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One of the many economic impacts of COVID-19 and the associated State-based lockdowns is the impact on the student housing market. With international borders closed and many universities shifting to virtual-based learning platforms, this has led to a dramatic decline in demand for student housing accommodation. As a result, many student housing providers are reconsidering their tenancy options.
The challenge with this re-evaluation is that most buildings used for student accommodation have been ‘purpose built’ and do not comply with various objectives of Better Apartment Design Standards.
This non-compliance is largely because student accommodation rooms have reduced spatial requirements when compared to modern apartments, instead relying on communal areas for additional amenity and, of course, public spaces. Additionally, student rooms are typically used for temporary periods by regional and international students that lease the rooms throughout the university semesters and often return home during their breaks.
Recently, a number of providers have lodged applications to amend existing planning permits to allow student accommodation rooms to be leased out as ‘dwellings’. However, several Councils have been hesitant to allow such a change to the use of the buildings. This is largely due to the perceived risk that these apartments are not of a suitable size to support reasonable amenity expectations.
To alleviate these concerns, Ratio has successfully negotiated with some Council’s to include a ‘sunset clause’ as a condition of permit to facilitate the interim change in land use.
A ‘sunset clause’ provides a restricted timeframe on a permit and, in this instance, allows for a typical residential use ‒ such as a ‘dwelling’ ‒ to operate on a time-limited basis. This offers the provider the flexibility to rent out the units to a greater diversity of tenants whilst also providing Council with the assurance that the use of the units as a ‘dwelling’ is temporary and will be reverted to student accommodation once the market recovers. This approach also allows the building owners to generate rental income during an interval where many businesses have been financially impacted.
The lack of demand for student housing by international students also creates a unique opportunity to provide a greater number of affordable housing options to the community. By allowing the units to be used for affordable housing purposes and deliver a source of income to housing providers, Council is incentivised to allow this change.
If you are a student accommodation provider and have had troubles in leasing out units due to the COVID-19 pandemic, get in touch with Henry Johnstone or your usual contact at Ratio to discuss how we might be able to assist you.