Housing as an asset class, Italian edition - Draghinomics #2
The Italian reform of student accommodation
This article was originally published in the 27th August 2021 paper issue of the Italian newspaper “Il Fatto Quotidiano”.
It is very easy to get lost in the hundreds of pages of the Italian national Recovery and Resilience Plan (RRP) and its annexes. While the public debate mainly focused on the reform of justice and public administration, there are many other relevant issues that risk being overshadowed. Among the innumerable areas covered by the RRP, the reform of student accommodation has gone almost unnoticed. In fact, this is a real gift to the private real estate developers.
First, however, let us take a step backwards. Covid has forced many out-of-town students to leave the city where they were studying. Even today - when life seems slowly normalising - there are still many unknowns. The price of rents seems to have fallen slightly (-2.5%), but the lack of a shared and well-reasoned planning weighs on the return to classes.
The critical issues that emerged with the pandemic have been grafted onto structural problems, such as the delays in the allocation of beds and the inequalities between regions. The shortage of available accommodation means that only 5% of Italian university students live in student accommodation, compared with a European average of 17% (Eurostudent data).
In this context of hardship, the final version of the RRP provides for the allocation of 960 million euros for student accommodation (40 million less than the previous draft). The objective is to increase the number of places for out-of-town students from the current 40,000 to over 100,000 by 2026.
How to achieve this goal? Here we come to the crucial point: the revision of law 338/2000 and legislative decree 68/2012 on the construction of student accommodation. The reform provides for the "opening of participation in financing also to private investors, or public-private partnerships" and a long series of other concessions to the “lords of the brick” (signori del mattione).
First of all, the government will support the "sustainability of private investment" with a concessionary taxation system ("similar to that applied to social housing").
Then, it will be possible to use the new housing in a "flexible" way. In other words, when student accommodations are not used to host students, it will be possible to rent them to third parties.
Moreover, the requirements for minimum common spaces will be relaxed. In return, managers will only have to provide "better equipped" single rooms.
Finally, the icing on the cake. The Ministry of Universities and Research will cover in advance (!) to the private sector the "charges corresponding to the first three years of management of the structures". In short, the government will generously fill the pockets of private builders with public money, in the hope that this will triple the number of student accommodation units available in Italy.
This measure, which the RRP calls an "innovative and original architecture", will at best be a free meal for property developers. At worst, it will not scratch the students’ housing problem. In any case, the legislative process has already been set in motion, since some of the changes envisaged by the RRP are already covered by the so-called “Decreto Semplificazioni”.
Among those directly concerned (i.e. the students), some discontent is beginning to emerge. Giovanni Sotgiu, coordinator of the Unione degli Universitari (one of the main Italian students’ unions), told Il Fatto: "The intervention foreseen in the RRP regarding the increase of beds in university residences goes in the right direction, but it is certainly still insufficient if we look at the total number of enrollments and compare it to the percentage of bed beneficiaries". For Sotgiu, the increase in the State co-financing threshold is positive, but "it is necessary to double the funds and work on the quality standards of the accommodation, as well as on the number".
These are not the only concerns of the university students. Sotgiu emphasises that "the possibility of private co-financing, in an area that is crucial for access to public universities for so many students, runs the risk of conferring discretionary powers on the criteria for access to residences (as has already happened in Venice), which could easily prove to be limiting and excluding, and increase the already well-known territorial inequalities".
What should be done, then? "The State and the Regions should allocate sufficient funding to cover the entire housing requirement, so as not to have to subordinate access criteria to private interests".
There is no need to hide behind a finger: the cake of student rents is tempting for many. Some in the sector are already making moves. One example? After the 2026 Milan-Cortina Games, the Olympic village will become a student residence. Il Sole 24 Ore reports that Coima sgr, a company that manages 27 real estate funds and is worth €8.4 billion in investments, will take care of it.
Instead of implementing a massive public housing plan, the RRP decided to pander to the private sector. The right to study is thus in danger of taking a back seat. On a crucial point of university life, which will have an impact on thousands of young people, the government seems to have given up intervening decisively and courageously.