The Australian government is urged to work with universities to ensure access to and availability of affordable student housing in the final report from the Australian Universities Accord Review Panel, tasked with reviewing Australia’s higher education system.
The report, released in late February 2024, contains 47 recommendations on student fees, funding, teaching, university governance, student safety and well-being, and international education. It also focuses on the growing housing challenges domestic and international students in Australia face, noting evidence that large numbers of international students are contributing to pressures in the housing market. The report stresses the need for a “planned and managed approach” to international education.
Homestay programmes are suggested as one solution to housing international students in Australia. The Review Panel notes that a separate Inquiry into the Post COVID-19 Recovery of Australia’s Tourism and International Education sectors has “recommended that the Government encourage states and territories to develop homestay in their respective jurisdictions to help alleviate pressing student accommodation issues and deepen connections between international students and Australian society.” Homestays are considered particularly important in regional areas, which typically have limited private rental sector accommodation and PBSA.
The Accord report highlights the importance of purpose-built student accommodation (PBSA) in reducing pressure on the private rental market. Still, it expresses concern that the high cost of PBSA “prices out many students, particularly those from underrepresented groups.”
Key recommendations related to student housing include:
- that the Australian Government and the Australian Tertiary Education Commission ensure that providers have appropriate risk management strategies for international education, including access to and availability of affordable student housing.
- The establishment of a Higher Education Future Fund with co‑contributions from public universities and the Government, with the aim of reaching $10 billion in assets. The returns would be used by the Government and contributing universities to fund built and digital infrastructure, including the provision of affordable student housing for domestic students.
The Property Council of Australia’s Student Accommodation Council Executive Director Torie Brown has welcomed the Accord report: “We were pleased to see the Accord mention the important role PBSA plays in the market, and we would like to work with the Government to grow the pipeline of supply going forwards,” she said.
The most significant boost to the PBSA sector in Australia, however, may come from the outcomes of the Inquiry into the Post COVID-19 Recovery of Australia’s Tourism and International Education sectors being undertaken by the Australian Parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade (the Committee). The Committee’s interim report, released in October 2023, focuses primarily on international education to align with the timing of the Australian Universities Accord, the Migration Review, and the Rapid Review of Australia’s Visa System. If the interim report’s recommendations are taken forward by government, some of the challenges facing investors in PBSA may be resolved. The interim report discusses evidence around the barriers to investment in PBSA, noting that:
“investors are subject to a number of fees, regulations and charges, including foreign owner stamp duty charges, land tax surcharges which are complex and vary by jurisdiction, as well as high Foreign Investment Review Board (FIRB) fees. By way of example, the Student Accommodation Council demonstrated how FIRB fees can vary according to whether a PBSA development is designated for a particular university:
… if PBSA developments are not specifically designated for a particular university, they are charged residential FIRB fees rather than commercial FIRB fees. This can effectively increase fees almost a hundred-fold, the FIRB transaction fees for a $50 million residential property are over $1 million, but just $13,200 for a commercial property.”
Commenting on the low levels of domestic investment in Australia’s PBSA sector, the Committee says:
“Perversely, Australian super funds invest in PBSA overseas but not in Australia. The Committee is persuaded by evidence received that this reduced domestic investment is strongly influenced by the complex and irrational tax treatment of PBSA across jurisdictions, as well as the general classification of PBSA as an ‘alternative’ asset class which assigns a higher risk profile thus deterring domestic institutional investors (especially superfunds).”
The interim report recommends that the Government urgently work to “foster the expansion of the Purpose-Built Student Accommodation (PBSA) sector including:
- examining mechanisms to boost domestic and superannuation fund investment into PBSA (as the majority of capital invested at present is foreign) including support for a new asset class of PBSA, recognising that it is now a mature and specialist housing product
- engaging with state, territory and local governments to remove planning and development impediments to PBSA developments
- working with regional universities and considering incentives to support PBSA developments in regional Australia.”
The Inquiry into the International Education and Tourism Sectors is ongoing. However, the Committee’s final report is expected to focus primarily on the tourism sector, given that the Interim report focused solely on the international education sector.
