Having left school at the age of 16 without qualifications, starting work the next day as a labourer in a foundry in what was still the Lanarkshire steel belt, the “university experience” clearly passed me by.
But of course university passed by most school-leavers – I believe the figure was around 93 per cent – back in the 1970s. And even then the trend, certainly among students from working or lower middle-class families, was to attend a university close to home and commute daily,
How different this was compared to today when not only do many more school-leavers go on to study at a university (most of which did not exist when I was a teenager) but also choose an establishment some considerable distance from home. Whether this explosion in university education is a good thing is not a matter for this column.
However, it seems worth noting that the most successful economy in Europe also has, pro rata, the lowest number of university students: namely Switzerland, where much greater emphasis is placed on high-quality, job-focused training.
What is relevant to this column is the enormous rise in purpose-built student accommodation that has resulted from not just the huge increase in students but the propensity for students to live away from home.
In towns and cities that already had sizeable student populations, the emergence of these developments clearly has implications for small private investors in properties that appealed to students – in particular HMO flats with licences to let to more than two tenants who are unrelated.
In Edinburgh, values of “traditional” student accommodation in residential areas have held up extremely well despite the growing choice of purpose-built flatted developments that offer not only warm and ultra-modern living space but also communal dining facilities and areas for study and relaxation.
Nowhere is this more apparent than Marchmont in Edinburgh. Traditionally, February is the month when students (or their parents) try to secure accommodation for the next university term, starting in September, yet despite the alternatives available, in February this year demand for HMO flats in Marchmont easily outstripped supply.
Clearly this suggests that substantial numbers of students still prefer traditional flat-sharing to purpose-built accommodation, no matter what advantages the latter has to offer. Never having been a student I cannot say for certain why this is, but suspect it has something to do with living side by side with friends of their own choosing in a place of their own choosing. Another factor is that when sharing with four or five others, traditional accommodation is not much more expensive than a room in a purpose-built development.
Consequently, investors who specifically target the student market, or who see students as part of a wider tenant base, really need not fear extensive void periods, or accepting lower rents, because of competition from the purpose-built sector.
However, the local authority may, at some time in the near future, limit the number of flats that can be let to students in a particular neighbourhood or even street. Edinburgh and Glasgow city councils are already preparing to impose controls on rent increases in designated hot-spots within their respective boundaries so they may extend this to student lettings if complaints from conventional owner-occupiers continue. This could result in more students switching to the purpose-built sector.
Luckily for investors, the areas closest to Edinburgh University (and Glasgow University too) remain highly popular with owner-occupiers and tenants holding down professional and skilled manual jobs and therefore prepared to pay prime rents. So any lessening of future demand from the student sector will almost certainly pass them by in terms of rental income and capital growth.
David Alexander is MD of DJ Alexander