University students in the UK are facing “unprecedented rent rises” amid record demand for accommodation, while the value of the maintenance loan designed to cover living costs stagnates, according to a report.
Many students are struggling to find affordable rooms, as rents have jumped by more than 8% overall this year compared with 2022-23, a survey by the real estate services firm Cushman & Wakefield says. In some cases, the increases are significantly higher, up by as much as 27% in one case.
There has been an increase of almost 390,000 students in need of accommodation over the last decade, and this combined with rising operational and development costs, high inflation and a declining rate of new bed delivery is sending rents soaring.
The average private sector rent outside London has gone up to more than £7,600 a year, which accounts for 77% of the maximum student maintenance loan allowance.
According to Cushman & Wakefield, fewer than one in 10 beds in major university cities are now affordable to the average student in receipt of maintenance loans and grants. Durham, Exeter, Birmingham and Nottingham are among the major university cities with minimal or zero bed spaces priced below the average maintenance loan.
Rental growth in private-sector purpose-built student accommodation (PBSA) was 9.4%, though far higher in some cities, including Glasgow, which registered an increase of more than 19%. Student maintenance loans, meanwhile, have increased by just 2.8% over the same period.
David Feeney, partner in Cushman & Wakefield’s UK student accommodation team, said: “Affordability stands as the biggest challenge to the UK’s student housing market, with maintenance loans and grants failing to keep pace with rising rents.
“Persistent inflation means that any loan and grant increases still represent a further real-terms cut. This in turn impacts the UK’s development pipeline, with much-needed beds for students significantly impacted by affordability considerations.”
A survey by the National Union of Students, meanwhile, found a growing culture of part-time work among students, with more than two-thirds (69%) taking on part-time jobs, with nearly all working more hours this year to help cover spiralling costs.
Almost one in five of those who worked were on more than 20 hours a week and more than a third (34%) said it had a negative impact on their studies. The NUS vice-president for higher education, Chloe Field, said: “Maintenance loans must be brought into line with inflation, and a rent freeze and rent controls are needed.”
Martin Blakey, the chief executive of student accommodation charity Unipol, said where there have been persistent accommodation shortages in cities like Manchester and Bristol, the situation had slightly worsened this year. In Bristol, he said one private hall of residence had put up rent by 27%, with fees jumping from £9,532 last year to £12,138. All the rooms have gone.
While the growth in international students has played a part in the student housing crisis, they too are affected by cost. “We are seeing quite a lot of international students who are staying with friends or with extended family members,” said Blakey, who said he knew of students commuting from Birmingham to Leeds to keep costs down.
Nick Hillman, the director of the Higher Education Policy Institute, said when interest rates went up, the traditional model for building new purpose-built student accommodation (ie borrow, build, pay down the costs of borrowing via rent) began to break down.
“The costs of borrowing are now too high,” he said, adding that the shortages were being compounded by landlords of on-street housing taking properties out of the student rental market to either sell or put on Airbnb.