Growing Bed Shortage Drives Student Accommodation Rent Hikes

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According to the most recent annual report from student accommodation portal StuRents, the number of purpose-built student accommodation (PBSA) beds has slowed by 66.6% since 2019 and the supply shortage is predicted to worsen, with an estimated shortfall of 490,000 beds by 2026.

According to the report, the annual increase in PBSA beds has decreased from 36,000 in 2019 to just 12,000 in 2023.

The report also reflected that more than half of the pipeline of PBSA beds outside of London is centred around just eight cities in the UK, with Bristol accounting for 12% of the discount on London.

Annually, student rents have been increasing but they have not been met with a rise in their maintenance loan and the minimum stays just over four grand a year, with a meagre 2.8% rise during inflation. Rent has increased by more than 10% year on year against a backdrop of 6.7% inflation during the 2023–24 academic year.

The average cost of a shared student residence bedroom increased by 10.3% year on year to £122 per week, while PBSA per person increased by 10.2% year on year to £184 per week, compared to a historical average of 2-3%.

Private operators currently oversee nearly 80% of all PBSA beds, according to StuRents; 22% are provided by universities, 25% by private providers, and 54% are housed in multiple occupancy units (HMOs).

However, the report also reveals that while increasing PBSA stock will “not necessarily resolve the issue of affordability for students,” it will also raise rents for new PBSA, decreasing the possibility that new stock will displace HMOs.

Richard Ward, head of research at StuRents, states: “The fundamentals of supply and demand for operators remain very bullish.” Rent is growing at an unprecedented rate due to these dynamics. Early signs point to additional significant increases in 2024–2025. For owners, this is excellent news in the near term because operating costs are still relatively high and this growth will be appreciated.

But the well-being and exploitation of students are being ignored, if this continues in smaller cities where they don’t have the opportunities or excitement as other cities such as London will suffer. If rent is becoming similar to London prices, why wouldn’t aim to go further south?

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What do others say?

Another report by the Higher Education Policy Institute says that student accommodation has increased by more than an average of 14.6% over the past two academic years with no signs of slowing down, meaning students are being left with little to nothing.

A lot of students rely on the income from the government to feed themselves and have a life. It’s becoming almost impossible for students who come from low-income households to get a higher education and support themselves.

HEPI Report 166 offers a reliable overview of living for students. It was created in reaction to the unprecedented increases in rent and supply problems that have been observed over the previous two academic years. It contains information voluntarily provided by the ten biggest Purpose-Built student accommodation providers, which together oversee over 125,000 beds in ten significant regional university cities. The data was supported and provided by the universities as well.

The cities covered are listed below:

  1. Bristol
  2. Exeter
  3. Glasgow
  4. Leeds
  5. Liverpool
  6. Nottingham
  7. Bournemouth
  8. Cardiff
  9. Portsmouth
  10. Sheffield

With expensive capitals such as London and Edinburgh being left out to give a more balanced and fair overview of the rents all around the UK.

The average annual rent in the ten major regional university cities was £6,520 in 2022–2024 and £7,475 in 2023–2024. The average annual rent in England for the current academic year (2023–2024) is £7,566.

Compared to the average rent in England of £7,566 for the current academic year, the average maintenance loan received by English students is officially expected to be £7,590. This means that rents will almost entirely cover the average loan, leaving just £24 for other living expenses, or 50p a week. Additionally, the average rent is equivalent to over 76% of the maximum maintenance loan.

The Regional Rental Landscape

The cities with the least supply have the highest rents and increases. According to the survey, Glasgow rents £7,548 annually, Exeter £8,559, and Bristol £9,200 on average, which are the highest average annual rents in the UK.

Glasgow had the highest rental increase over the previous two years, at 20.4%, followed by Exeter (16.1%) and Nottingham (15.5%).

“Student housing has reached a crisis point in affordability, underpinned by these alarming figures,” said Unipol’s Assistant Chief Executive Victoria Tolmie-Loverseed. Rents are rising rapidly, just as real-term government support has stagnated. With rents consuming unhealthy levels of an average maintenance loan, students are being forced to take desperate measures—illegally doubling up in rooms, taking on increasing amounts of paid work or even avoiding university altogether due to costs.

“Failing to address the student housing crisis risks undermining decades of progress in widening participation in higher education. We risk excluding those from poorer backgrounds, forcing middle-income students to take on unsustainable debts, and damaging the student experience for all.”

What is Driving These Rent Hikes?

The report asks 34 leading student accommodations, including student and private operators, a series of questions all revolved around the current issues. Rising energy costs, staff, construction and borrowing seem to be affecting both private and university providers.

High development costs, along with barriers to gaining planning permission, are hindering the ability of providers to build in time to meet demand. A total of 30,000 new beds have been introduced in the past two years, not coming close.

The ones that are being built are more modern, sometimes smaller but always come with a hefty price tag. For you to have a nice modern room for a year for four walls, some students are expected to pay over £160 a week. Rent levels in existing buildings have also been increasing as a consequence of rising running costs such as staff and energy bills.

The most recent report warns upcoming students planning on moving to a new city that the renter’s reform bill could push landlords to exit the student market and significantly reduce the number of lettings for shared houses. This is placing university-owned and purpose-built accommodation under more strain; there typically isn’t enough room for current and new students, creating an even larger demand.

Policy Recommendations

The report sets out several recommendations for both the government, universities and private providers to consider that could be useful:

Reform of the Student Maintenance System

A call for the student maintenance system reset is crucial if access to high education is to be maintained across all areas of the UK and evenly, no matter the class. The maintenance loan should be redesigned as a “contribution to living costs,” and the importance of the parents should be highlighted rather than just mentioned.

I find that a lot of areas are ignored. For example, a family could be earning a certain amount a year but there is no discussion on how much of that is disposable income. Just because a family might be earning a slightly above-average income does not mean that they have the money to support their child through the education system. These things should be assessed to ensure people are being paid fairly. It’s unfair that bright students might have to drop out of university due to financial issues.

Financial Support and Affordable Room Options

Private providers and new builds are especially expensive as they need to cover the costs of production. Students are being hit from all angles with part-time minimum wage jobs, and the cost of living is high, but they need time to go to university and have free time to study and then they are asked to pay for a room that some people with a full-time job couldn’t afford. More affordable options need to be introduced.

Private firms might have to consider things such as credit insurance to ease the pressure of immediate costs and reduce prices. If these prices begin to increase, there will be a significant reduction in students, and this will only damage their future.

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Tom is a Digital Content Writer passionate about sustainable property & property trends. Regardless of the subject, he will always write blogs of the best calibre. Read more about Tom here.

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About Tom Condon 127 Articles
Tom is a Digital Content Writer passionate about sustainable property & property trends. Regardless of the subject, he will always write blogs of the best calibre. Read more about Tom here.

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