Impact of post study work visa on the PBSA Market

What is PBSA?

PSBA stands for purpose-built student accommodation which designed to match the demands of today’s students, the PBSA’s can be self-contained studios or cluster apartments that share communal spaces such as bathrooms and kitchens. Some flats also come with en suite facilities. The larger PBSA’s also comes with bonus facilities including on-site laundry facilities, a games room, study rooms, TV, an on-site gym and cinema.

“Knight Frank suspects that the market would see a 15% rise in full-time undergraduate students from now until 2030.”

So with the further rise in student applications, demand for student accommodation, particularly purpose-built student accommodation, is anticipated to grow. Over 36,000 new beds are expected to enter the market this year, and there is still demand for even more.

UK Visa Extension for International Students.

On September 11, United Kingdom Prime Minister Boris Johnson reintroduced the return of the two-year post-study work visa for international students as part of government measures to boost numbers of overseas students after Brexit.

Reasons for the Visa Extension for International Students:

• This new graduate immigration route allows international students to stay in the U.K. for two years after they graduate so that students can work or look for work, ensuring the U.K. continues to attract the brightest students.
• The PM insisted on the “new immigration route” would help sectors such as science, technology and engineering. According to the Department of Education, the new work visa would apply to those who “start courses in 2020-21 at undergraduate level or above”.
• Maddalaine Ansell, director of education at the British Council, said: “This new immigration route will also support the U.K.’s ambitions to increase the number of international students studying in the U.K. each year to 600,000 by 2030.”
• Last year, British universities educated about 460,000 international students, not including those from the E.U. The government is aiming to increase the number to 600,000 over the next ten years.
• Chief executive of Universities UK, Alistair Jarvis welcomed the decision saying it would benefit the economy of the U.K. and reinstate it as a first choice study destination. And, international students bring positive social outcomes to the U.K. as well as 26bn in economic contributions, but because of the lack of post-study work opportunities in the U.K. for too long has put the U.K. at a competitive disadvantage in attracting students.
• According to the statistics provided by the U.K. Visas and Immigration, around 22,000 Indian students got a tier-4 study visa in the year ending June 2019. This number was 42 per cent higher compared to 15,000 students who received the visa the previous year. It is a very positive development as the number of Indian students who are coming to the U.K. for higher education is on the rise – Jan Thompson, British Deputy High Commissioner to India.
• The reintroduction of the programme is to boost the number of students going to Britain. Dominic Asquith, British High Commissioner to India, said, "This is fantastic news for Indian students, who will now be able to spend more time in the U.K. after completing their degree, allowing them to gain further skills and experience,”
• As Brexit looms, the U.K. universities are bracing for their financial coffers to shrink. They stand not only to lose a pool of E.U. students post-Brexit but also the European Research Development Fund - a specially-allocated investment that funds a substantial number of projects amounting to more than 26,627,123 between 2014-2020 - across higher education providers in the U.K.

According to the IDP connect data, two weeks post announcement-

• A significant spike of interest from Indian students.
• Physical science disciplines reaping the biggest upturn in subject interest.
• Postgraduate interest increasing.
• A major spike in postgraduate interest from Indian students.

This decision by Boris Johnson reverses a decision made in 2012 by then-Home Secretary Theresa May that forced overseas students to leave four months after finishing a degree. The abolition of two-year post-study work visas in 2012 was seen by universities as a deterrent to international students, given that rival nations such as the US, Canada and Australia maintained such visas, and as a particular factor in the dramatic fall in the number of Indian students coming to the U.K.

Indian students turned to more welcoming shores such as Canada, Australia, and other E.U. countries. According to the statistics of December 2017 provided by the U.K. Council for International Student Affairs, student numbers from India have nearly halved in just five years.

This two-year post-study work visa is bringing back a similar facility that was in existence until 2012. Previously, the Tier 1 (Post-study work) scheme allowed international students to stay for up to two years, but this was discontinued in 2012. According to the Q.S. 2019 International Student Survey, when choosing a country to study in, 35% of respondents want to be able to get a work visa after graduation.

According to the report by the Higher Education Statistics Agency (HESA) a sharp decline in the number of Indian students coming to the U.K. from 39,090 in 2010/11 to 16,550 in 2016/17 and 19,750 Indian students made their way to the U.K. in 2017-18, marking a significant year-on-year increase. The number of postgraduate students, especially, is on the rise.

In 2011, under the previous Tier 1 Post-Study Work Visa, the numbers of students transferring into work visas were 46,875. Following the 2012 changes, that fell in 2013 to just 6,238.

Research has shown that the reason for the declining proportion of international students choosing the U.K. as their study destination after 2012- when the post-study work route had been closed was the country’s comparatively weak post-study work offer.

In 2015, a study found that 36% of prospective students chose not to study in the U.K. cited post-study work options as the principal reason for this decision. Two very similar concerns followed: about job prospects in the U.K., and the ability to stay in the U.K. after completing their studies.

If we use the 2016-17 data (the latest we have) to model what could happen with the new visa, we’d expect around 54,000 (35% of non-EU graduates in that year) to take up the opportunity.

Good News for Students Coming to the U.K. for further Studies-

• Home secretary Priti Patel said that the new Graduate’ route would mean talented international students can study in the U.K. to gain valuable work experience and build successful careers.
• This announcement aims to make the U.K. a science superpower and a world leader in the STEM (Science, Technology, Engineering and Mathematics) sector.
• Almost half of all Indian students (approximately 130,000 since 2008/9) heading to the U.K. in the last ten years chose a STEM subject.

International students who are already studying there aren’t happy with this decision as the extra time is not given to them.

• International students currently studying at British universities aren’t happy with the government’s plan to offer two-year post-study work visas to future students because it could leave them worse off if the extra time is not given to them too and they will miss out as according to the announcement, the new policy will apply to those graduating from summer 2021.
• Over 16,000 people have already signed a petition calling on the government to extend the new visa rules for international students currently studying in the U.K.
• According to the poll released by YouGov, 2000 British adults showed support for the change. 46% were in favour of the recent extension of two years while 26% were opposed to the decision, and 28% did not know.
  Out of 4350 students
  – 2000 supported the change
  – 1218 were neutral &
  – 1131 opposed
• The move has been welcomed by universities and Labour but criticised as a “retrograde” step by campaign group Migration Watch. Alp Mehmet, Migration Watch chair, stormed: “This unwise and retrograde step will lead to foreign graduates staying on to stack shelves.

Well, this decision is going to increase the demand for student accommodation in the UK for sure.
Student accommodation has become a significant part of the country’s source of steady profit. With a 3% year-on-year increase in the number of applications from international students, the UK student accommodation market is continuing to boom year-by-year.

The demand for student accommodation is expected to continue to rise across the UK but especially in the towns with massive student populations. Also, local cities, like Nottingham and Manchester, have been boosted by the growing student population.

According to recent data from the Universities and Colleges Admissions Service (UCAS), over 560,000 students have applied for a full-time undergraduate course for the 2019/20 academic year at various UK universities; which is about 2,500 more applications as compared to the 2018 figure. Also, the number of EU applicants has risen by 6% to 6,610, and the number of applications from the UK has surged by 6% to 41,970, which is the highest recorded number since 2010.

The data released by Knight Frank in the “UK Student Housing Update” shows that roundabout 1-million students live away from home, out of which over 30% of full-time first-year students prefer to stay in privately-owned purpose-built student accommodation (PBSA); which is a whopping 8% increase in the last five years.