‘Harsh blow’ dealt to student accommodation sector

Margaret McLean

A “harsh blow” has been dealt to the student accommodation sector with almost £100 million in rent waived, lawyers have said.

Student housing specialists at CMS have also said that while the Coronavirus (Scotland) (No.2) Act 2020 will help students, it may also work against the provision of accommodation.

The legislation includes measures for automatic cancellation rights for students, which let them get out of agreements for coronavirus-related reasons.

Margaret McLean, partner and student housing specialist at CMS, told The Herald: “The law is a win for students, giving financial peace of mind regarding tenancy contracts – particularly given the uncertainty as to what this coming academic year will look like, as many Scottish universities announce delayed start dates for their autumn terms and work to combine traditional on-campus learning with online teaching.

“The COVID-19 pandemic has, however, dealt a harsh blow to the student housing sector. Scottish Property Federation data reveals that even before the bill, private providers in Scotland had voluntarily waived some £59m of student rents, with Scotland’s universities having waived £38.5m, and many providers have also gone beyond the bill’s proposals, offering release from contracts for next year where courses are terminated or run online, or delaying contracts if courses are delayed.”

Ms McLean added: “In addition, the Scottish Parliament has also temporarily extended current council tax exemptions for students to address the sector’s concerns that providers could, inadvertently, also find themselves liable for council tax where rooms are vacant due to coronavirus related reasons.

“The support of the Scottish government on these matters has been welcomed by the sector, as they face a challenging year ahead given the uncertainty around construction delays and student take-up of their accommodation, as the extent of international travel restrictions and social distancing guidelines remains unknown. However, the sector is a highly resilient one, with a history of low volatility and good growth.

“It emerged from 2019 in a very strong position in spite of the economic and political disruption, and with existing investors in the market publicly supporting the longterm fundamentals of the UK sector, the current blow is expected to be a temporary one.”

Darina Kerr, partner and higher education specialist at CMS, said investment in the sector before lockdown had been high.

She said: “The sector has without doubt been weakened by the COVID-19 global pandemic, and both universities and private providers face a tough year ahead.

“Inevitably, there is some uncertainty as to student numbers and term dates, and the temporary shift to partially remote teaching and learning adds a further unknown to an already complex picture.”

While the pandemic “will undoubtedly result in a transactional pause for providers, there remains a strong appetite for higher education and for the traditional university experience to continue making the sector well placed to bounce back when lockdown and travel restrictions ease and greater certainty returns to the market”, she added.

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