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Double-edged sword as cost of student lets rises

Monday 10 December 2018

Universities across the UK have seen student numbers escalate over recent years and they had to turn to the private sector to help ensure supply of accommodation. According to a report released last week by Unipol and National Union of Students (NUS), this has been a double-edged sword, bringing both benefits to students, and cost implications.

The Accommodation Costs Survey 2018 shows that institutions have allowed private providers to shape the market according to a model of higher-specification, higher cost and predominantly en-suite provision. Universities have then tried to compete with the private sector offer, and whilst this has led to higher accommodation standards, it has also led to a significant rise in the cost of student accommodation, which is unsustainable.

The popularity of studio flat has also been something of a phenomenon. They now represent the most common form of development, having increased by 123 per cent over the 2012/13 – 2018/19 timeline. Unipol and NUS argue that these high costs studios need to be balanced with more mid-cost 'cluster flat' developments to ensure that students from all backgrounds can continue to follow their academic dreams and keep the costs of learning from escalating further.  

Average weekly costs for purpose-built student accommodation have reached £147, an increase of five per cent on last year and 31.3 per cent since 2011/12. In the survey, the most expensive rent recorded was a whopping £535 a week for a privately-provided studio in Bloomsbury, with the cheapest being a standard room in an institutional cluster flat in Manchester at £65 per week. The findings show that 'standard stock' averages £9 more expensive per week in the private sector than the institutions themselves. However, it's important to note that university accommodation is usually older and not refurbished as often. 

The study found that rents account for 73 per cent of available financial support in 2018/19 compared to 58 per cent in 2011/12. But whilst costs have risen substantially, it's often the case that more services are included in the cost of rent, such as wifi, possessions insurance, etc. 

Weekly rents for studios offered by institutions are slightly higher than for private providers, although there are few of them and they work on shorter contract lengths on average. Unipol and NUS argue that studios are not a common stock type on campus because universities understand that they create an insular living environment and act as a social inhibitor, detrimental to student welfare and mental health. As the stock is well served in the private sector, there is also little need to compete.

UK-wide, the average contract length is 40 weeks for institutional and 46 for private accommodation. Typically, undergraduates may favour a shorter letting year, because there is minimal teaching over the summer period. Postgraduates, on the other hand, may find a longer letting year useful.

Unipol and NUS say that it is clear that private providers account for an increasing share of rooms in purpose-built stock over time. In 2018/19, the proportion of bed spaces provided by the commercial sector has reached half of total stock (50 per cent), rising from 39 per cent in 2012/13.

Whilst the private sector has a crucial part to play, Unipol and NUS argue that, before it is completely replaced, universities should give proper consideration to the small but important role their current standard stock plays in providing affordable accommodation, and find ways to replace and repurpose it with other low-cost but attractive options.

Seven key recommendations were made by the report writers:

  • That all providers should take steps to ensure the provision of affordable stock now and incorporate these into their strategies. For institutions, it is recommended that, as a minimum, 25 per cent of all rents charged should fall within the bottom quartile of their rent structure; for private providers this should also be the case at each accommodation site they run. Against this measure, universities currently come up three percentage points short, and the private sector 18.

  • That providers pay close attention to Equality Law and the imperative to ensure that a lack of suitable accommodation (for example, rooms that are, or could be adapted, or rooms for students with families) does not act as a barrier for students with those needs to attend university. Institutions in particular must ensure they have appropriately varied and accessible stock which is well advertised to prospective students.

  • Planners should intervene and call time on over-investment in the studio market and should impose strict conditions on the granting of permission for more studios. Applicants should be required to demonstrate an alternative use and studios should meet larger minimum size standards that would allow unused units to be repurposed for the fast-developing co-living movement or single key worker housing.

  • In light of the current crisis in student mental health, all providers should be considering how a community can be nurtured, using social spaces and optional residential life programmes as common good practice.

  • Providers should recognise the unique role they have in their residents’ lives, and accordingly seek to join up with universities and students’ unions to ensure that student wellbeing is promoted in a joined-up way, offering campus-wide solutions and quick access to mental health support services for those in need.

  • Providers establish an open dialogue with students, in partnership with their students’ unions, in order to help to manage expectations and deliver on student needs.

  • The Competitions and Markets Authority should intervene to ensure that accommodation debts are not being used to stop students graduating and that the Office for Students should set proportionality guidelines for universities who do not allow students to attend graduation ceremonies that have limited, and sometimes, contested, debts to an institution.

Read the full report