A radical rethink on student accommodation

One of the least surprising findings of the most recent iteration of the long-standing NUS/Unipol Accommodation Costs Survey is that rents have gone up – again.

Rents rose by 6% since last year. Rent increases are consistently higher than rates of inflation for the same period and when rent is factored in as a proportion of the maximum financial support a student can receive, there emerges quite a startling picture.

On average rent comprised 55% of the maximum available loan in 2012-13. It then rose to 62% in 2015-16 and by 2018, accounted for 73% of the that amount. It’s worth remembering that just a small proportion of students are eligible for the maximum loan – which means that there will be many students spending a considerably higher proportion of their available funds on rent.

This is in spite of an increase in the amount that students are borrowing and the amount of debt that is being accrued. The increasing costs of student accommodation is therefore inexplicably linked with the spiralling of student debt in recent years.

Squeezing the lower middle

The exorbitant price of accommodation is not just an issue for students from the lowest income backgrounds. In fact it’s possible to make a convincing case that it’s the students from lower middle-income backgrounds who are penalised the most in this arrangement. Students’ whose parents earn just above the cut-off points for the maximum loan package and often the criteria for lower cost rooms, are facing biting hardship.

One lazy assumption often heard from Treasury is that that these students can access funds from their parents to top up their loans to cover living expenses. This has created a new cultural norm which sees students work more than 20 hours per week in paid employment when there is plenty of evidence to suggest this has a detrimental effect on their ability to study, keep up with their peers and look after their mental health.

This all means that we need to radically rethink our model for student accommodation. This will require an objective view of all of the costs faced by students throughout their time in university, considering what is reasonable for students to pay and to borrow to access and excel in education. We must understand what cost barriers there are.

The Auger review offers some hope. With an established focus on access and value for money, the aspiration of the review is to ensure fairness and transparency in the funding system for HE. This would be meaningless without a concerted effort to tackle the issue of affordability in accommodation.

It’s not just the cost

As was articulated to the sector by Eva Crossan Jory, the NUS Vice President (Welfare), in a speech today any reforms to purpose-built student accommodation must address all aspects of applying for, residing in, and moving on from student accommodation.

Changes in legislation will soon make it illegal to charge additional fees to students looking to rent a room, except for holding deposit and a security deposit. This should end the inexcusable practice of charging all kinds of often spurious fees – such as for booking, application, referencing and cancellation. This is a step in the right direction.

Likewise changes in regional planning regulation would, in some areas, make it necessary for all new accommodation to have a nominations agreement with an institution, reinforcing the link between the university and where a student lives while they study.

But beyond that, the NUS would like to see developers and architects taking on board the lessons from groups such as the Healthy Universities Network, both designing rooms that are cost efficient and creating space in buildings for shared areas and social spaces.

The student voice is critical in all of this and feedback must be sought especially from students that are leaving purpose-built accommodation. For too long, universities and developers have focused exclusively on the perceived desire of prospective students who, important though they are, have limited experience or understanding of what they need or want from their accommodation in their very first year.

Are residential life packages really worth the money? Will gym membership really make the difference in terms of the enjoyment of your halls? Is living in a tiny a studio for nine months really the best way to make new friends in a new city?

And if we commit to a radical rethink of the sector, we should not be afraid to ask whether student accommodation should remain the domain of first years and international students only. Is there scope for it to become the living arrangement of choice for all students? Can we create something affordable and co-designed that provides a sociable and supportive environment in which all students can thrive? We can and we should.

10 responses to “A radical rethink on student accommodation

  1. In addition to the increasing cost of student accommodation, another concern is that so many private landlords, or suppliers of student accommodation are asking students for sizeable chunks of rent in advance ie 3 months plus.
    Students end up without funds to pay for other living costs and constantly worried about their financial situation. We are definitely seeing this in York. Private landlords don’t ask other tennants to pay their rent in quarterly chunks and should not be allowed to exploit students in this way: students agree to the terms because they don’t feel that they have a choice.

  2. Good to see an article on this important topic. Hopefully we can see a rebalancing that takes the financial pressure off students and allows them more freedom to focus on their studies.

  3. Why does the UK think it is necessary for universities to be housing providers at all? Much of the world functions quite happily without making this assumption. Had anyone ever been foolish enough to appoint me as a VC, it would have been one of the first questions I asked. Accommodation is a constant source of trouble, very hard to operate economically and it is quite apparent that the private sector can do the job instead. If student unions are concerned, they could form housing associations or co-operatives, as happens in several European countries. At most, there may be a case for universities running a small amount of accommodation where the market fails – notably for students with disabilities who need purpose-designed spaces, although I suspect they would be unhappy to occupy what would be perceived as ghettos. Many of the same arguments could also be applied to university catering, especially for city centre campuses.

  4. ‘where the market fails’…hmm….the market rarely works, particularly for those at the lower income levels.

  5. Robert, this is exactly what’s happening. Increasingly, both directly and indirectly, student accommodation is being provided by the private sector through purpose built ‘halls’ (often more like hotels). The accommodation is generally of a very high standard (and price) responding to a particular segment of the market. It’s interesting to see each year the most expensive accommodation generally gets booked up first. One of the costs of this arms race type escalation in the quality of accommodation provision is a disappearing lower priced option of a reasonable quality.

  6. @Robert Dingwell, investment in an accommodation block generates a positive internal rate of return, eases pressure on the local rental/housing market (important for local political goodwill), makes the University more attractive to students and improves retention (especially progression from 1st year to 2nd if rooms are available). Why would a VC veto a project that makes the university’s bottom line no worse and generates operational benefits? Regarding catering, the private sector alternative would need to be at least 20% more efficient since it would be liable for VAT (campus services are exempt on the grounds of supply closely connected to education). Don’t give up your day job to become a VC!

  7. None of these are arguments for universities taking on housing provision. The return is problematic because students tend to resist rent increases, private providers are happy to come in and local politicians welcome them just as much, and there is no clear attraction to students – the university can act as a letting agent rather than a landlord. Aren’t there better arguments for investing in teaching and research space – or, heaven forbid, staff – to fulfill the core mission. On the catering front, both local independent and chain providers seem capable of serving the market around city centre universities at competitive prices and quality. I accept that it may be different on rural or suburban campuses, although franchising may offer an attractive alternative model.

  8. @Robert Dingwell You don’t understand the distinction between a capital and a recurrent cost. A capital cost takes place ONCE. A recurrent cost, such as spending on extra staff, takes place EVERY year. Have you taken out a bank loan or a mortgage recently to pay your Council Tax bill? Go along to a lender and see what they say. If a building project wipes its face (ie you don’t pay too much on construction), the institution is left in no worse a financial position after making an investment that will generate benefits for decades to come. A positive internal return means you actually have some extra income for some more staff as well.

  9. Why does the UK think it is necessary for universities to be housing providers at all?

    Because University owned property rented to students = income for the University, and in the closed period these rooms can be rented to holiday makers, residential corporate conferences and so on.

    The Halls of Residence are an asset, not a social program.

    Take the rosy blue sunshades of Thatcherism off, and think 🙂

  10. “Because University owned property rented to students = income for the University, and in the closed period these rooms can be rented to holiday makers, residential corporate conferences and so on.”

    Or even some academic conferences or visiting students. Plus you don’t have to lay off all the campus staff during the vac period and hire them all again when the students return. Simples.

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