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Research Article

Exploring Student Housing Demand, Supply Side and Planning Policy Responses in a Small University City: Studentification in Durham, UK

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Received 01 Nov 2021, Accepted 14 Oct 2022, Published online: 08 Nov 2022

Abstract

Growth in the number of university students has increased demand for accommodation beyond that which universities themselves can provide, provoking private investor supply-side responses such as houses in multiple occupation (HMOs) and purpose-built student accommodation (PBSA). Such developments can lead to high concentrations of students in areas proximate to university colleges and campuses. The movement of large numbers of transitory students into well-established residential areas in university cities, termed studentification, leads to socioeconomic and physical changes. We deploy a mixed-methods approach to analyze qualitative and quantitative data, exploring the role of market participants and revealing the extent and impact of studentification in Durham, a small historic university city in North East England with a high relative student population. The research confirms that studentification was driven by key actors across two distinct phases: conversion of terraced houses into HMOs by private landlords, subsequently restricted by planning regulations, followed by development of PBSA by institutional investors supported by and in collaboration with the local authority and university. Consequently, studentification in Durham has become more dispersed, resulting in increased house prices, rents and competition for investment opportunities farther afield, causing exclusionary displacement of local residents and reducing the supply of family and social housing. We present a detailed timeline of studentification in Durham and reveal a new geography of studentification that extends to peripheral areas of the city and offer some salutary lessons in respect of planning and housing management policy responses to high demand for student accommodation.

The process of studentification is strongly linked with the growth of higher education institutions (HEIs) and student numbers, which—when accompanied by the inability of universities to provide accommodation for all their students, often because of limited finances and capacity within their campuses and estates—creates “town versus gown” tensions. This is especially the case in small cities, where a university dominates civic life, or larger cities with universities that attract most of their students from outside the metropolitan area, resulting in a large influx of students needing accommodation. The transient seasonal demand for student accommodation creates opportunities for private-sector investors, large and small, to commercially exploit the mismatch between demand and supply. The real estate market supply-side response has typically taken the form of conversion of domestic dwellings to houses in multiple occupation (HMOs), the construction of purpose-built student accommodation (PBSA) and conversion of commercial premises to student accommodation. This study investigates how studentification, in a small historic university city, has impacted on local residents and housing markets. It examines how the process of studentification has evolved over three decades, identifies the main drivers, agents and influencers of change over this period, and explores the response of local housing markets and residents to the vicissitudes of concentrated studentification as the council and university seek to manage “town versus gown” tensions and ameliorate some of the negative consequences for the resident population.

The phenomenon of students living in HMOs, typically converted from family homes into multiroomed houses to accommodate larger student numbers, is nothing new (Hubbard, Citation2008; Kinton et al., Citation2016; Munro & Livingston, Citation2011). However, more recently, studentification has manifested itself as large privately owned PBSA blocks, funded by financial institutions seeking favorable rates of return during the prolonged period of low interest rates following the financial crisis and recession of 2009/2010 (see Chatterton, Citation2010; Kinton et al., Citation2016). Such large-scale, purpose-built developments have often been encouraged and facilitated by planning authorities and local policymakers as a solution to some of the problems generated by high concentrations of HMOs. Nakazawa (Citation2017) highlights how PBSA has altered the geographies of studentification, whereas Sage et al. (Citation2013) suggest that with the arrival of PBSA, a corporatized form of “new build” studentification was introduced.

To date, most studentification studies have focused on enclaves of studentification within a particular university city or town (for example, Hubbard, Citation2008; Kinton et al., Citation2016; Sage et al., Citation2012b). They rarely focus on city-wide residential property markets, the role of private real estate investors and landlords as market participants and agents of change, or their collective impact on local housing markets, rents and house prices across the city.

Our research comprises an in-depth study of the City of Durham, predominantly represented by the City of Durham Parish, at the center of which lies Durham Castle and Cathedral, a UNESCO World Heritage Site (UNESCO, Citation2021). The city, whose history can be traced back to AD 995, is situated in the North East of England and has, since 1832, been home to Durham University, which is the third oldest university in England (after Oxford and Cambridge). The university, like Oxbridge, retains a collegiate system with students affiliated to one of its 17 colleges and, as Durham’s largest employer, it both dominates the city and exerts a powerful influence over the wider area, economically, physically, culturally and socially. Durham University’s global status (ranked 92nd in the QS World University Rankings 2022) results in a large international student body (approximately 30% of students come from 120 countries around the world; the remaining 70% come from across the UK and from outside the region) (Durham University, Citation2022). Durham Parish itself has a small resident population—of approximately 28,000 people, 18,000 (64%) of whom are students (City of Durham Parish Council, Citation2019). Consequently, Durham has one of the highest relative student populations of any city in the world. In comparison, the university cities of Heidelberg and Göttingen in Germany have student populations of 19% and 16%, in cities with populations of 160,000 and 134,000, respectively (Miessner, Citation2021). Durham University plans to expand student numbers further, from 17,500 to 21,500 by 2027; despite plans to establish four to six new colleges, in partnership with private developers, the university predicts that only half of its students will be accommodated in college halls of residence by this date (Durham University, Citation2017a, Citation2017b).

The city’s Neighbourhood Plan (City of Durham Parish Council, Citation2019) highlighted problems associated with studentification and its impact on local communities (further explored in the Literature Review section). The plan outlined how studentification has damaged community harmony, as areas of the city previously occupied by family housing have been converted to HMOs, creating unbalanced communities. Our study aims to investigate the evolving process of studentification in Durham over the last 30years by reviewing planning policies in respect of student accommodation, media coverage, housing market data, and interviews with key stakeholders and market actors, to provide a rich and complex case study analysis. Our study investigates the impact of studentification on local housing markets, the role of market actors, such as investors and landlords, in the studentification process, and planning and other public policy responses introduced to ameliorate some of the problems generated by high concentrations of students, and identifies the emergence of new types of student accommodation provision.

The following section reviews relevant theory and literature, to identify key themes and issues associated with the process of studentification; then we present the research methodology employed to investigate concentrated studentification in the City of Durham. Next we present a detailed timeline of how the process of studentification evolved in the city, through the interplay of seemingly inexorable growth in student numbers, public policy interventions that sought to ameliorate some of the worst excesses of concentrated studentification, and the activity of real estate investors and developers in supplying purpose-built student accommodation (known as third-wave gentrification). A new geography of studentification in Durham is identified that now extends to peripheral areas of the city that were previously relatively untouched by the process. We conclude the article by offering some salutary lessons in respect of planning policy and housing market responses to high and concentrated demand for student accommodation within the environs of a city dominated by its university.

Literature Review

The following literature review has been divided into five key sections. The first section defines the process of “studentification,” whereas the second delves more deeply into the main driver of the process, increasing student numbers. The third section summarizes the benefits and disbenefits of studentification for an area and its resident population, whereas the fourth explores planning and housing policies that have encouraged an increased supply of student accommodation. The final section identifies the role of residential investors and landlords in supplying the market with two particular types of private-sector student accommodation, HMOs and PBSA, and the use of Article 4 directions. Although framed in a UK context, this contemporary review of studentification offers a framework within which housing market supply and demand conditions in other cities with large student populations can be analyzed, and the planning and housing policy management regimes that have sought to address similar imbalances between supply of and demand for student accommodation can be interpreted.

Studentification

The term studentification, originally coined by Darren Smith in 2002 in his study of student residences in Leeds, is now widely used both in the UK and internationally (see Beech, Citation2018; Garmendia et al., Citation2012; Hall, Citation2017; Hubbard, Citation2008, Citation2009; Kinton et al., Citation2016, Citation2018; Moos et al., Citation2019; Munro & Livingston, Citation2011; Smith, Citation2002, Citation2005). Studentification is recognized as an evolving process leading to urban change, involving the movement of large numbers of transitory students into well-established residential areas in university towns or cities, displacing local residents, particularly families, resulting in social, economic, physical and cultural changes (Kinton et al., Citation2016; Miessner, Citation2021; Nakazawa, Citation2017; Smith, Citation2005; Smith & Hubbard, Citation2014). Research has identified various participants or actors in the process of studentification including central and local government, HEIs, residential investors and landlords, students and their families and local communities (Chatterton, Citation2010; Hubbard, Citation2008; Kinton et al., Citation2016).

Hubbard (Citation2008) describes studentification as the physical conversion of single family or existing privately rented homes by property owners, developers and investors into HMOs, defined by UK government as: “a property rented out by at least 3 people who are not from 1 household but share facilities like the bathroom and kitchen” (UK Government, Citation2020).

Studentification has been associated with gentrification and students are regarded as gentrifiers (Smith, Citation2005; Smith & Holt, Citation2007) where areas are impacted with an initial upgrading of the physical environment as single-family houses are converted to HMOs, often followed by a deterioration of the physical environment and neighborhood. As described by Kinton et al. (Citation2016, Citation2018), studentified areas are often characterized by a transitory population, with students moving in and out again in sync with the academic year, resulting in such areas becoming like “ghost towns” during vacations (Sage et al., Citation2013). Students tend to segregate from nonstudents, preferring to live in close proximity as they feel a sense of belonging and share a student identity, lifestyle culture, and consumer practices (Munro et al., Citation2009). Such distinct student cultural lifestyles lead to changes in retail and service provision aimed at students, which can in turn lead to community imbalance, loss of local community amenities and social change (Sage et al., Citation2012a, Citation2012b; Smith & Hubbard, Citation2014). Most studies identify studentification of specific areas within university towns and cities; for example, Sage et al. (Citation2012b) highlight the presence of enclaves of students in Brighton, whereas Hubbard (Citation2008), Kinton et al. (Citation2016) identified the same in Loughborough and Ruiu (Citation2017) in Newcastle upon Tyne.

Studentification is an evolving process, occurring in stages (Smith & Hubbard, Citation2014). Traditionally, studentification involved students living in HMOs previously occupied by local residents (Hubbard, Citation2008). More recently, the concept of studentification has been associated with a rise in the development of PBSA (Kinton et al., Citation2016, Mulhearn & Franco, Citation2018; Nakazawa, Citation2017, Revington, Citation2022) and in vertical studentification with students displacing former nonstudent residents in high rise blocks (Garmendia et al., Citation2012). There is also a suggestion that semidetached, detached, and town houses, originally developed for middle-class families, are now being converted into student HMOs (Kinton et al., Citation2016, Citation2018). Miessner (Citation2021) highlights how benefit recipients, low-income households, and even middle-income families in Goettingen in Germany have been displaced by high rents and increasing land prices, driven by the trend of students sharing flats, who can collectively pay more rent than families can afford.

Nakazawa (Citation2017) notes that studentification manifests itself in different forms in different countries. In Australia and New Zealand, domestic students tend to live in the suburbs or at home with parents; international students in Australia and New Zealand tend to live in PBSA, similar to the UK, where students pay their full fees up front (Collins, Citation2010; Holdsworth, Citation2009). In Spain, high-rise blocks have been converted to flats, which are then shared by students, often in suburbanized locations (Garmendia et al., Citation2012). In historic university cities, such as Durham, Oxford, and Cambridge, where university colleges are part of the fabric of the urban core, studentification often occurs in areas closer to the center. Smith and Fox (Citation2019) observe that in North America, although many of the challenges of studentification are perceived as similar to and parallel those around the globe, it is the massive scale and spatial extent of studentification in the US and Canada that increases the need for multiagency partnerships to play an active role in managing the process. They also note a scarcity of quantitative and qualitative measures with which to assess the relative health of the “town and gown relationship” in a given location (Smith & Fox, Citation2019). Our study addresses this subject within a UK context.

Student Numbers

As confirmed in the introduction, studentification has been driven by global increases in the number of students in higher education (Garmendia et al., Citation2012; Hubbard, Citation2008; Kinton et al., Citation2016). For example, in the UK, undergraduate and postgraduate student numbers increased from approximately 1.6 million in 1994/1995 to 2.5 million in 2019/2020, due to successive UK governments seeking to widen domestic participation in higher education (Higher Education Statistics Agency, Citation2021). This has led to increased demand for student accommodation (Cushman & Wakefield, Citation2019; Hubbard, Citation2008; Ruiu, Citation2017).

Knight Frank (Citation2019) confirm that the removal of UK government limits on student numbers in 2015 allowed universities to increase enrolments, further fueled by increased tuition fees (Rogers, Citation2020; Wyness, Citation2013) the corollary of which is that UK universities can now enroll more undergraduate students, and the financial reward for doing so has also increased. However, the supply of student accommodation has not kept pace with the growth in student numbers (AMA Research, Citation2018; Rugg et al., Citation2000). Hubbard (Citation2009) and Rugg et al. (Citation2002) note that universities, unable to supply much-needed student accommodation on their own campuses, due in part to a lack of available land and finance with which to develop new halls, have increasingly turned to private housing markets to provide student accommodation off campus (Hubbard, Citation2008; Munro & Livingston, Citation2011; Smith, Citation2002). According to Jones and Blakey (Citation2020), 45% of the 1.2 million students renting accommodation in the UK are in HMOs, 28% live in university-provided accommodation, and 27% are in private-sector PBSA.

Benefits and Disbenefits of Studentification

Studentification is often perceived negatively rather than positively (see Chatterton, Citation2010; Kinton et al., Citation2018; Munro & Livingston, Citation2011; Sage et al., Citation2012a, Citation2012b; Smith, Citation2005). Negative commentary appears to emanate mainly from local residents, who often have an influential voice but potentially negative perspectives, in relation to student housing policies (Hubbard, Citation2009; Kinton et al., Citation2016). Sage et al. (Citation2012a, Citation2012b) and Mulhearn and Franco (Citation2018) identify the development of unbalanced communities and the loss of local community amenities among the disbenefits of studentification; Chatterton (Citation2010) observes that students segregate themselves from established residents; Munro and Livingston (Citation2011) highlight problems of noise, crime, refuse, parking, and degradation of the physical environment, with unkempt gardens and poorly maintained properties; and Kinton et al. (Citation2016) and Revington (Citation2022) point to the problems of noise, litter, and antisocial behavior. Whyte (Citation2019) indicates that currently students’ voices and experiences are often unheard and disregarded, which corresponds with Hubbard’s (Citation2009) argument that nonresident opinions may be less negative.

Hubbard (Citation2009) suggests that there is little coverage of the positive aspects of studentification and observes that much negativity surrounding studentification is portrayed by the media (Beech, Citation2018; Oliver, Citation2018). Students bring social, cultural, and economic benefits to a university town or city, creating lively, mixed-community neighborhoods with an attractive range of uses, high levels of local services and vibrant cultural activities (Munro et al., Citation2009). Macintyre (Citation2003) noted how universities investing in off-campus accommodation are creating student enclaves and a sense of “new urbanism,” which in turn can appeal to local residents and businesses, akin to Munro et al.’s (Citation2009) notion of mixed-community neighborhoods. Chatterton (Citation2010) argues that students are a lucrative, dependable consumer market, bringing money to the local economy—not only in terms of rent and tuition fees, but also in relation to the retail, entertainment, leisure, food, and hospitality sectors (Hubbard, Citation2008; Knight Frank, Citation2019; Ruiu, Citation2017).

Smith (Citation2005) highlights how studentification fuels a buoyant housing market by encouraging capital investment in bricks and mortar and generating revenue from services such as property maintenance, sales and lettings agencies, conveyancing, and legal services. Universities UK (Citation2017) report that the higher education sector in England supports more than 815,000 jobs, generates £95 billion of gross output and contributes £52 billion to the national gross domestic product (Frontier Economics, Citation2021) representing approximately 1/40th of the national economy. The presence of a large student population is also a key marketing device for towns and cities to project and boost a more cosmopolitan image nationally and internationally. Thus, the student has become monetarized and commodified, representing opportunities for profit for local businesses, investors, and universities as much as an educational persona (Chatterton, Citation2010).

Policies and Politics

Pressure has mounted on universities, local politicians, authorities, and developers to reduce some of the abovementioned negative impacts of studentification, resulting in local government, HEIs, and community organizations working together to find ways to mitigate negative impacts and promote more balanced communities (Kinton et al., Citation2016; Munro & Livingston, Citation2011). This has led to increased regulation of HMOs in the UK by local planning authorities’ use of Article 4 directions, which essentially restrict or remove prevailing permitted development rights that allow the conversion of family houses into HMOs without need for planning permission. To compensate for this suppression of supply of HMO student accommodation, local planning authorities, HEIs, real estate investors, and developers have symbiotically worked together in a strategic way to provide an increasing stock of PBSA complemented by expansion and ongoing refurbishment of existing university stock (Durham University, Citation2017a; Hubbard, Citation2009; Kinton et al., Citation2016; Universities UK, Citation2006). PBSA development corresponds to third-wave gentrification (Lees et al., Citation2007), where newly built rental properties are supplied, supported by institutional investment (Davidson & Lees, Citation2005, Citation2010).

The UK government Housing Act of 2004 introduced regulations on HMOs, and since April 6, 2006, it has been mandatory for HMOs with three or more storeys, and with five or more occupants who do not form a single household, to be licensed in England and Wales (UK Government, Citation2020; Wilson & Cromarty, Citation2019). Since October 1, 2018, licensing has been extended to all HMOs with five or more occupants, comprising two or more households, irrespective of the number of storeys, but excluding property in a purpose-built block of three or more flats (Wilson & Cromarty, Citation2019). Since 2010, local authorities have been given discretionary powers by the government to restrict certain development rights by the use of an Article 4 Direction, which requires property owners to gain planning permission to convert from a C3 use (a single dwelling house occupied by a single person or family) into a C4 use (a small HMO—a small shared house occupied by 3–6 unrelated individuals, as their main residence, who share basic amenities such as the bathroom and kitchen). Chatterton (Citation2010) confirms that local authorities have limited HMO numbers in some areas, in response to the deterioration of the urban fabric and lifestyle conflicts between students and established families and residents. PBSA developers and investors have benefitted from such policies (Chatterton, Citation2010) as students have been redirected away from established neighborhoods (Revington, Citation2022), altering the geography of studentfication. Local authorities, working alongside universities, developers, investors, and local and national community organizations, have strategically permitted the development of PBSA, both on and off campus, seeing it as the preferred option to reduce the impact of studentification, disperse students, promote sustainable communities, and regenerate brownfield sites (Hubbard, Citation2009; Kinton et al., Citation2018; Sage et al., Citation2013; Smith, Citation2005, Citation2008).

For example, in Loughborough, the local authority’s policy of encouraging off-campus PBSA development, to diminish the impact of HMOs in the Storer and Burleigh areas, facilitated the development of 1,013 new bedspaces in the center of Loughborough in 2015 (Kinton et al., Citation2016). However, Garmendia et al. (Citation2012) and Hubbard (Citation2009) argue that PBSA has often done little to reduce problems associated with studentification and sometimes exacerbated them by studentifying new areas. This is supported by Ruiu’s (Citation2017) study of Newcastle, which highlighted how increases in PBSA have resulted in an overconcentration of students in certain areas, such as Shieldfield. Chatterton (Citation2010) suggests that PBSA is generally more expensive, and although popular with overseas students is less favored by UK students, who generally prefer HMOs. In addition, it has been found that in both Antipodean and UK studies, PBSA can lead to geographies of exclusion, as international students are segregated from domestic students (Nakazawa, Citation2017). Restriction on HMOs in certain areas can lead to displacement into other areas, resulting in de-studentification and problems such as empty houses, degradation of properties and loss of house value (Kinton et al., Citation2018; Munro & Livingston, Citation2011).

Real Estate Investment in HMOs and PBSA

Smith (Citation2005) suggests that the pioneers of studentification are often small-scale property owners and investors who recognized an opportunity for profit maximization in locations in proximity to university campuses. In Germany, small-scale property owners dominate the rental housing market, owning 57% of rented flats, many of which are rented to students as they provide the best return on investment due to flat sharing, enabling higher rents to be paid (Miessner, Citation2021). Smith (Citation2005) and Hubbard (Citation2009) highlight how HMOs, created via conversion, subdivision and extension of existing privately owned or rented housing, are a lucrative business opportunity for landlords, property developers, and investors. HMOs provide high rental yields, increased capital values, and higher returns than could be obtained through private renting to households. This is noted by Revington (Citation2022), whose study of Waterloo in Canada reveals that small-scale investor landlords purchase housing to rent to students, converting interior common spaces into additional bedrooms, which in turn leads to inflated property prices in established neighborhoods. Osborne (Citation2015) suggests that landlords can collect 36% more rent from a student tenant than a nonstudent tenant, which explains why HMOs are still the dominant housing solution for students (JLL, Citation2019). Bingham (Citation2018) confirms that by restricting the supply of HMOs, policy controls such as Article 4 have inflated HMO values by up to 50% compared to identical non-HMO properties. Conversion of traditional dwelling houses into HMOs inflates house prices and rents, which may benefit local residents wanting to sell their property but is disadvantageous to local residents needing access to affordable homes (Sage et al., Citation2012a, Citation2012b). Thus, studentification often distorts local housing markets by displacing local residents in proximity to university campuses, further intensifying the concentration of HMOs (Smith, Citation2005; Smith and Holt, Citation2007).

Chatterton (Citation2010) highlights how, in recent years, there has been increasing activity from large developers, corporations, and investors in the student market, who have spotted the potential for financial gain (Cushman & Wakefield, Citation2019; JLL, Citation2019; Knight Frank, Citation2019; Savills, Citation2019). Universities have been under pressure to create more accommodation to house increasing student numbers; faced with financial constraints and aware of the need to provide quality accommodation in order to attract students, universities have increasingly turned to private-sector developers and investors, sometimes in partnership, to develop student accommodation via new campus developments, refurbishment of existing university stock and the development of private PBSA (Chatterton, Citation2010; Kinton et al., Citation2016, Citation2018). Increasingly, universities lease accommodation back from private commercial partners, creating a new four-way dynamic between corporate operators, investors, local authorities, and universities (Chatterton, Citation2010).

According to Knight Frank (Citation2019), the UK is the second largest global PBSA market after North America, with private landlords and investors quick to acquire and develop properties suitable for student rental due to the prospect of lucrative rates of return, security of income and low void rates (Hubbard, Citation2009; Knight Frank, Citation2019; Smith, Citation2005).

Buoyed by potentially high yields and sustained capital growth, student accommodation has become a distinct asset class for corporate investment and pension funds (Smith & Hubbard, Citation2014) with Cushman and Wakefield (Citation2019) reporting that PBSA had become one of the fastest growing property market sectors in the UK. Consequently, the PBSA market has attracted significant private investment, with the number of beds in the UK increasing by 30% over 5years, due to established market providers such as Unite (Unite, Citation2020), UPP, Opal, and Downing creating robust PBSA investment models built on the product’s strong defensive, income-producing attributes (JLL, Citation2019; Mulhearn & Franco, Citation2018). JLL forecast an increase of 500,000 more full-time students in the UK by 2030, supported by (pre-COVID-19) UK government targets to increase international student numbers by 35% and achieve a new student to new bed ratio above 3:1 by 2030 (JLL, Citation2019).

Increased student spending power and changing, more discernible student demands have encouraged the development of higher quality PBSA product (Chatterton, Citation2010; Kinton et al., Citation2018; Smith & Hubbard, Citation2014) that has attracted students from more traditional HMOs and on-campus accommodation. Universities collaborate with developers to provide PBSA with private kitchens, en-suite rooms, gyms, cinemas, etc., as accommodation has been identified as key factor in determining students’ selection of university (Hubbard, Citation2009). PBSA generally relies on first-year and international students, the latter of whom are more likely to stay in the same accommodation for the length of their university career (JLL, Citation2019; Knight Frank & UCAS, Citation2020); second- and third-year undergraduate and postgraduate students are a relatively untapped market (JLL, Citation2019). Consequently, HMOs are having to improve in quality due to competition from PBSA developments and increasing student demands and expectations (Kinton et al., Citation2018).

Our research updates previous research into the impact of studentification to provide a more contemporary analysis of how the supply of new student accommodation has evolved in response to housing market conditions and public policy interventions. Specifically, our research seeks to explore the evolution of student accommodation in Durham over the last 30years, to establish a clear timeline of the incidence of HMOs as they have spread across the city, capturing the advent of PBSA development in the city, and identifying new phases and types of student accommodation. Our research also aims to relate such phases of housing market development and investment to local planning, housing management, and other public policy interventions that have sought to address negative externalities associated with concentrated studentification. The research is distinctive in that it investigates the impact of studentification on housing markets and communities across Durham, deploying a mixed-methods approach, set out in the following section, in order to investigate the following research questions:

  1. How has studentification evolved in Durham over the last 30 years?

  2. How has the implementation of local planning, housing, and other public policies influenced the supply of new student accommodation in Durham?

  3. How has the activity of investors and landlords impacted on the supply of new student accommodation in Durham?

Methodology

The research comprises an in-depth case study of Durham City in North East England (described in more detail in the next section). The case study utilized a mixed-methods approach and exploited, as a starting point, data from a wide variety of sources, as listed in .

Table 1. Secondary data utilized within the study.

Our case study approach, which Rowley (Citation2002) and Yin (Citation2014) confirm is an effective way of seeking answers to “why” and “how” questions, facilitated the collection of qualitative and quantitative data from three domains, namely secondary literature, including planning and housing policy documents; demographic and housing market data; and semistructured interviews with stakeholders and market actors. The semistructured interviews sought to obtain insight from interviewees to enable deeper exploration of key themes and probe personal experiences and perceptions of studentification (Longhurst, Citation2003; Silverman, Citation2015). Following a pilot phase, a total of 15 interviews were conducted with the following anonymized participants: Residents (A; B; C; D; E); Local Councillor; Landlords (1; 2); Director of Letting; University Estate Manager; University College Principal; County Council Planning Officer; University Students (A;B) and PBSA Manager. Interviews took place in August and September 2020 online, via email exchange, by telephone, or in person at a safe distance in accordance with UK government COVID-19 guidance prevailing at the time. Interview questions were sent in advance of the interviews, which were audio recorded and transcribed before the data were thematically coded (Longhurst, Citation2003).

By deploying a mixed-methods approach to analyze and interpret both qualitative and quantitative data, we were able to chart the evolution and impact of the process of studentification on a small city with a very large relative student population and explore how planning and housing policies have been used by the local authority to influence and steer the quantity, quality, type and location of development of student accommodation in the city.

Analysis of stakeholder interviews was triangulated with secondary housing market data and public policy documents, to improve rigour and enhance the validity of the research findings (Noble & Heale, Citation2019; Winchester & Rofe, Citation2010). Our in-depth case study was able to capture the complex role played by a variety of different market actors in the process of studentification to reveal a deeper and more nuanced understanding of the socioeconomic impact of studentification on local housing markets in a small historic city. Through the comprehensive representation of the evolving process of studentification, and the associated impact on communities and housing markets, we have compiled a detailed timeline of the evolution of studentification in Durham.

Summary of Case Study Area

The City of Durham is situated in County Durham in the North East of England and is famed for its Anglo-Saxon Christian heritage, heavy industry, and coal mining. We chose Durham because it is a small city that is dominated by its large, high-status, “Russell Group” university, regarded by some as an alternative to Oxford and Cambridge universities, with which it shares a similar college system and historic status and setting (for example, the Durham Castle and Cathedral UNESCO World Heritage Site).

The rationale for pursuing Durham as a case study was that its small size and large relative student population has resulted in extreme levels of studentification (up to 100% saturation in some places). This in turn results in the impacts of studentification being more apparent than in other larger cities where studentification has been more dispersed or diluted. Thus, some of the answers to our research questions can be more readily identified. We intend for our Durham case study to serve as “a canary in the coal mine” (a rather apt analogy given the heritage of deep coal mining in County Durham)—that is, to provde advance warning of the impact concentrated studentification can have on local housing markets and communities, and to identify public policy and housing market responses that have been deployed in an attempt to ameliorate some of the negative externalities arising from persistently high levels of studentification.

The extent of the case study area is shown in , which is referred to again in the data analysis, interpretation, and discussion sections that follow. Our study is focused on Durham City, and in particular the City of Durham Parish (CDP) as depicted in (by pink shading), within which further spatial designations significant to our study are identified as follows: the Article 4 Direction Area in blue hatching (see the next section for further consideration of this policy tool); and the (Heritage) Conservation Area (within the black boundary), at the heart of which lies the 1986 UNESCO-designated World Heritage site, comprising the D-shaped peninsula (shown in magenta) containing Durham Cathedral, Castle, Prebends Bridge and environs (see Durham World Heritage Site (Citation2021) for further information).

Figure 1. Map of the Durham, City of Durham Parish boundary, and other spatial designations. Sources: City of Durham Parish Council (Citation2019a), Durham County Council (Citation2016a, Citation2016b, Citation2020b, Citation2021a).

Figure 1. Map of the Durham, City of Durham Parish boundary, and other spatial designations. Sources: City of Durham Parish Council (Citation2019a), Durham County Council (Citation2016a, Citation2016b, Citation2020b, Citation2021a).

We chose CDP as the focus for study because it is an area within which studentification has evolved over a period of 30years, providing a time frame in which planning and other public policy responses have been introduced and their impact can be felt and measured. According to the City of Durham Parish Council (Citation2019), approximately 18,000 residents, out of a total population of 28,000, are students (approximately 2 in every 3), resulting in studentification occurring across the whole of the parish rather than in discrete enclaves. By studying a single entity across which studentification has been so prevalent, it is hoped that the impact and implications of the process will be more apparent than in larger cities. In so doing, findings from the study may offer insight into events that may occur in other, larger towns and cities with fast-growing and concentrated populations of students.

Data Analysis and Interpretation

Our analysis of data was structured using the themes identified in the literature review, namely evolution of studentification through supply of new student accommodation, planning, housing and other policy interventions, and housing market actor (tenants, landlord, investors, planners, and developers) activity in response to high demand for student accommodation. Consideration of each theme is split between the two predominant types of “off-campus” student accommodation identified in the literature review, namely HMOs and PBSA.

The following sections portray the characteristics and trajectory of the aforementioned phases of studentification experienced in CDP using verbatim quotes from interviewees to validate the findings from the analysis of secondary literature and data. This is followed by a similar consideration of planning policies after which we present an analysis of perspectives captured by interviewing real estate market participants.

Phase 1 – Growth of HMOs

Studentification in Durham started with conversions of mainly terraced family homes into HMOs by private landlords in the early 1990s, catering for increasing student growth in the city.

The university has steadily expanded over the years, which has created demand…the city center being the main focus. In 1993 the percentage of students in the viaduct area was probably 25–30% students whereas now it is 98%. (Landlord 1)

The areas of Viaduct, Claypath, Elvet, and Whinney Hill ( and ) are all now heavily occupied by students. All these areas had terraced properties in the 1990s which landlords saw as suitable for HMO conversion to provide accommodation for students which the growing university was unable to provide. They were in close proximity to the city center and university, which the students wanted. (Landlord 2)

Table 2. Percentage of student council tax-exempt properties in the Viaduct area of CDP in 2014 and 2022.

Table 3. Percentage of student council tax-exempt properties in part of the Elvet area of CDP in 2014 and 2022.

You have to go back to first principles, and the reason students were living in these properties is because families did not want to live there. They were moving out; landlords were buying them because they were cheap and students were moving into them because they were cheap. (University Estates Manager)

It is apparent that the conditions in the early 1990s meant that some areas of the city were ripe for HMOs, resulting in the first wave of studentification that has continued to evolve ever since: “It has been a sort of trickle effect with more and more students moving into Durham City” (Resident B).

This observed trend can be corroborated with reference to the inexorable increase in the number of student council tax-exempt properties (excluding PBSA) in County Durham, the majority of which are located in CDP. Student properties are exempt from paying council tax. City of Durham Trust (Citation2018) report that over 1,800 properties within CDP have been converted to student lets (over the last 25–30years), resulting in the loss of family housing and a decline in owner occupancy. It appears that despite planning controls, the popularity of HMOs in the city continues unabated. The Viaduct area, shown in and , which was already heavily studentified, has become increasingly so, with Sutton Street recording total saturation (that is, 100% studentification; Durham County Council, Citation2022). It is worth noting that council tax-exemption figures, used as a proxy for student occupation, may be an underestimate, as some landlords pay council tax to avoid their HMOs being recognized as such, thus avoiding Article 4 directions and other planning and regulatory controls.

Figure 2. Change in percentage of dwellings subject to student tax exemption 2014–2022 – selected streets. Sources: Authors’ data; Durham County Council (Citation2014b, Citation2021b).

Figure 2. Change in percentage of dwellings subject to student tax exemption 2014–2022 – selected streets. Sources: Authors’ data; Durham County Council (Citation2014b, Citation2021b).

Since 1990, much council housing in the Elvet Crescent, The Hallgarth and Whinney Hill areas has been converted to student HMOs, fuelled by the government’s “right to buy” scheme enabling council tenants to buy their own homes before selling them for windfall profit to private landlords. The loss of affordable council housing to private student lettings is corroborated by student council tax-exemption data, with student occupation levels exceeding 60% for part of Whinney Hill and 53% at The Hallgarth (Durham County Council, Citation2022; see and ).

Due to a combination of planning controls and a lack of available houses, HMO activity has spread farther afield, into the outlying areas of Gilesgate, Neville’s Cross, Crossgate Moor, and Mount Oswald. Dragon Lane has increased from 20% student occupancy in 2014 to 40% in 2022, whereas Heron’s Court has increased from 4% to 18%, partly due to improved facilities, transport links, and the opportunity for higher rental yields in Gilesgate (Durham County Council, Citation2022): “I am looking for a house to buy for student letting in the Gilesgate area as property is now very difficult to find to buy and convert in the city center” (Landlord 2). and highlight the increase in student housing within many parts of Gilesgate, particularly over the past 8 years.

Table 4. Percentage (%) of student council tax-exempt properties in Gilesgate in 2014 and 2022. Source: Durham County Council (Citation2014b, Citation2022).

Phase 2: The Rise of PBSA

Unlike other cities in the UK, the development of large private PBSA is a relatively recent phenomenon in Durham, which experienced its first large private PBSA, Elvet Studios by Unite, in 2013, quickly followed by a further 17 PBSA developments over the next 7 years providing over 3,600 new student bed spaces (). The information in has been compiled using information from City of Durham Parish Council (Citation2019) and StuRents (Citation2020).

Table 5. Private PBSA development in CDP 2013–2020.

Expansion of university PBSA is consistent with Durham University’s ambition for 35% of its students to be from overseas by 2027, students who typically prefer PBSA (Durham University, Citation2017a). Growth in PBSA is due to a combination of increasing demand for student accommodation, inelastic short- to medium-term supply of on-campus accommodation, and limited supply of housing stock to convert into new HMOs. The desire of PBSA providers and investors to enter the student accommodation market in Durham is exacerbating the studentification process, in the same way that Hubbard (Citation2009) recorded in Loughborough, by further spreading concentrations of students into areas where previously there were relatively few.

A recent development trend is the conversion of former retail premises to student accommodation, for example Mint Studios, a former Royal Mail Post Office in the historic heart of the city, which opened in 2019 with 11 student apartments. Such conversions capitalize on the preexisting oversupply of retail space in the UK, which has already increased due to the impact of COVID-19 on high street retailing (Greenhalgh et al., Citation2021), but will be further encouraged by the government’s relaxation of the planning use classes order in England which affords permitted development rights for conversion to residential of all property types in the new Use Class E from 1 August (Clifford et al., Citation2021).

Planning Policies

In response to the pressures of studentification, Durham County Council (DCC) introduced an Interim Policy on Student Accommodation (Durham County Council, Citation2014a) that aimed to create sustainable, balanced communities and control HMO growth, the main elements of which were:

  1. Applications for new build HMO extensions resulting in additional bed spaces and changes of use from any a property type to an HMO will not be allowed if more than 10% of the total number of properties within 100 m of the application location are used as HMOs or student accommodation where council tax is exempt (in England, students are exempt from paying council tax on a property where they are seen as the main occupier, and it is thus possible to determine such properties from council tax records).

  2. In areas of high HMO concentration, conversion from a C3 to an HMO would be permitted if it would “not cause further detrimental harm.”

  3. Proposals for new PBSA, or for conversions or extensions to PBSA, will need to show:

  4. a need for additional student accommodation;

  5. that such development would not impact negatively on leisure, retail, tourism, or housing employment or would support the regeneration objectives of the Council; and

  6. discussion with education providers.

This was followed, in 2016, by an Article 4 Direction to remove permitted development rights for change of use from a single-dwelling house occupied by a single person or family (C3) to an HMO (C4) across the majority of the city (Durham County Council, Citation2016b). These measures are widely regarded as a case of too little too late:

Planning policies have come in too late…it is almost after the horse has bolted and they are trying to redress it now. Some streets are nearly all student occupied now. (Resident D)

Really we shouldn’t have allowed it to get to more than 60%, but it has happened, it is what it is. It is going to be very difficult to rebalance. (Local Councillor)

Problems have also arisen around inconsistencies in the application of the abovementioned threshold levels, with some landlords prevented from converting C3 to C4 in areas of high HMO concentration, although others have been allowed to do so.

…despite the fact that 27 of the 32 houses on my street are occupied by students I have not been able to get permission to convert my house to an HMO as it exceeds the 10% threshold, whilst other residents with similar numbers of students on their streets have been given permission. (Resident B)

Recent planning restrictions have had the perverse effect of increasing the value of existing HMOs while at the same time devaluing non-HMO properties in heavily studentified areas.

I wanted to convert and sell my house as an HMO. I could not gain permission as it exceeded the 10% threshold. A landlord offered me £300,000 but withdrew as I couldn’t get HMO status. I have had to sell it as a non HMO for £250,000! (Resident B)

Consistent with Hubbard’s (Citation2009) finding, that PBSA had become the mainstay of local authority policy response to reduce demand for HMOs and restore balance to local communities, DCC has encouraged the development of PBSA across Durham City: “The council has encouraged the development of PBSA in the hope that students will move out of the HMOs. However, students like HMOs and are unlikely to leave them for PBSA” (Landlord 2).

As well as gaining planning permission for an 850-bed PBSA at Mount Oswald, Durham University owns a further six sites that are allocated for PBSA in the adopted County Durham Plan (Durham County Council, Citation2020b), which suggests that PBSA development in the city is far from over.

Real Estate Market Participant Perspectives

Private landlords in Durham, acutely aware of the city’s lucrative student HMO market, have been buying, converting, and letting mainly terraced houses to students for over 30years: the “demand for housing from students, unable to be housed in university accommodation who are willing to pay decent, reliable rents, encouraged me to enter the student housing rental market” (Landlord 2).

The price of HMOs has continued to increase in CDP, with a director of a private student lettings agency confirming HMOs that previously sold for circa £50,000 per bed space were now achieving over £80,000 per bed space. For those landlords who invested in HMOs in the 1990s and 2000s, this means high (double-digit) rental yields and significantly enhanced asset values. Consequently, many landlords continue to retain their HMO properties, and few come to market: “I have no intention of selling my student properties; they keep going up in value and the rental returns give me a much higher percentage than I would get from the bank” (Landlord 2).

The market value of HMO properties is further reinforced by aforementioned policies that restrict the creation of new HMOs, making opportunities to invest in such assets scarce, while at the same time pricing out local residents: “there is very little if any affordable housing in the city center as most housing is owned by landlords, for students, who have forced us out of the market as we can’t afford the high prices” (Resident C).

This supports the findings of Hubbard (Citation2008) and Sage et al. (Citation2013), who highlight how HMO-inflated house prices are preventing young families and professionals from being able to afford to live in such areas, resulting in imbalanced communities. However, unlike Kinton et al. (Citation2016, Citation2018), who highlight recent problems of de-studentification in certain areas of Loughborough, this process does not, as yet, appear to be occurring in Durham and is unlikely to do so as long as demand for student accommodation continues to exceed supply.

National PBSA providers such as Unite, Prestige Living, Student Castle, and Student Roost have become major players in the PBSA market in Durham over the last decade due to lucrative income streams that can be generated from the student lettings market. Elvet Studios, owned by Unite, comprises 121 studio apartments, each charging a minimum of £181 per person per week and thus delivering a gross annual rent of in excess of £1.1 million (Unite, Citation2020). Although PBSA continues to offer high rates and an opportunity to diversify in an alternative asset class to traditional commercial real estate sectors, there is likely to be continued interest from institutional investors, including overseas funds, to invest in new PBSA schemes.

Another potential supply of new student accommodation is associated with the development of John Snow College and the all-new South College, both of which guarantee accommodation for all first-year students, on a former golf course at Mount Oswald located on the southern edge of the city. This £80 million “Design, Build, Finance, Operate” (DBFO) scheme by Interserve, a UK infrastructure developer and manager; investor Equitix; and Campus Living Villages, an international investor and operator in student accommodation (Durham University, Citation2020), adds a further phase in the continuing evolution of student accommodation provision in Durham over the last 30years, as shown in .

Figure 3. The evolving process of studentification in Durham City. Source: Authors’ elaboration (2020). HMO = houses in multiple occupation (HMOs). PBSA = purpose-built student accommodation.

Figure 3. The evolving process of studentification in Durham City. Source: Authors’ elaboration (2020). HMO = houses in multiple occupation (HMOs). PBSA = purpose-built student accommodation.

Discussion and Implications

Although Durham University continues to grow, and demand for student accommodation remains strong, it remains difficult for stakeholders to reconcile the opportunities that this brings with some of the negative consequences for local residents and communities. Our study has charted the evolution of studentification in Durham from the early 1990s to the present day, as represented in . In contrast to many studies of studentification that focus on student enclaves in a university town or city, our Durham study has revealed that with approximately two thirds of the population of CDP being students, studentification has spread across the whole parish, displacing local residents and creating unbalanced communities. High concentrations of students risk amplifying the negative externalities associated with studentification, such as antisocial behavior, petty crime, and a degraded physical environment (Chatterton, Citation2010; Munro & Livingston, Citation2011; Kinton et al., Citation2016; Revington, Citation2022).

The evolution of student accommodation in Durham has been driven by a number of different market actors and stakeholders, including private landlords and investors, DCC, the university, local residents and university students who are seen as “agents of change in various geographical contexts” (Holton & Riley, Citation2013). Each has influenced the process in different ways, as the city struggles to balance competing pressures for accommodation. Increasing numbers of students have generated the development of a variety of student accommodation types, ranging from traditional halls of residence and private HMOs to new PBSA and conversion of former retail premises, to the creation of a new generation of university colleges with on-site student accommodation.

Early literature (Smith, Citation2002, Citation2005) highlighted studentification as a process involving the conversion of residential homes, particularly terraced houses, to student HMOs. Our case study offers a detailed and distinctive representation of a 30-year process of studentification that exposes a dichotomy between the need to cater for the city’s growing but transient student population, and the long-term needs of local residents, families, and communities. Our study has shown that the process of studentification in Durham initially impacted on local housing markets, through growth in HMOs, which were originally concentrated in the Viaduct, Claypath, Elvet, and Whinney Hill areas of the city. As student numbers continued to grow, HMOs spread to more peripheral areas, increasing local house prices and rents, displacing residents, and diminishing the stock of council and other affordable housing for families and other households to buy or rent.

Consistent with previous research, our findings confirm that studentification in Durham is continuing to evolve, with studentification expanding across the city beyond traditional HMO areas to new localities, driven to a large degree by PBSA and the conversion of former commercial premises to residential use. In response to the mounting pressures of intense studentification in Durham, DCC, the local planning authority, introduced an Interim Policy on Student Accommodation (Durham County Council, Citation2014a) that aimed to create more sustainable and balanced communities by controlling HMO growth. The policy restricted the change of use of any property to an HMO if more than 10% of the total number of properties within 100 m of the application location are used as HMOs or student accommodation. This was followed by the 2016 Article 4 Direction referred to above. The unintended consequences of restricting change of use to HMOs have been to increase the value of existing HMOs while at the same time devaluing non-HMO properties in heavily studentified areas. The policy interventions are regarded by stakeholders as doing “too little too late” and closing the stable door long after the horse has bolted.

To ameliorate some of the unintended consequences of concentrated studentification, and to counter the crowding out of local residents, local planning for housing policy by DCC has encouraged development of new PBSA by national student accommodation providers, funded by institutional and private investors. This has contributed to the dispersal of university students more widely across the city, as PBSA development sites are typically located in different areas to those containing HMO stock. As well as local planning interventions, national planning policy in England has relaxed development controls on change from commercial to residential use, through permitted development rights that encourage the conversion of former retail and office premises to student accommodation. The opportunity to convert commercial premises to student accommodation and the ease of doing so have received a further boost through recent changes to the Use Classes Order in England, with the introduction of a new “Commercial, business and service” Class E, which, in combination with the already relaxed permitted development rights, is likely to result in more commercial premises being converted to residential use, with up to 80% of buildings eligible for conversion in some locations (Clifford et al., Citation2021).

It is apparent that the driving force for new student accommodation in Durham has been growth in student numbers not being matched by the supply of university halls of residence. Although the university has been the driver of demand, it has had little direct influence on what new student accommodation is built or where studentification occurs. Private investors and developers, attracted by high investment yields and security of income, have taken advantage of the lucrative student accommodation market by supplying HMOs, PBSA, and conversion of commercial premises for student accommodation. Only recently has Durham University pursued direct provision of new on-campus student accommodation, as part of its development of two new colleges, in partnership with private-sector partners at South and John Snow Colleges on the periurban southern periphery of the city ().

Conclusion

With approximately two thirds of its “term time” population being students, Durham has one of the highest relative student populations of any city in the world. Consequently, the manifestation and impact of extreme studentification are exposed and laid bare in Durham. Our study of local housing market demand- and supply-side behavior, and public policy responses introduced to ameliorate some of the negative externalities of high concentrations of students in a relatively small and historic city, are potentially transferrable to other towns and cities that attract high numbers of students from outside their respective metropolitan areas.

The research, considering as it does city-wide residential property markets and the role of private real estate investors and landlords as market participants and agents of change, has been able to capture their collective impact on local housing markets, rents, and house prices across the city. The study confirms that studentification creates both positive opportunities and negative consequences for local residents and communities, which evolve over time, shaped initially by the inherent characteristics and availability of suitable housing market stock in proximity to university colleges or campus, and then by successive local planning policies that attempt to influence local housing market outcomes.

Three distinct phases of student housing provision are identified: from the speculative ‘laissez faire’ conversion of domestic dwellings into HMOs; the exigency of Article 4 planning regulations to restrict HMO numbers, in tandem with cooperation and partnership working between local planning authority, university, institutional investors, and real estate developers to supply PBSA (third-wave gentrification); to a recent return to provision of “on-campus” student accommodation as part of the development of new colleges on the periphery of the city, further extending and altering the geography of studentification in Durham.

The local government has demonstrated pragmatism by deploying neighborhood-based interventions, in the shape of regulations limiting supply of HMOs, developing new partnerships with institutional investors and housing providers, and building upon already mature relationships with the university and other local stakeholders. The efficacy and timeliness of such planning and housing market policy interventions are debatable, but allowing real estate markets to run unchecked, regardless of the consequences for local communities, is politically unpalatable. With student accommodation increasingly regarded as a key influencing factor in students’ choice of university, and most students continuing to seek accommodation within a short distance of their respective university campus (Magni et al., Citation2019), the fundamental demand-side housing market drivers are unlikely to change significantly. Time will tell whether local government supply-side interventions, which seek to influence what new student accommodation is built where, will encourage more balanced, mixed communities and ameliorate some negative aspects of concentrated studentification, or whether the wider dispersal of students may actually accelerate urban change in peripheral areas and risk causing further exclusionary and sociocultural displacement, resulting in a “new geography” of residents and students.

Endnote

Subsequent to the completion of the study, in May 2021, DCC held a referendum of voters in CDP asking them if they wanted the Neighbourhood Plan covering the parish to be used to help decide planning applications in the area in the future. On a turnout of 38% of the electorate, an overwhelming 90% voted in favor (Durham County Council, Citation2021b). The outcome of the referendum represents a new phase in the evolution of student accommodation in Durham, one in which local residents, through the neighborhood planning process, seek to exert greater influence over what happens to their neighborhoods, and ‘change the imbalance toward student accommodation back to sustainable balanced community’ (City of Durham Parish Council, Citation2021, Theme 4, Objective 1).

Acknowledgments

We thank Josephine Ellis, freelance planning consultant and GIS specialist, who assisted with the preparation and presentation of and .

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Christopher Wilkinson

Christopher Wilkinson is a Graduate Surveyor at the Valuation Office Agency. He worked previously as a Traffic and Highway Engineer before studying MSc Real Estate at Northumbria University. His research focused on studentification, housing markets, planning and development.

Paul Greenhalgh

Paul Greenhalgh is Professor of Real Estate and Regeneration and Head of Built Environment at Northumbria University. He is a Chartered Commercial, Valuation and Planning and Development Surveyor and his research interests include spatial analysis of real estate markets, financialisation and evaluation of the impact of planning and regeneration policies.

References