a year and a yield of 8.3%.

The pipeline consists of 13 sites, two of which are already under construction, one in Swansea where planning is secured, three where planning permission is yet undecided, two where the site has been secured and a further five which are in the process of being acquired.

The first two schemes are due for completion this September and consists of 571 beds split between Newcastle and Manchester. The remaining student developments are scheduled for completion by September 2019.

CPG already has a portfolio of over 3,100 beds valued at around £216m and has appointed KPMG and PwC as joint advisors on the sale.

Under the deal, it's expected that the winning investor will purchase the land once planning permission has been granted and pay £242m to fund the development phase, with a lump sum being paid at practical completion to take the total cost of the acquisition to £325m.

CPG is also seeking to act as the developer as well as provide asset and property management to the investor once the student property has been built.