Will the foreign student cap fix the rental crisis?

The Student Accommodation Council (the Council), which advocates for the purpose-built student accommodation sector (PBSA), is maintaining its position that a reduction in international students will not have a large impact on the private rental market, despite the Albanese government citing that as its main reason for implementing an overseas student cap. International student numbers have been capped to 270,000 total for next year, pending the passing of its legislation, with 145,000 allocated to publicly funded universities and the remaining 95,000 going to the VET sector. The Council said the legislation would be a sustainable number that could give investors in accommodation the confidence they need to continue growing supply. The Albanese government has been criticised for using international students as a scapegoat for the housing and rental crisis, especially in cities. The Council in April released research that found the availability of rental properties started to drop during the Covid-19 pandemic, when there were little to no international students in Australia. That research also determined overseas students only make up four per cent of Australia's rental market, and are not the main reason for the tight market. There is a projected 7,770 new beds in the sector due to become available by 2026, which is not enough to alleviate demand in the private rental market. Although, the Council said, the Senate inquiry into the proposed caps has not yet modelled the impact that a reduction in international students would have on the housing market, despite the government recommending a reduction in international students to reduce pressure on the rental market. Torie Brown. Picture: NCA Newswire/John Feder “In a constrained housing market, any policy that impacts migration or students is housing policy," Council executive director Torie Brown said. “It is critical that Treasury passes a housing lens over any proposed reduction in student visas. If it had, it would have found that large reductions in student visas would not fix the rental market. “Historically low housing supply, slow planning systems, smaller household sizes and a shift towards people using their spare bedrooms as offices instead of bedrooms are the real reasons behind the housing crisis." How can unis renegotiate number with PBSA? Under the pending cap legislation, universities are able to negotiate a higher maximum cap if they build more student housing, although Ms Brown said the sector is not yet sure how that would play out. She said the language has changed from 'universities need to provide new student accommodation' to 'universities need to show access to student accommodation from 2026.' "You can't force a university to become a housing developer and nor should you. A university's superpower is educating and providing services and courses," she said. "[The PBSA industry's] superpower is providing housing for students. So, universities should be encouraged to partner with us. "In some cases, that's just working with us to take rooms out in existing buildings. We're hopeful that from 2026, universities partnering with the private sector will be enough for those universities to show that they've got access to new student accommodation." Related stories: Universities benefit from international students but fail to provide housing | Overseas students not to blame for rental crisis: report | International student cap set to 270,000 Some universities have said there is "red tape" involved with building new student accommodation, preventing beds from coming online quickly enough. "The state government should be working with the sector to get those developments up quicker, acknowledging that clearly the federal government wants to see more of it," Ms Brown said. "Let's all work together to try and get these buildings built quicker." International student vs private rental market The Council partners with providers to build PBSA, which is unavailable to renters who are not tertiary education students, although is open to both international and domestic students. "We are really reliant on the international student market. We produce a housing asset type that they really like to live in. It's staffed 24 hours a day, it's built for them," she said. "It's a community, it's a safe place for them to live when they arrive in Australia. We build those buildings with international students in mind." "Better than expected" Ms Brown said investors were concerned the cap number would be closer to 95,000, which would have "scared off" developers. "Investors can remain confident that there's still a good amount of international students coming into Australia, particularly in the higher education sector, which is now closer to 2023 levels," she said. "On one hand it's better than expected, and investors can remain confident in continuing to grow that asset class in Australia, but do we take the narrative that implementing a cap is necessary to help with the housing market? No, I don't accept that as fact. She said the entire rental sector is tight and requires growth, although there are benefits for international students when applying for PBSA specifically. "International students are not the preferred tenant for a residential landlord, because they usually don't have any rental history. They don't have a full-time job with pay slips that they can point to," she said. "So, they're often at the bottom of the list when it comes to the private residential market. A landlord will go for someone who's got an Australian tax file number. "Most of the people living in our buildings, most of the residents, it's their first time living out of home. So they're leaving their home countries and they're coming to a new country. "For them, it's critical to know that they've got somewhere to arrive safely when they get here. And often parents are a big part of choosing where they live, too." Lack of supply and change in culture real issues "Australia has had a long-term problem, a structural issue, with bringing enough houses to market. We haven't been building enough houses for 20-30 years," Ms Brown continued. "We've also started to see a change in the way that people use their homes. Spare rooms are now home offices, you're less likely to have a flatmate or an extra family member in your spare room because you're using it to work from home. "We've also seen a change in the size of families in Australia. So we're now seeing more single-person households, we're seeing more couples with no children living in a family home, and we're seeing more single parents across the market." Read more: “This Bill has few friends:” What was said at the intl student cap hearing | Visa fees hiked 125% to pay for HECS, paid prac reforms | Report: 620,000 permanent migrant workers and $70bn “ready to be activated”

Will the foreign student cap fix the rental crisis?

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