Student accommodation contributions and nomination agreements
Nomination agreements and contributions in lieu of affordable housing drive the economics of a student scheme. Both are negotiable, and some requests fail the statutory tests.
Two obligations decide the economics of a purpose built student scheme. A nomination agreement with a higher education provider, which ties the beds to students and, in London, engages the affordable student accommodation policy. And a contribution sought in place of conventional affordable housing, which is where student accommodation section 106 negotiations spend most of their time.
Both are negotiable. Both have to satisfy the statutory tests for obligations, and the second one frequently does not, at least in the form it is first requested.
Why councils seek obligations on student schemes
Three arguments come up, and they are not equally strong.
The first is that student accommodation uses land that could have delivered conventional homes, including affordable homes, so the scheme should contribute to affordable housing need. That argument is respectable where the development plan says so, and the policy basis has to be in the plan rather than in the officer's report.
The second is that a scheme brings costs the authority has to meet, from waste collection and cycle parking to pressure on streets and open spaces. Those are ordinary contribution matters, and they stand or fall on evidence.
The third is that students in purpose built accommodation are exempt from council tax under the exempt dwellings provisions, so the authority loses revenue. That one is not a planning consideration. An obligation has to be necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind, under the statutory tests in the levy regulations. A payment to replace lost general taxation meets none of the three, and saying so politely, with the regulation cited, usually ends the discussion.
Nomination agreements and what they secure
A nomination agreement gives a named higher education provider the right to nominate students to some or all of the bedrooms, for a stated term. It is the mechanism that converts a block of rooms into student accommodation in fact rather than in description.
What the agreement itself typically covers: the number of beds nominated, the term and renewal, rent setting and any cap, the marketing and allocation process, void risk, and what happens at the end of the term.
What the section 106 has to cover is different. It has to secure that a nomination agreement exists, or that reasonable endeavours have been used to obtain one, and to say what happens if no provider will sign. That fallback clause is where the value sits for a developer, because a provider's appetite is outside your control and a planning obligation that requires the impossible will simply block occupation.
Three clauses to argue about carefully:
- the definition of a qualifying student, which should allow for students at any recognised provider rather than only the one named, so the building is lettable if the named provider's numbers fall
- the cascade if no nomination agreement is in place by a defined date, which should permit occupation by qualifying students generally rather than leaving the building empty
- the treatment of vacation periods, since summer letting for conferences or visitors is a different use and needs express permission if you want it
Restricting occupation to students
Purpose built student accommodation is normally treated as sui generis, outside the use classes. That cuts both ways. Any later change of use needs planning permission, which is the council's control and also the reason an occupancy restriction should not be drafted so tightly that the building has no future.
The usual package is an occupancy restriction limiting use to full-time students, a management plan covering arrival and departure weekends, waste, noise, security and a named responsible manager, a register of occupants available to the authority on request, and car free provisions backed by a permit restriction where the authority can deliver one.
Keep the management plan out of the deed and into a condition where you can. Management arrangements change with operators, and varying a condition is faster and cheaper than varying an agreement.
Contributions in lieu of affordable housing
Where the development plan requires student schemes to contribute, the questions are how much, on what basis, and whether the scheme can carry it.
| Basis of request | What to test |
|---|---|
| Policy in the adopted plan | whether the policy actually applies to sui generis student accommodation |
| A formula per bed or per m² | whether the formula is evidenced and applied consistently |
| Affordable student beds in place of cash | whether a provider will nominate, and at what rent |
| Viability adjusted contribution | whether the appraisal inputs are agreed before submission |
In London the Plan takes the affordable student accommodation route, requiring a proportion of bedrooms at an affordable rent benchmark and a nomination agreement with a specified provider. That approach turns the discussion into one about rent levels and the provider's position rather than about a cash sum, which is usually more productive. Outside London, practice varies widely between authorities, and the adopted policy is the only reliable guide.
Where the request is unaffordable, the route is an appraisal. A Viability Assessment needs to set out development costs, rental values for the beds, the yield applied, the operator's position, and the residual land value against an evidenced benchmark, with the policy compliant scheme tested first. Councils usually expect a suitably qualified author, and professional review is strongly advised before it is submitted, because the appraisal will be reviewed line by line by the authority's own consultant.
Two mechanisms help when the numbers are tight. Phasing the contribution so it is paid against occupation rather than on implementation, with indexation handled in the way described in deferred contributions and indexation. And a review mechanism if the scheme is slow to start, following the structures in viability review mechanisms.
Testing requests against the obligation tests
Work through each requested head of terms and write down, in one line each, why it is necessary to make the development acceptable, how it is directly related to the development, and why the amount is fairly and reasonably related in scale and kind.
That discipline is worth the hour. It produces a table you can put in front of the case officer, and it exposes the requests that are really a wish list. Items that regularly fail: general council tax compensation, contributions to services with no identified project, sums calculated per bed with no evidence base, and monitoring fees pitched at a level unrelated to the work of monitoring.
Items that regularly succeed: cycle parking and cycle infrastructure, contributions to a named street improvement or walking route scheme, waste and recycling provision, travel plan monitoring, and employment and skills obligations during construction.
An Affordable Housing Statement is the natural place to set out the policy analysis and the scheme's offer, whether the offer is beds at an affordable rent or a commuted sum.
Drafting for a change of operator
Student accommodation changes hands, and the operator at practical completion is often not the operator in year five.
Draft accordingly. Obligations should bind successors in title and be capable of performance by any competent operator, not just the applicant's chosen one. Avoid naming the operator anywhere in the deed. Include step-in provisions where the authority needs comfort that management obligations continue. And check that the nomination agreement obligation survives a transfer, with a mechanism for replacing a provider that withdraws.
Illustrative example. A 320 bed scheme on a city centre car park, with the council seeking a commuted affordable housing sum, a nomination agreement, cycle contributions and a travel plan. The negotiated outcome ties the commuted sum to first occupation with indexation, defines qualifying students by reference to any recognised provider with a cascade after a stated date, restricts vacation letting to a defined number of weeks with a management plan condition, and carries an obligation on reasonable endeavours for the nomination agreement rather than an absolute bar on occupation.
None of that is exotic drafting. It is the difference between a deed that funds the scheme and a deed that stops it letting in September.
One honest uncertainty. The relationship between student accommodation and housing supply figures continues to shift, and beds are counted towards supply using a ratio derived from average household size under the current measurement guidance. Check that guidance for the current ratio rather than relying on a figure from a previous project, since it affects how much weight an authority gives to the scheme's contribution to housing delivery.
To see which reports a student accommodation scheme is likely to need, enter the postcode on PlanScope and answer the guided questions.
This is general guidance rather than legal advice. Check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.
Frequently asked questions
Can a council require a contribution for lost council tax?
No. Students in purpose built accommodation are exempt under the exempt dwellings provisions, but an obligation must be necessary to make the development acceptable in planning terms, directly related to it, and fairly and reasonably related in scale and kind. A payment replacing general taxation revenue satisfies none of those tests.
What does a nomination agreement do?
It gives a higher education provider the right to nominate students to some or all of the bedrooms for a stated term, covering rent setting, allocation, void risk and renewal. The section 106 secures that such an agreement exists, or that reasonable endeavours have been used to obtain one, together with a fallback if no provider will sign.
How should qualifying students be defined?
By reference to full-time students at any recognised provider rather than only a named institution, so the building remains lettable if that institution's numbers fall. A cascade permitting occupation by qualifying students generally, after a defined date without a nomination agreement, prevents an obligation from leaving rooms empty.
Is student accommodation in a use class?
Purpose built student accommodation is normally treated as sui generis, outside the use classes, so any later change of use needs planning permission. That gives the council control and is a reason not to draft occupancy restrictions so tightly that the building has no alternative future.
What affordable provision applies in London?
The London Plan takes the affordable student accommodation route, requiring a proportion of bedrooms at an affordable rent benchmark together with a nomination agreement with a specified provider. That turns the negotiation into one about rent levels and the provider's position rather than a cash sum. Outside London, practice depends on the adopted local policy.
Can vacation letting be included?
Only if the permission allows it. Letting rooms to conference delegates or visitors in vacation periods is a different use, so seek express permission with a defined number of weeks and a management plan. Discovering the restriction after practical completion removes a revenue stream the appraisal may have assumed.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.