Make student accommodation more affordable, says Hepi

New paper advises universities not to leave student accommodation to the private sector but to lead from the front

Universities must offer more affordable student accommodation and not leave it to developers, says a new paper from The Higher Education Policy Institute (Hepi).

Student Accommodation: The Facts looks at student accommodation in the UK, tracks changes in the sector and addresses the roles different accommodation providers play in the higher education process.

It argues that providers need to offer students a greater choice of accommodation and price points, and points out the barriers to doing so.

The report has been co-authored by student accommodation consultant Sarah Jones and Martin Blakey, chief executive of the charity Unipol Student Homes. It builds on growing interest in the issue of student accommodation over recent years, from the government, media and influential figures – including the 2019 Augar review’s proposal that the Office for Students investigate the issue; then universities minister Chris Skidmore’s holding-to-account of student accommodation providers when 20 student housing schemes were not completed on time in 2019; and a report on the issue from the House of Commons Library in March 2020.

The Hepi paper shows 1.2 million students rent their housing, split between university-provided accommodation (28%), private purpose-built student accommodation (27%) and shared student houses (45%).

Private developers’ fondness for reproducing forms of provision which appear to work financially will continue to squeeze out the innovation needed to create affordable solutions – Hepi

It calls for a new approach in three areas:

Affordability

The average annual rent for a purpose-built student room (£6,366) accounts for 73% of the maximum student loan outside London, leaving only £2,349 annually for living costs. This proportion is up from 58% six years earlier – the rise reflects both higher-quality accommodation and the fluctuations of local property markets.

However, while rents in student accommodation have risen by more than inflation over time, the maximum student loan for living costs rises only by inflation.

All institutions should therefore adopt an affordability policy, says Hepi. Universities should not leave student accommodation to the private sector but take the lead in providing more affordable student accommodation, either by themselves or in partnership with the private sector, otherwise “private developers’ fondness for reproducing forms of provision which appear to work financially will continue to squeeze out the innovation needed to create affordable solutions.”

Regulation and legislation

The “special nature” of student accommodation is not recognised in current housing law and regulation. The Department for Education (DfE) and the Ministry of Housing, Communities & Local Government (MHCLG) should therefore work together on regulatory frameworks for university – and privately-provided PBSA.

Cost

In the Unipol/NUS Accommodation Costs Survey 2018, 49% of respondents said they did not involve students in rent-setting at all and only 15% of universities said they set rent in relationship to cost, compared to 21% of private providers: “Some institutions are content to allow rent levels to be determined primarily by general economic conditions.”

Hepi argues the private sector should provide greater transparency to students on why rents cost what they do and where rental income goes.

Student rents could be subsidised by opening student accommodation to summer tourists, if current VAT restrictions were lifted.

‘Refunding rents has, of course, cost a lot of money’

The report also points out that when the coronavirus pandemic caused students to be sent home in March, most universities and accommodation providers expected students to continue paying rent. Following pressure from the NUS, universities – starting with Newcastle University, quickly followed by the University of Essex and the University of Manchester – began to announce they would either waive future payments or refund rents.

Unite Students was the first purpose-built student accommodation (PBSA) supplier to announce it would not charge rent for students who had gone home – most PBSA suppliers soon adopted a similar position.

This response to the departure of students has lost universities and PBSA providers a total of £563 million in rent, according to student housing charity Unipol – £395 million for universities, and £168 million for the private sector.

“Refunding rents has, of course, cost a lot of money, says the Hepi paper, adding that “There is a certain inevitability that many accommodation providers will seek to recover lost income from higher rents in the future. The summer 2021 Accommodation Costs Survey will see if that is the case.”

When people look back on their student days, their memories tend to be shaped as much by their living arrangements as by anything else – Nick Hillman, Hepi

“Whenever I speak to young people about their higher education choices, I generally advise them to think as much about their choice of accommodation as their choice of institution and course,” writes Nick Hillman, director of Hepi, in the introduction.

“After all, when people look back on their student days, their memories tend to be shaped as much by their living arrangements as by anything else.

“Student accommodation providers are not just successful companies. They are not just landlords. They are not just one of the many foundation stones on which the UK higher education system rests. They are all of these things, but also – at their best – they provide a community in which young students can transition to adulthood in a secure, safe and enjoyable environment.”

The latest paper is the second publication in Hepi’s Analytical Paper series, following a survey of postgraduate education. It is also the third piece in a trilogy on students’ living arrangements (following William Whyte’s history of student accommodation, Somewhere to live: Why British students study away from home – and why it matters).

Responding to the new report, NUS vice president (higher education) Hillary Gyebi-Ababio, said:

“We welcome many of the recommendations in this report – particularly those concerning the need to tackle the affordability crisis facing student renters, the need for reforms to boost students’ rights as tenants and the need for governments across the UK to greater understand the student housing sector and intervene.

“Outside Scotland, student tenants have been left without access to any safety net during the pandemic which has only further highlighted how we need an independent review of the student housing sector which places students at its centre. The UK government’s planned Renters’ Reform Bill is a perfect opportunity to implement such a review in England alongside a range of other protections for all renters.”


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