Housed: The Shared Living Podcast

Has the 25/26 season been tough for PBSA? Should void beds be a Plan A? Later living housing targets, Uni mergers, The impact of a new housing secretary. Do more 18 year olds going to uni mean more in student accommodation?

• Season 5 • Episode 1

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Sarah, Dan and Deenie are back with a brand new season of Housed, dissecting and discussing some fresh new topics from the world of shared living. 

This week insights:

- The impact of the new Housing Secretary
- Why does affordable just mean 'old'?
- More 18 year olds going to uni = more in student accommodation?
- Why has the 25/26 season been tough for PBSA?
- Should void beds be a Plan A?
- Including later living in housing targets
- University mergers and what it really means for students

Thank you to our season four sponsors:
MyStudentHalls - Find your ideal student accommodation across the UK.
Utopi - The smart building platform helping real estate owners protect the value of their assets.
Washstation - Leading provider of laundry solutions for Communal and Campus living throughout the UK and Ireland.


Speaker 1:

Hello everyone and welcome back to How's the Shared Living podcast. This is the first episode in season five, and we are delighted to be back once more with brand new content. Same old podcast hosts and sponsors, though, so we're very glad to be back. Apologies if we're a bit rusty it's been quite a while since we put the old headphones on. First of all, let's recap who we are. I'm Sarah Canning from the Property Marketing Strategists.

Speaker 2:

I'm Dan Smith from Resi Consultancy and Verboflow AI.

Speaker 3:

And I'm Dini Lee from the Property Marketing Strategists.

Speaker 1:

And let's hear a word from our headline sponsor.

Speaker 3:

Season five of Housed, sponsored by mystudenthallscom. List your properties, commission free and reach thousands of students searching for their university home.

Speaker 1:

Thanks once again, dan and the team from my Student Halls who have supported Houzz since the beginning. We're so grateful that you're back once again for a fifth season of Houzz. We know anyone working in student accommodation is busy budget setting at the moment, so do make sure you get in contact with Dan and the team to make sure that you have my student halls in your budget for the 26-27 leasing season. Thank you, wash Station and Utopia for coming back and sponsoring House once again. More from them later.

Speaker 1:

We actually managed to get in a sponsor's lunch together over the summer. It was great to see Dan, john and Ben in person, as well as Maria from Howard Kennedy. Thanks so much for your thoughts and ideas of how to keep the podcast even better and, listeners, feel free to keep sending us your ideas and topics to cover as well. We haven't been completely off, though. We've done a few special episodes over the summer that we hope you've caught up on. We had a three-part mini-series with the Class Foundation and a very special live recorded podcast special with Fusion as well last week. So, deanie and Dan, when, when we've not been podcasting, what have you you been up to over the summer? It?

Speaker 3:

was a busy summer, I think, probably doing lots of fun things, maybe not all work. I wasn't on all shared living news when it was summer, but it was. It was busy, it was hot and I think I'm ready to get back to it, ready to get back to normality, ready to get back to the, the everyday normality.

Speaker 2:

I'm in limbo at the moment because M, as we all know, is about to pop, and so I'm about to have an extended break, should we say. It won't be a particularly long paternity leave, such as life as a self-employed consultant, but I've been making the most of a bit of downtime, to be honest, and and it has felt like downtime I know it's been absolutely manic in the sector, but it's been a very strange year. Most of my work the client work that I've done and that we do as a company has been relatively easy because of some of the locations that we're in. There's been a few surprises in terms of the cities, and most of what we tend to do is try and make sure that we're leased up in advance of the rest of the market, and that's been the real key focus. So, actually, we've only had two markets that I've struggled with. Clients. Everywhere else, though, hasn't necessarily been quite so easy, and we've found it relatively easy because we made sure that the pricing was realistic.

Speaker 2:

I think that there's been quite a few operators out there struggling and investors out there struggling with filling beds at certain price points, and so I fielded more calls than I ever would normally, and the rest of the team have too.

Speaker 2:

I haven't had to jump into action too much. Most of the time we're doing sort of performance reports and things like that, but because of my workload at the moment and the fact that all of our the consultants that I work with have been pretty much at capacity as well, we've actually just almost given away a bit of consultancy to people just to say, look, these are some of the five things with this market, this is what to look at. So yeah, it's been busy, could have been busier, I could have made a lot more consultancy from it. But it is a funny sort of limbo period just before paternity leave where I'm trying to make sure that I've got enough stacked up to see us through Em's maternity cover but also then not overload or disappoint clients that were expecting me to work full tilt in october and early november. So, yeah, funny, funny one really, but interesting ends to the ends the leasing season.

Speaker 1:

That is understating it somewhat I think we found that it was. It was quiet in real estate. It felt like lots of people were on holiday a lot and we found it difficult to get decisions out of people and kind of get momentum going with some of our clients. So it's actually really refreshing to start September back and get that momentum going again. It's really really hard, I imagine in all departments, but in marketing it's really hard to have kind of start, stop, start, stop. We much prefer to kind of have a really good run at it and kind of keep those decisions coming through and kind of keep the strategy moving. Really so, and a bit of a one for a routine as well, so, having the kids off over the summer we had A-level and GCSE results in our house over the summer, so they were actually off for a kind of prolonged period of time as well, and various children going on holidays and all sorts. We have milestone birthdays at this house as well, so it's felt like a really busy summer. But, yeah, really glad to kind of get stuck back in with work and I guess kind of on that we have lots of news to catch up on.

Speaker 1:

We're not going to sit here and dissect kind of six, seven weeks worth of news over the summer. But there are some kind of headlines that have really kind of piqued our interest, especially the kind of the most recent one, which kind of hit last week, which was the Kent and Greenwich University merger. We've kind of been talking about it for, you know, probably more than a year, like are we going to see this? Is this going to kind of kick off with, you know, alleviating financial pressures for universities? Now Kent and Greenwich have been very, very clear that this isn't a cost-saving exercise. But we do note that there's been redundancies previously, in January there were news reports that suggested Kent planned to save 19.5 million in voluntary redundancies after cutting courses and jobs didn't help enough, and in May Greenwich announced 319 job cuts. So it could be seen that this merger is about raising the profile and the impact of this new university, but obviously the financial impact in the future can't be denied.

Speaker 2:

I am going to call bullshit on the fact that it's not a cost saving exercise.

Speaker 1:

I was more polite.

Speaker 2:

I'm certainly not Now. Yes, there are economies of scale, being part of a larger group. I think this is two universities that have not found it easy in a more competitive environment. I think they're thinking about long term sustainability. So I don't think this is like, well, hey, we're going to go bust within the next three months, so let's do something quickly. I do think this is there's some foresight here and some long-term strategic planning, but I think this is the start of many.

Speaker 2:

There have been mergers before and you know, gannis from landmark mentioned on my linkedin post linkedin post about it that there was a merger previously between Manchester Business School and UMIST and yeah, that was fine, that was a synergistic merger. We are about to see, I think, the emergence of the super university groups. I think that there are a lot of different cities that are primed and ready for this to merge universities, to effectively merge the back offices, because it's very difficult to merge the brands. So I would expect University of Kent and University of Greenwich to maintain their brands, because it's terrible for any student when a university brand disappears effectively, it almost makes your degree worthless, and so I think that they will keep the brands, but there is absolutely no doubt that they will streamline, and so there will be less courses, there will be less availability on certain courses. One university may be focused more on the arts, one may be more on sciences or whatever it might be, or teaching and research. I think that this is going to be a real pattern. Over the course of the next two to three years, we'll see large supergroups pop up to oversee, a bit like we have in academies in secondary schools, for example. I think that they will start to oversee multiple mergers of universities.

Speaker 2:

I think that overall if I could summarize this, for PBSA in particular I think it's going to mean less students at these universities. I don't think there's any other way of looking at it. I think, because of the streamlining nature, I don't think this is an opportunity for expansion. I think this is a survival mechanism that will help with long-term sustainability, but it just gives a bit of breathing room. So, yeah, in my opinion, it's a pretty worrying trend that I think we're going to see more of.

Speaker 2:

I think it will be the tip of the iceberg, personally, and I think that we are on the cusp of completely reshaping our higher education sector without a genuine strategy or plan from the government or, realistically, from any of the bodies that oversee universities. So that's my 10 pence worth. I know that Vivian Stern from Universities UK painted a really positive picture of it and how this was, you know, really forward thinking and it was. It was about helping to thrive, not helping to survive. I have to say I think I'll call bullshit on that as well. I don't think this is a positive story for the sector. I think this is out of necessity personally, but you know, discuss.

Speaker 3:

I absolutely agree. I think it's about the financial situation that the universities are finding themselves in and this is a way that it can streamline costs and make it easier to continue to function as universities. They have said that they will retain their names and identities, so this isn't about a brand merger. This is about, as you say, back office kind of merging of departments so that actually you can run things cheaper and more efficiently. And to your point, dan, I was just gonna say isn't this what has happened in schools across the country, where you've got trusts picking up schools and supposedly helping them to run more efficiently? But as a parent of a school in a trust, you don't really see it. And as many of my friends in the local area where I live are teachers teaching in those trusts, you know there's a lot of a lot of people in back offices. I guess earning those money that isn't then going into the teaching. So if it's done well, I think it can be done well.

Speaker 3:

I get really frustrated sometimes through seeing it in the school sector. Is that the whole benefit of you know, when you've got supply teachers that don't don't turn up, the whole benefit being part of a trust is actually you can share those resources and you can kind of you've got excess teachers in one school, you bring them to the school that in the trust that that has teachers away. But that doesn't tend to happen in my experience of trust. So if it's done properly and it's done well, it can give a benefit. But, as you say, it's not done because this is a positive step forward. It's doing because the universities particularly kent I think, has more financial pressures and this is a way to help them out.

Speaker 1:

Moving on to another news story Now, it seems like ages ago now, but let's not forget what happened in government over the last few weeks really. So we have another new housing secretary, steve Reid. He has big shoes to fill. He's inherited some challenges. I was looking up whether he comes from a housing background, because I really don't understand why ministers and secretaries in government aren't in place because of the experience that they can bring about that sector. So I thought right, steve Reid, what is his credentials? So he previously ran Lambeth Council, so he would have had some housing delivery experience there. He also had a role as as environment secretary, so that overlapped a little bit with housing policy, I don't know. He started by saying that he wants to get the sector to build, baby build, and I've literally never heard anything so icky in all my life.

Speaker 3:

So sounds very trump to me. Yeah, that was awful drill baby.

Speaker 2:

Oh my god. Okay, I didn't know.

Speaker 1:

He'd said that that's totally changed my opinion, I know, I know, but he did follow up. I might be able to rescue him here because he did follow up with so we can put the keys to a decent home in the hands of every single family that needs it. And you know that goes some way to negate the build, baby build statement. Really, I don't know. I mean, you know Angela Rayner. I've got a lot that I could say about her resignation, but I won't. But no, she, she had, no, she has big shoes, she had tons of charisma and you know she did make an impact, I would say, in the housing industry in the short while that she was in in post. So you know, do we think that Steve Reid will just kind of pick up the baton and continue to build, baby build?

Speaker 2:

oh, that's, that's saying it no, it makes me cringe every time you say it. Now, look I. So. We don't need charisma, we just need someone who can actually help us build beds in the right locations, the right stock and the right amount of them. And I think that I'm buoyed by the fact that his voting history in government is reasonable. There's nothing outstanding there in terms of policies. He's voted against that would concern us from a housing perspective or even a higher education perspective.

Speaker 2:

So the insinuation there with build baby build, is that it's just a case of mass reform across whatever areas that are needed to ensure that developers can actually build, and that will obviously likely be across environmental laws, planning regulations, building safety regulations, et cetera. Now, when, now, when trump used it, it was drill baby drill. Throw caution to the wind, don't care about the environment, just go and dig for oil, drill for oil and get as much out the ground as you possibly can, and I think that that is I. There's a there's a certain amount of me that thinks that is an approach that I think we need to take when it comes to housing delivery, if you're going to try and deliver one and a half million houses in this parliament, which they are never going to do at the current rate, then something drastic needs to happen. So I actually appreciate that sentiment. I think that something drastic does need to happen with planning. I think that something drastic does need to happen with building safety regulations and the building safety regulator, and by drastic I mean massive support and staffing and systems and processes to improve that. But yeah, primarily it's linked to planning. Do we support developers more? Yes, maybe I think that there's an opportunity there as well, but I can't help but thinking we'll be in the same old problem in a couple of years' time.

Speaker 2:

Steve will get caught up in the weeds of the planning regime and local councils and local authorities and the NIMBY mentality that we seem to have against the likes of PBSA and BTR and the big sort of high-rise blocks, against the likes of pbsa and btr and the big sort of high-rise blocks, because I'm not seeing anything new, not seeing any new suggestions or new policies. Maybe it's a bit early yet you know he's only been in the post a couple of weeks but I want to see him consulting the entire sector through the relevant bodies and through listening to housed. Uh, incidentally, I like the fact that he's on linkedin, although he's not read my messages yet. I should probably stop messaging. I think I'm on two a day at the moment, so we'll see if he ever does. But yeah, I do think that there is a huge opportunity for him to really stamp his authority on it.

Speaker 2:

I think that it does need some pretty drastic reform to actually enable us to build the right stock in the right locations. Is he the man to do it? I don't know.

Speaker 2:

I am rapidly losing faith in any decision making from the current government from either a policy or a communications perspective at the moment, so jury is out, fingers crossed. But, um, yeah, steve, if you're listening, do please reach out to the right people anyone at the bpf or the arl, or anyone at housed podcast or class conference, class foundation, etc. There are so many people that that you know we should be, that should be consulted in any kind of housing targets, because PBSA, btr, later living just hasn't been considered, and you know, we all know, that the government is so focused on immigration, and illegal immigration in particular, at the moment that, unfortunately, labour are just chasing after reform in that way. So I expect the housing policy to follow reforms in some way, shape or form. God knows what that's going to look like. I am just a bit deflated with where the government's at when it comes to housing. Deanie, what were you thinking?

Speaker 3:

I didn't know anything about him so I've done a bit of research. I think he has got some experience in housing. He did when he was in Lambeth. He did oversee the development of Vauxhall Nine Elms in Battersea, so he does know a little bit, I think. What has?

Speaker 3:

It seems he wants to carry on with what Angela Rayner started and he has talked about planning and I did read which I think is a positive thing that he has mentioned taking out one of his kind of ideas around getting planning moving is to put decision making in the hands of planning inspectors and not councillors, which I think is a good move in terms of nimbyism and actually a strategy to planning not, I don't want it in my backyard strategy, which is what we have. But, like I say, it's kind of. I think you know, when the Labour government came in, I think we were positive about all that they were saying and all that they were talking about that it's slow, it's really slow. It's mired in lots of other things going on. That is distracting and, yeah, good luck to him. But, as you say, it's a tough job. There's a lot of issues still that need to be fixed and, of course, yeah, speak to everyone across the sector and try and find those things that can be changed, that are going to make a difference.

Speaker 1:

I think the problem is we've had so many housing secretaries and housing ministers that it's difficult to you know for any of them to really make a big impact and kind of keep their one strategy going through the whole term. I don't think we've had a single one last full term yet, so that's frustrating. But actually on the subject of housing targets, I found out something interesting. I went down a whole later living rabbit hole because I read an article by Shoesmiths and later living isn't included in housing targets either. So we talked about PBSA not being included, but neither is later living. So you know, obviously there's, you know, big gaps in supply and demand and data when half you know not half, but you know two very important parts of kind of housing provision are excluded from those numbers.

Speaker 1:

I also found out through my later living rabbit hole that Churchill Living has dropped its 1% exit fee for homeowners selling, which is a positive move for those considered those selling and buying obviously in later living, but it's a drop in income for Churchill and will others follow suit. So it does kind of change the dynamic and, I guess, the metrics around later living and in the affordable and rented later living sectors. Knight Frank reported some positive moves, with 43 new affordable schemes opening in 2025, which equals 2,911 units, but, unbelievably, 67% of existing affordable later living was built prior to 1985. So all that tells me is that affordable later living is just old, so it's not been purpose built for affordability, it's just affordable because it's like nearly 40 years old, like nearly four. Well, it's 40 years old, um, you know, and that's, you know that's that's dated, you know that's gonna need, you know, loads of maintenance. They're not gonna have any kind of the sustainable, you know eco, you know friendly, you know positive technology around it.

Speaker 2:

So that was staggering I think that's the same across all sectors, though, like, affordable stock is old stock normally. Think about PBSA. It's the crap old university stock that no one else wants anymore. You know, the universities don't want to do any of the sustainability work. They can't afford to or they don't want to actually run the properties themselves. They flog it off and then that sits in the affordable sector quite often or maybe it will get, you know know, refurbed into mid-range. But but yeah, I I think that that is typical, that the affordable sector is just is just older stock, primarily because you can't build affordable stock in almost any sector now from from scratch unless there's mass subsidies. So yeah, I think that's a challenge. But but later, living is a massive opportunity to help solve the housing crisis. It's going to be a changing hearts and minds piece for the long term.

Speaker 2:

I was with Marcus Hodges the other day actually at PropTech Connect, who is the COO at Birchgrove. Obviously, we've had honour from Birchgrove, the CEO on the podcast previously. Absolutely love her and love birch grove and what they all, what they stand for. But you can see the frustration in talking to marcus in in how slow we are, as you know, uh, as as a nation really to come out to the fact that it really will help out the housing sector if more older people do go into later living and they do go into that rented later living in particular. It frees up so many beds, frees up capital and I think there's a huge opportunity there. So birch grove are in it for the long run. You know they are obviously out there looking for investment, but but yeah, they are in it for the long run and I think they need to be, because this is a 10, 20 year, as I said, changing hearts and minds on on how you actually see out your days almost, and and I think that later living can can really offer something different and can have a massive positive impact on the housing shortage that we that currently see.

Speaker 2:

And good to see Churchill again, not a rented later living operator, but more of a care home and later living residential provider. Good to see them reducing that 1% exit fee. I think that will make quite a big difference. I think that will change the sector. We've got a Churchill scheme being built in Bicester. There's one in almost every town. Now I think they're all over the sector. We've got a Churchill scheme being built in Bicester. There's one in almost every town now I think they're all over the place. So, yeah, it's a bit like Unite. Whenever Unite do something, typically a lot of others will tend to follow in some way. So yeah, good to see that as well.

Speaker 1:

We are just going to take a break and hear from one of our other sponsors, Utopi.

Speaker 3:

This episode is brought to you by Utopia, the smart building platform that helps real estate owners protect the value of their assets.

Speaker 2:

From ESG compliance to energy efficiency and resident engagement. Utopia turns real-time data into action, making buildings better for people, planet and profit.

Speaker 1:

If you're in asset management or operations and care about performance, utopia is your essential partner. Find out more at utopicouk. That's U-T-O-P-Icouk. Thank you so much, utopi, for coming back for season five. We love working with you and thanks very much, as always, for all of your contribution and ideas to the topics that we cover.

Speaker 1:

One kind of glaringly obvious piece of news that we are not covering today is the renter's rights bill. It only feels right to cover that once there is a bill pushed through government, because it's literally been changing weekly and it looks like now that they're not going to get it through for until maybe the end of October. So we do have Howard Kennedy on standby to come back once that decision is pushed through. So until that point we will try and not kind of speculate in the meantime. So, moving on to kind of the end of leasing season, really kind of the student sector, obviously we're not going to get the full numbers for quite a while probably, so we won't really see kind of the impact of kind of the students. But from what we do know is 18 year olds are up, but I don't think we've necessarily seen this translate into university accommodation bookings or PBSA bookings. What do you both think the reason for that might be.

Speaker 3:

I think I've got quite a strong opinion on this, I think. Looking at the numbers, yes, numbers are going up with people studying university, but really what the trend is they're plateauing. They're not, and you know, with this big increase of 18 year olds, they should be increasing at a higher rate and they're not. So actually, what we're seeing is probably more of a plateauing of people going off to university and you know, as you mentioned at the beginning of the episode, you know, dan, you've been getting a lot of calls.

Speaker 3:

It's been a hard market out there for people and I think I feel like a broken record We've been saying this for a number of years that you know we're in the market to help students to go to university and it feels to me that we're in a place where more and more of those domestic students are choosing to stay at home or not go to university because the affordability behind it is not there and therefore, that is why we're potentially seeing the issues that we have in the sector of people not being able to fill, because we're pushing people away from either studying at university which is really tragic or getting or not actually going away to university to live.

Speaker 3:

It's only those that have the means and ability to do that, and I think it's. We need to stop start looking at everything in totality, not in small little numbers, and start thinking about actually what the customer needs and what the customer wants and what is the right product at the right price. And building the same thing and delivering the same thing time and time again is clearly not delivering where we need to be delivering their students there, their students coming to study, but we still can't fill those rooms yeah, I don't know how to put this eloquently enough.

Speaker 2:

Yet I'm working on how I talk about it, because I've had a couple of people come up to me and say well, you're bearish on the market and do you realize quite how much what you say affects some of this due diligence and some of these investment decisions? That's really self-aggrandizing decisions. That's really self-aggrandizing. I don't necessarily feel that what I say or what we say on here does go that far, but it's really tough out there. It's really tough for PBSA, it is really tough for university halls. I've had more calls than I ever have from CEOs, general managers, ops directors, whoever, saying what are you seeing in the market? Because we're maybe 10%, 15% behind where we thought we'd be on a portfolio level, or we're 20% behind in a specific location. There are some locations that are doing OK, but they're mainly doing okay because the investor for that particular property has adjusted their pricing. There has needed to be, in almost every single city, a complete recalibration of pricing. So all of those gains that we saw where people were jacking up prices and I use that phrase jacking up because that's what it was, it was exploiting the market performance and the market demand and a lot of those gains have been wiped out. So it doesn't mean that people are behind business plan or that investments are going to fall over and people are going to go bust or not make any money. There's still money there to be made, but we have to get round. This PBSA sector is now so mature that we need to be looking at the 3% to 5% increase in rents year on year. We cannot be looking at double digits anywhere and that is not particularly pleasant to hear for investors that are opportunistic for the short-term private equity rather than the longer term, and by short-term, anything less than three years, I think. If you're in it for one to three years, all you're going to be focused on is jacking those rents and I don't think that's healthy for us or for the sector. And I want to start attracting and I think we should start attracting longer term capital, institutional capital, five, 10, 20 year capital and really bring the sector forward with a sustainable plan, because at the moment, it has been the Wild West over the last six years.

Speaker 2:

Obviously, covid put a spanner in the works, but I think what's kind of being proven in a lot of places is that if you do put your rents up by double digits year on year, even for one year. Then you will get found out and the affordability of that city or that asset in particular tips over into unaffordable. And we're seeing that in Glasgow, we're seeing that in Bristol and it's not just having an impact on how my building's not full. Why is that? That's weird, given that I put my pricing up by 23 percent or 36 percent or whatever it was it's. It's more along the lines of students now starting to think well, I can't afford to go to glasgow because I know that the accommodation is going to be ridiculously expensive in my first year because my university halls have mirrored the pbsa costs. Then my second year, when I look at an hmo maybe a bit more affordable but a lot more hassle and you know it's going to be difficult to get. So maybe I'll look at pbsa. No, I can't because an ensuite is 300 quid.

Speaker 2:

Look at bristol like that was absolute bedlam at the start of the year and it was a real difficult market to get to 100. I'm pleased to say the client that I've got got to 100, but only and it was a real difficult market to get to 100%. I'm pleased to say the client that I've got got to 100%, but only because there were some really honest conversations that were had between the operator and the investor that we helped to facilitate. That meant that that asset was well-priced. So I think there are a lot of investors that have held on to the fact that they could maybe get these double digits again. The big rent rises and we are creating these cashback wars. So end of the market this year.

Speaker 2:

I have no doubt that student crowd data will show that there are more cashbacks than ever on offer. I'd love to see the total sum, the quantum of cashbacks that have been on offer. I'd love to see the total sum, the quantum of cashbacks that have been on offer. And we've seen. I saw £5,100 as a cashback in Leeds and again, like that is just really unhealthy. Anything over £250 is incredibly unhealthy and it shows that that market is sick or that property is sick. Market is sick or that property is sick. So I I think we've got a battle on our hands because university halls are not full, like pretty much across the board. There are some that are yes, of course, but I would say the vast majority of university halls are not full and therefore they are being more aggressive.

Speaker 2:

I've got universities reaching out saying should we offer two or three year contracts?

Speaker 2:

Do you think that's a good idea?

Speaker 2:

Or should we go for the sort of semester sessions or 40 week tenancy lengths rather than the typical one weeks?

Speaker 2:

I know, and I'm saying, like guys, we are at that tipping point now where the markets, in every market, now we've got enough supply, which is I know that you don't want to hear that A lot of our investor or developer listeners are not going to want to hear that I think we've got enough supply. There are no homeless students that I can see. I think we've got an affordability crisis and that is the major problem. But, yeah, I think that we have to give students what they want. It's that time the students can now demand this and they can say we want more flexibility, we want more affordability, and if you don't give us that you know as well as things like apprenticeship degrees and things like that I think we are we've reached a tipping point. So, yeah, I'm going to call it we have reached an affordability tipping point and I think that there needs to be quite a lot of recalibration across certain markets if you want to get to 100% occupancy, if you don't care about your occupancy, then fine, but I would always favour occupancy over revenue.

Speaker 3:

I just want to say that there are lots of things that are external issues that are impacting on the sector, but a lot of this is sector influenced problems that they have control to fix, like all those things that you said. Look at your product, look at what you're offering, look at how you're offering it, look at your flexibility, look at your pricing, look at your contract lengths. There's loads of things we can do as a sector to take control of this, but just pretending everything oh, it's just a blip in this year and next year will be all right, is not the answer, and and I guess that's a big urge from us is is we're all going into pricing and planning for next year. Let's do that properly this time. Let's not just pull out the financial model for last year and think we can increase it by five or six percent. Let's completely pull that apart and do something different different.

Speaker 1:

I mean, I think we knew going into this season that international pgs were down so strategically. Why are there so many 51 week contracts out there? Domestic students do not want 51 week contracts. They actually want 36 week contracts because that's as long as their semester is, you know, and already pushing them 42, 44 week contracts is already too much, but definitely 51 they don't want. But we see a lot of this hidden impact that in some sectors they're signing up to a 51 week contract because there is no choice, because every contract is 51 weeks, and then they're looking for tenancy takeovers that kind of probably 38, 39 weeks.

Speaker 1:

Now we've spoken to operators who say, well, it doesn't matter that you know it's a tenancy takeover, we're not impacted financially. But your operations team are, they're doing the tours, they're doing the paperwork, they're cleaning the rooms and if you're not reporting on tenancy takeovers then you're not properly capturing the data of what the actual demand is in your building. I know it's not massively helpful because I don't know what you're going to do with those void weeks in between. You know, but that has to be accounted for in your financial model. You know if there aren't international postgraduates that that need to be here for 51 weeks. They actually need to be here for 52 weeks, but that's a whole other topic that we'll we'll come on to at some point. But it's just, it's strategic. So, like Dini said, it's like looking back, looking at who are the students coming through. An 18 year old domestic undergrad is very different to an international postgraduate, you know. So what is your product doing, what is your proposition doing, and can you match what you have to actually what the demand is?

Speaker 2:

If you are jacking your rents up by more than 5%, you better have a bloody good reason for doing it. I think this is one of the key things to to think about as well, because, yes, there are ways that you can, you know, improve your, your social spaces or your rooms, do some kind of capex projects. Fine, like, yeah, I get that you can really look to push rents there, of course, because you're in a different product, uh, product segment, but it's it's the opportunistic. You know, okay, we filled, okay last year, so I think we can probably jack our rents by 10% this year or whatever it might be. I think those days are numbered and I think we will start to see more steady returns, which is great, because PBSA should still be the darling of the alternative real estate sector because it does produce those returns. But you talked about the numbers coming through Everybody when the UCAS results were released in terms of how many undergraduate students were coming and are great. You know China undergrad numbers have picked up. Yes, they have Brilliant. They're still you know they still lower than they. They previously were in the high post, covid, but it's the postgrads. So this is where the problem is. We have a major problem in the uk with our number of postgraduate students from abroad, but also from the uk. Now some of this comes down to value at universities.

Speaker 2:

Why would you study a postgrad right now, in the era of ai? To be honest, I think there's something to be said for. Why would you study a postgrad right now, in the era of AI? To be honest, I think there's something to be said for why would you study a degree right now, in the era of AI? And that's where I think there will be more focus on degree apprenticeships, on latching onto a company very early on to know that you've got a specific role to go into. Because right now, if you're asking me if I would study law or graphic design or journalism or any number of industries that are already impacted by ai, absolutely not. There is no way I would go into a sector where those entry-level roles are likely to have dried up or have changed so dramatically that my degree almost becomes worthless. And and I do mean there are degrees out there right now that are worthless within three months of having started them, because AI is moving industries and job roles so fast that universities have been woefully slow to keep up in terms of what they're teaching students because they've been trying to control how they use it in their coursework or in their exams or whatever else it might be. So I think that postgrads is where the primary problem is.

Speaker 2:

I think Indian student numbers across the board this year have been pretty dire. Talking to the marketplaces, all of them are forecasting between a 10 and 20% drop in Indian students across undergraduates and postgraduates. And I think that we've latched on to the fact that we've got a few more domestic students this year Great Like that's, you know, that's really good and a few more Chinese undergraduate students again really positive. But there's no way they're all living in PBSA really positive, but there's no way they're all living in pbsa. And I know this for a fact because I see so many platinum and gold studios in mid-range properties that are empty. That's where a lot of the voids are, you know the bronze en suites or the bronze studios. They seem to have gone, unless there's like a glut of them and they're not priced very well but within a distinctly average building to have expensive studios. They are just not selling as they used to.

Speaker 2:

It is not the case of build it and they will come anymore.

Speaker 2:

It's again.

Speaker 2:

I'm trying. I'm trying to pull out some positives as well. I just, I just am struggling. At the moment. We still have very good, consistent demand, but that sort of stellar performance of, yeah, being able to enable double-digit rent growth year on year in any location hasn't been healthy, will not work now, and we have to be much more prudent and realistic with our forecasting, our budget setting and revenue setting as well, because there's so much cannibalization of that revenue from marketplaces and incentives. There are some giving away anything up to 40% of the gross revenue of that particular room in those cashbacks and incentives. That shows a really unhealthy market and a really unhealthy property. So I think that we just need to call it for what it is right now and say it is tough.

Speaker 2:

It is going to get tougher, especially with more consolidation of universities as and when that happens and also the era of AI as well. That's great for the sector in certain places, but it's also incredibly challenging for students to work out where they want to go and what they want to study. So, yeah, it's a real. I do need to formulate my thoughts because that was just a bit of a brain dump there, to be completely honest. But yeah, there's a lot more to come on this as to how the sector can manage this and deal with these challenges, and what the solutions are. That's what I really want to focus on. I could talk about the issues and the challenges all day long, but we have to start talking about solutions.

Speaker 1:

On that note, we're going to go to a break and we will come back after we hear from Wash Station to hear more from Dini.

Speaker 3:

Wash Station proudly sponsor this episode of Housed. We provide best in class laundry solutions that complement your buildings. Wash Station smart green clean.

Speaker 1:

Thank you very much, Wash Station. You add so much value to the podcast and we appreciate all your support over the last couple of seasons. Deanie, do you have anything positive to say about the PBSA season, or are you also all doom and gloom?

Speaker 3:

No, I am. I wanted to come back on what Dan was saying about what is the positive message, how to be positive, and I think the positive message is that sex has a lot of power. They have created a complete change in how students live at university over the 15 years that it's been introduced and developed in the UK and, as I said earlier, you know, part of the decisions that the sector has made have created some of the issues we're finding now. So it can be unraveled and it can be brought back like it as a sector it has a lot of power. You know, I remember coming into the sector and learning about it, thinking, but students don't want to stay. Remember coming into the sector and learning about it and thinking, but students don't want to stay in purpose-built accommodation. They want to go and stay in HMOs.

Speaker 3:

But actually we've trained and educated young people going off to study that actually there is a, there is benefit in going to stay in these purpose-built student accommodation and it is a great place to go and say so. We can really change culture. We can really change the way that people go and study. But we just need to take a good look at ourselves, realize that the student of 2026 is very different to a student of 2012 and create a new product for ourselves. We've got. We've got everything going for it. We just need to take a step back and think differently totally agree.

Speaker 2:

It's that unite called it a normalization of demand in their in their previous reports and yet they're still clinging on to the fact that they'll hit their occupancy and revenue targets. I feel like something will have to give there and we've seen a lot of, you know, discount discounting across the board. So I think we don't need to reinvent ourselves as a sector. There's a lot of operators doing some brilliant things out there really looking after those students, but they are starting to vote with their feet in terms of the sector that they're in, whether they're looking at HMO, uni halls or PBSA or BTR. We've seen that huge drain away to BTR and they're then starting to look at, you know, actually, which operator offers me value. So you have to really focus. If you're an operator, you have to focus on those core values. What are you actually offering the student? Is it just, you know, a bed at an affordable price, or are you going above and beyond? And I think that's where I saw Fatty put this on a linkedin post, really crediting the site teams fatty, from aparto, this is, and he was really crediting the site teams and I think this is where, again, you know, in the era of ai, I think a lot of the hq processes and and systems could be replaced with ai. You can never replace all of the. You know all of the work that the site teams do and that's where the site teams are going to be more important than ever to your brand, to your you know where your brand sits within the market, how your students feel, and I think we're now at the point where we're not shooting fish in a barrel. I've said this for a couple of years to be fair, but we're definitely not shooting fish in a barrel. I've said this for a couple of years to be fair, but we're definitely not shooting fish in a barrel.

Speaker 2:

We have to make sure that we really focus on those students rather than just paying lip service. We have to deliver what they want and it's not just a case of oh yeah, they've said they want a cinema room or a karaoke booth or you know, maybe they, maybe they want 24-hour security or whatever. We have to be thinking about flexibility and affordability. So PBSA has had a really good run. There is still plenty of opportunity to make good money from an investment standpoint, and what we have to now do is think about how can we make sure that it's an affordable product.

Speaker 2:

I don't just mean we're at the affordable end of the sector, so everyone's paying under a hundred quid a week. I mean that it's affordable in multiple different categories and that we are offering value, and I just don't think enough. People are really thinking right. What do students actually want? It's that affordability, it's that flexibility and it's all of the bells and whistles as well. So it's going to get harder to fill. Operators are going to have to work harder, investors are going to need to invest more in their operators, and I think that pricing is going to need to be recalibrated over the course of the next sort of two to three years.

Speaker 1:

Just a shameless plug here. We have our latest youth forum being previewed at the Urban Living Festival next week as well. We have asked students what they want from the future, what they've learned about their current accommodation and what they want to see changed. So we're giving people that come to Urban Living Festival next week an exclusive preview of that data and then, of course, we will be launching it. It so if you go to the Property Marketing Strategist website, you can sign up and to get that report first, and once we do, we will, of course, discuss it on the podcast.

Speaker 1:

It has been a bumper episode. We had a lot to catch up on. So thank you for sticking with us, thank you to my student halls for being our headline sponsor and, of course, thank you to utopia and wash station for coming on board again for season five, and we hope you've enjoyed listening to this episode a bumper episode. We have lots to catch up on. I've missed catching up on all of the shared living news and ever. If you've got any hot topics or ideas of what you want us to cover in season five from the pbsa, btr, co-living, later living hmo, university accommodation sectors get in touch at hello at housed podcastcom. See you again next week.