The Class Foundation publishes new vital PBSA report

Anna Varela·15 November 2024·4 min read
The Class Foundation publishes new vital PBSA report

The UK’s reputation for high-quality higher education continues to draw students from across the country and around the world. However, this influx is outpacing the nation’s ability to provide adequate student housing, creating a severe shortage across many regions.

According to the European PBSA Legalities Report 2024 compiled by the Class Foundation, the 20 largest student cities in the UK need roughly 230,000 additional student housing beds to meet current demand levels – London alone requires 100,000 new beds.

‘The UK market is one of the most established PBSA markets in Europe’

However, it’s struggling to keep pace with the surging demand.

Cultural shifts have led to more students studying outside their home regions, while international demand remains high. Yet, the development of new PBSA facilities hasn't been able to match this rapid growth.

From a legal and regulatory standpoint, the UK’s PBSA market is highly complex.

Student occupancy arrangements typically follow the format of Assured Shorthold Tenancy agreements or licence agreements, both of which incorporate detailed terms and responsibilities for landlords and tenants, with significant statutory protections in place.

The report explains that this regulatory framework is designed to safeguard student tenants, but it can also create challenges for PBSA developers and operators.

Compliance with requirements like deposit protection schemes and gas safety certificates is essential, but it can slow down the process of recovering possession if needed.

Zoning and planning regulations.

The classification of PBSA under the Use Classes Order is often a “matter of fact and degree” for local authorities, leading to inconsistent and unpredictable outcomes across different regions.

The report suggests there is a general consensus that a more centralised planning policy for PBSA would help free up traditional housing stock for the wider market.

Tax considerations for PBSA investors and developers

VAT and Stamp Duty Land Tax pose potential pitfalls for investors and developers, who must carefully structure their transactions to ensure the recovery of VAT on construction costs and navigate the varying SDLT rates.

Looking ahead, the report identifies several impending changes that could further impact student housing.

 These include the potential revival of the Renters' Rights Act under the new Labour government, which may strengthen tenant protections, as well as the additional duties and costs introduced by the Building Safety Act for PBSA operators.

The report also notes that the planning system is likely to undergo reform, with the Labour government acknowledging the need to streamline the often-cumbersome process of obtaining planning permission.

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