Stay or leave the city? Students and rented accommodation during COVID-19 pandemic.

As the world-wide massive expansion in the number of higher education students has occurred, they are considered as an important driver of urban change. Off-campus student accommodation in the form of shared rental housing has become increasingly significant all over the world, with studies suggesting that this is having important consequences for housing markets in the many cities. As a result, there is a growing need for research showing the behaviour and motivation of this group of tenants. The COVID-19 pandemic and implemented restrictions provided a unique opportunity to explore the behaviour of young tenants in an unusual situation. By survey conducted in such inimitable conditions, new general knowledge has been gained. To highlight a key result, it was found that students are a large and extremely flexible group of tenants who demonstrate no reluctance to terminate a tenancy agreement and return quickly to the family home. The empirical results show that they displayed no attachment to the rented flat, full reluctance to pay for the reservation of a place and good knowledge of the market situation, leading to the negotiation of lower prices and more favourable rental conditions. However, their motivation to stay and continue to rent included uncomfortable study conditions at the family home, a romantic relationship with a partner, a job in the city and strong existing social bonds. The results reported in this study can be useful for global investors on the rental real estate market.

Introduction

Increasing number of higher education students makes them an important driver of urban change (Chatterton, 2010). Scientists (i.e. Chatterton, 1999; Kinton et al., 2016; Munro et al., 2009; Rugg et al., 2002) stressed the importance of understanding how students affect private rental market, as they seem to be a substantial and growing feature of this sector. The issue is raised that both qualitative and quantitative methods are required to gain wider knowledge on the factors that shape students' demand on local housing market.

Off-campus student accommodation in the form of shared rental housing has become increasingly significant all over the world, with studies suggesting that this is having important consequences for housing markets in university towns, ie. in the UK (Hubbard, 2009), Spain (Garmendia et al., 2011), Germany (Miessner, 2021), Canada (Allinson, 2006) and USA (Dobbs, 2013). Considerable attention has recently been devoted to questions of student accommodation and its consequences (Christie et al., 2002; Russo & Capel, 2007; Smith & Holt, 2007). In the current times, many students are giving up on-campus living and renting a flat in the city. The willingness to rent depends on age, mobility and wealth (Andrews & Caldera Sanchez, 2011; Chen & Jin, 2014; Cuerpo et al., 2014; de Boer & Bitetti, 2014). Young people with insufficient funds usually decide upon tenancy (Źróbek et al., 2020), and since being a student requires accommodation (Pittman & Richmond, 2008), they may rent a room or a whole flat, either alone or together with peers or a life partner.

The results of the above mentioned research suggest that students are a specific and flexible group of tenants. Turnover within student neighbourhoods is argued to be sufficiently high to cause significant neighbourhood and community disruption in many cities (Munro et al., 2009). Phenomena of de-studentification lead to the depopulation and decline of some classical studentified neighbourhoods (Kinton et al., 2016). Any changes in students behaviour are expected to have unintentional consequences for wider social, cultural and economic relations in university towns and cities (Sage et al., 2012).

The covid-19 pandemic provided a unique opportunity to study the market behaviour of this group under specific conditions. Never before in the history of the world has it happened that so many countries in such a short period of time first closed universities and then switched to distance learning. The appearance of the Corona Virus (COVID-19) has led the whole world within a very short time to an unprecedented health crisis. Governments all over the world implemented various emergency protocols in order to control and minimise the spread of the virus, i.e. in India (Saha et al., 2020), Spain (Odriozola-González et al., 2020), the USA (Cohen et al., 2020) and Canada (Vilches et al., 2021). Lockdowns also reached the sphere of education at all levels. At the beginning of the pandemic (March 2020), many national governments closed educational institutions and urgently switched to e-learning (Chaturvedi et al., 2021). The overall impact is expected to be very considerable (Araújo et al., 2020; Aucejo et al., 2020). The closure of universities, the suspension of classes, and the subsequent shift of academic education to a remote mode have resulted in a student exodus from university towns and the mass termination of leases.

The outbreak of the COVID-19 virus pandemic triggered a mass exodus of students from the world's academic cities and has had a number of negative effects on housing markets, i.e. in the United Kingdom (Cromarty et al., 2021), Canada (Rental Market Report, Third Quarter 2020), USA (2021 U.S. Real Estate Market Outlook), Australia (Evans et al., 2020) and Poland (). Government measures such as lockdowns, the closure of campuses and rules limiting the mobility of students have resulted in students leaving rented accommodation and returning home, often before their rental contracts expire. Consequently, rents have declined, partly because of discounts on existing rental agreements. The situations observed around the world have inspired an in-depth study and finding answers to the questions: what kind of tenants are students? Are they stable? Under what circumstances will they leave the city at once, and when will they decide to stay a while longer?

This paper attempts to shed light on the impact of the COVID-19 pandemic on the real estate market in terms of student rentals. The study provides up-to-date insights into the changing situation of local rental housing markets in cities where the university centre plays a significant role. Research conducted on a sample group of students has revealed the specificity of these young tenants, their extraordinary adaptability to new conditions and the very high flexibility of their rental demand. The results and conclusions presented may be helpful for researchers and people doing business in the real estate market, as well as city authorities and urban planners.

Study area and study design

The study was conducted in the territory of Poland. The number of students in 2019 in Poland was 1,202,582 (Statistics Poland), and over 70% studied at public universities. The survey was carried out in the city of Olsztyn (a city in northeastern Poland). It serves as the largest scientific centre in the region, with a population of 171,979 and 25,817 students. The University of Warmia and Mazury in Olsztyn (UWM) educates 82% of students. It can serve as a good example of a city in which an academic centre plays an important role, thus the results can be related to similar cities in the world.

Since student dormitories (managed by the ‘Żak’ non-profit foundation) located on the UWM campus offer accommodation only for 12% students, the majority of students seek housing on the private market. Students can rent a room in a private dormitory, rent with peers an entire flat in a building managed by one owner (buildings with flats exclusively for rent), or rent a flat or single room directly from private individuals. Another form is renting a room in a house where the owner lives with his/her family at the same time. The largest group live in a rented apartment, most of them with peers (Źróbek-Różańska & Szulc, 2018).

The main source of the primary data were questionnaires. In addition to a survey, the research required the collection of data from Statistics Poland, the National Bank of Poland and private organisations involved in the real estate market. A questionnaire survey was distributed in 2021 among 318 UWM students from January (the end of the winter semester) to March (the beginning of the summer semester). Participation in the study was voluntary. Students were asked to complete a survey posted on their individual Microsoft Teams accounts or to use a link to a Google Forms application. The relatively short survey and convenient form of survey delivery was successful (a 99% return rate). The student sample consisted of 315 students, which is representative under standard assumptions (non-conformity level 0.5, level of confidence 95% and maximum error 5%). The following survey was done in a proper manner. All participation was voluntary, and no identifying information was published. Another questionnaire was sent to the different types of student accommodation owners: the manager of dormitories (Żak Foundation), the owner of a private dormitory, the manager of a multi-family building consisting exclusively of rental flats, and the owners of individual private flats that are rented to students (42 responses in total).

Results

In Poland, the restrictions resulting from pandemic has been reflected in Poland's cities, i.e. Cracow, Lublin, Łódź, Poznań, Warsaw, Wrocław, and the Tricity. In the Tricities and Wrocław, a 10–20% drop in prices for rentals was observed. In Łódź and Lublin, a marked decline in interest in student housing was noted. In Warsaw, Cracow and Poznań, only the owners of 1–2 room flats in a good location found a tenant quite quickly (Propertynews.pl). In Olsztyn, the average transaction rate on the rental market has also fallen (Borzym, 2021).

The market behaviour of tenant students was revealed gradually in response to changing regulations. On March 11, 2020, the Rector of the UWM issued an ordinance (Ordinance No. 32/2020) suspending all teaching activities. It was expected that the restrictions might be temporary. According to direct interviews, students temporarily returned to their family homes, but they did not terminate their tenancy agreements or remove their belongings from the rented accommodation.

On March 26, 2020, the Rector issued a new ordinance (Ordinance No. 37/2020). Teachers of classes in all fields of study were obliged to adopt remote forms of teaching. In this situation, students who had looser lease terms began to return home for longer periods. Some owners negotiated to reserve their place for part of the rent. Those who had signed contracts with longer notice periods commenced the procedures to terminate their existing contracts.

May 22, 2020: classes remained remote, but authorities could organise laboratory classes and classes of a practical nature which, for substantive reasons, cannot be conducted online. The accommodation of students in student dormitories was resumed, but with the proviso that it could take place only on the basis of a named list of students drawn up by deans or the director of the School of Public Health (Ordinance No. 45/2020).

With the commencement of the new academic year 2020/2021, October 1, 2020, the Rector issued a further ordinance on teaching organisation. According to the regulation (Ordinance No. 82/2020), classes at UWM were delivered in remote and mixed modes. As a result, the possibility of conducting classes on a stationary basis was limited to the minimum (e.g. in medical, veterinary and arts-related faculties). The order entered into force on 1 October 2020 and remains in force until further notice (at the time of the current study, it had the status of existing law). In a letter dated 17 September 2021, the Vice-Chancellor set out the new rules for dormitories. Students who have scheduled blocks of classes on-site could use short-term accommodation during class periods. The order was in force until the end of the academic year.

As a result of introducing remote modes of teaching at the university, there has been a significant decrease in the demand for student accommodation. The process was gradual. The pace of leaving the city mainly depended on the agreement notice period and the field of study as some classes were maintained (e.g. in medical faculties). Moreover, some students were completing a graduation thesis and stayed in the city until the end of the summer semester 2020. A full change in the demand for student rentals was observed in the academic year 2020/2021.

The surveyed students adapted quickly to the new learning conditions. The surveys show that the percentage of students living with their parents increased from 18% to 62% and the percentage of students renting decreased from 73% to 30% (Fig. 1 ). Estimating from a representative sample, the number of renters fell from almost 13,000 to just over 5000. Additionally, students who started their first degree in the 2020/2021 academic year did not have an opportunity to report demand at all. From the data obtained from the Office for Students, in 2020/2021, a total of 5196 students were enrolled on the first degree (excluding medical or veterinary studies). It can be estimated that, in the absence of the Covid-19 pandemic, 4261 first-year undergraduate students in September 2020 would have reported a demand for housing in Olsztyn, and 3794 of them would have searched for rental opportunities. This demand was lost in 2020/2021.

Fig. 1

Students' place of residence before and after the emergence of the pandemic.

Students also showed a lack of attachment to occupied premises and a high degree of flexibility. This is expressed by the fact that they abandoned the housing units they previously occupied, and some started to look for another housing unit (19% respondents), 12% negotiated reduced rent, and 6% negotiated more favourable leasing terms. Some students decided to move from a dormitory to a flat rented on the private market. The new market situation gave students the opportunity to move to better locations, better standards or to live with fewer roommates. It is also worth mentioning that 82% of students did not pay a reservation to keep their place in the flat, assuming that they would find another flat on their return.

However, there were students who stayed in Olsztyn and continued renting. The survey revealed that 21% of students rented a flat on the private market, 6% lived in a student dormitory, and 3% rented a room in a flat. They were asked about the reason for staying in Olsztyn and the following answers were obtained (Fig. 2 ): 19% declared unsuitable conditions for remote learning in their family home, 18% decided to continue renting due to maintaining a romantic relationship, 15% stayed in the city due to employment, 11% were motivated by hybrid learning, and 9% chose to live away from home for social reasons (access to recreational infrastructure and proximity to friends). The remainder of those who chose an open-ended answer to this question mentioned doing an internship in Olsztyn, conducting research necessary for their master's degree thesis, and wanting to live independently (without parents).

Fig. 2

Reasons for renting accommodation during pandemic.

The flexibility of students had a significant impact on accommodation owners. According to the Żak Foundation report, before the pandemic, the occupancy rate in the UWM dormitory was 92% (11.03.2020), and it was exclusively long-term residence. As a result of e-learning, the occupancy rate in the dormitory decreased to 27% (22.02.2021). Several changes on the housing market were noted. The availability of dormitory places for selected groups of students and the new short-term rental supply displaced demand for housing on the private market. However, he increased supply on the private market and the lack of supply of dormitory places for ineligible students redirected demand to the private market. Private dormitory owners, on the other hand, saw the demand for their offer almost disappear.

The outflow of tenants resulted in a change in rental conditions. According to the author's own research on a group of owners, in 71% of cases the number of months that a flat is rented to students fell from 10 to 12 to 0 during the year, 12% maintained their flat rented for three months (in this case, the flat was rented by students who were unsure whether they would be able to commute to classes at the university premises and hoped to keep their retail jobs) and 17% declared that they managed to keep tenants for 10–12 months a year. Those who declared continuous renting were asked to describe their tenants and flats. The most frequent tenants were couples in a steady relationship who were renting a 1 or 2 room flat on their own. The reasons for staying in the flat included the type of studies (one person in the couple was studying medicine or veterinary medicine) and the desire to live together.

Half of the respondents (52%) declared a rent reduction of around 10% (in only one case did the reduction amount to as much as 50%). This half included all owners who still had tenants (i.e. the reduction applied to the rent actually received) and owners who reduced the rent in an advertised offer. This information was collected in a sample that was too small to represent the entire market. Therefore, the information on rent reduction should be compared with that received from students: 12% of students reported paying a lower rent compared to before COVID-19. Another change concerned the possibility of enforcing payment for room/apartment bookings. Before the pandemic, it was common practice that students not using the accommodation during holidays paid a reservation of usually half the rent. In the sample of owners surveyed, none had continued to receive this type of payment. The reluctance to incur the cost of booking/storing belongings was confirmed by research among students.

The last phenomenon that was observed on the supply side of the student housing rental market was a change in the target group of the offer. This occurred in cases in which low costs enabled a high elasticity of supply. Owners of flats that could be offered at low cost to people other than students (62% of the sample, 87% of respondents who lost student tenants) found tenants among economic immigrants (mainly from Ukraine), young married couples and remote business people. The change was mainly successful among those who owned studio and 2-room flats. The owners of these types of flats had to restore the typical functions of the rooms - clear division into a living room and a bedroom. In flats typically furnished to meet the needs of students (separate, multi-purpose rooms with lockable doors), the owners refrained from more costly transformations and decided to wait for the pandemic situation to develop. In contrast, zero elasticity was shown by dormitory managers.

Conclusions

Off-campus higher education student accommodation has become a common way of residing in the world cities during studying period. Thus, there has been a growing need for research exploring the behaviour and motivation shaping the demand represented by this group of emerging adults. The COVID-19 pandemic, lockdowns and other restrictions provided a unique opportunity to investigate the behaviour patterns of student-tenants in an unusual situation. Therefore, the research presented in this article shows new general knowledge that has been gained. The research was conducted on a sample of representative size and allows to explain a world phenomenon - student exodus from the cities. The survey was conducted on a sample of young adults studying in Poland. The empirical results show that the majority of students returned to their parents' home outside the city and some (first-year students) never left their family homes at all. Belonging to the most mobile age group, students reacted to new conditions very quickly - they terminated their leases and were unwilling to pay reservations. Thus, university towns experienced a sudden reduction in the number of residents aged 18–26 and rental housing owners lost a source of income.

To highlight a key result, this research provided insight into the specificity of young tenants' behaviour:

no reluctance to return quickly to the family home;

no attachment to the rented flat;

full reluctance to pay for the reservation of a place in the flat due to lack of attachment to the location;

awareness of the market situation, leading to the negotiation of lower prices and more favourable rental conditions.

The motivation to continue renting included uncomfortable study conditions at home, a romantic relationship with a partner and fears of separation, a job in the city and social networks. The pandemic also allowed another conclusion to be drawn - the profitability of the student rental business proved to be very sensitive to the behaviour of highly flexible tenants. Owners of flats were forced to be much more flexible and to be ready to adjust their offer to a different target group or to agree to lower rent and less profitable rental conditions.

In times of globalisation, when differences in the behaviour of young people around the world are blurred, it can be assumed that the results obtained can be generalised and applied to other cities where the university plays a significant role. The results of the survey lead to the following conclusion: specialised housing for a narrow group of students can be a very risky business. It can be expected that when the question of whether to stay or leave the city arises again in the future, students will answer: leave and do it quickly.

CRediT authorship contribution statement

I hereby declare that the article has been written solely by one author and that all steps at each stage have therefore been taken by Alina Źróbek-Różańska.

Alina Źróbek-Różańska: Conceptualization, Methodology, Software, Formal analysis, Data curation, Writing- Original draft preparation, Visualization, Investigation, Supervision, Software, Validation, Writing- Reviewing and Editing, etc.

Declaration of competing interest

I wish to confirm that there are no known conflicts of interest associated with this publication and there has been no significant financial support for this work that could have influenced its outcome. I confirm that there are no other persons who satisfied the criteria for authorship but are not listed. I confirm that I have given due consideration to the protection of intellectual property associated with this work and that there are no impediments to publication, including the timing of publication, with respect to intellectual property. In so doing I confirm that I have followed the regulations of our institutions concerning intellectual property. I understand that the Corresponding Author is the sole contact for the Editorial process (including Editorial Manager and direct communications with the office). I confirm that I have provided a current, correct email address which is accessible by the Corresponding Author.

Sample structure
Type of studies:	Percentage
First degree studies	65%
Second degree studies	25%
Unified studies	10%
Place of permanent residence:	Percentage
Olsztyn (study area)	13%
Olsztynski County (municipalities in the immediate vicinity of the city)	5%
Another district in warmińsko-mazurskie voivodship	34%
other voivodship	48%
Type of place of permanent residence:	Percentage
Large city (over 100,000 inhabitants)	27%
Medium city (20000–100,000 inhabitants)	19%
Small city (less than 20,000 inhabitants)	13%
Village	41%