The average rent in student halls of residence now swallows up 75% of the maximum available student loan.
Analysis by Cushman & Wakefield shows that the rise in young people going to university has outstripped the building of new housing, pushing up rents.
The report shows there are now a record 2,175,835 full-time students studying at UK universities, while more students than ever – at 61% – are studying away from home. Overall, 1.63m students now have a requirement for a bed space during their course of study.
For students in the most expensive cities, including Bristol, Bath and Manchester, average rent is £203 a week, equivalent to 97% of the maximum available student loan. For a ‘medium’ priced city, such as Birmingham, Nottingham, Leeds, or Southampton, rents are £166.13 a week, while the likes of Cardiff, Liverpool, Newcastle, and Sheffield average £143.71.
David Feeney, a partner in Cushman & Wakefield’s student accommodation team, pointed out that, as loans are means-tested, rents are actually talking up a far greater proportion for most students. “Only a limited number of students from the least wealthy households actually receive the maximum loan amount, meaning that only those with a household income of less than £25,000 per annum receive a loan higher than the average private sector en-suite rent.”
This was likely to become more pronounced as rents continued to rise. “Affordability will continue to be a big issue for the sector both for providers and students who are having to account for the impact of the cost-of-living crisis,” he said. “Rents are rising while maintenance grants have failed to keep pace.”
The longer-term slowdown of new schemes being brought to the market is also continuing, with just 69 developments for the 2021/22 academic year, less than half the level seen in 2017.
Cushman & Wakefield said that escalating and uncertain build costs, wider inflationary concerns, land availability and planning policies had the potential to hold up supply as much as the pandemic had in the previous year.
Overall rental growth for 2021/22 stood at just 1.07%. However, Cushman & Wakefield said this is set to bounce back in the next 12 months to 3.1%.
Rents will grow by more than 8% in several markets next year, with Glasgow’s West End leading the pack at 13.1%, Durham following at above 10% and Belfast at 9.6%.
The report also reveals that counter to the long-term undergraduate trend of a ‘flight to quality’, it is universities ranked below 100 in the league tables that are growing the fastest, outpacing those in the top 25.
Feeney added that refurbishing older stock was fast becoming a challenge. There are still around 175,000 un-refurbished first-generation bed spaces in the UK market, which represents around a quarter of the total market. The overwhelming majority of these are university owned.
“As they reach the end of their operational lives, universities across the UK are wrestling with their options in an era of Net Zero targets,” Feeney said. “With the embedded carbon associated with new build, there is a balance to achieve between spaces that are more likely to be refurbished rather than demolished.”
