Purpose-built rooms in London average £1,000 per year more than the maximum loan

This article is more than 9 months old

This article is more than 9 months old

University students in England are seeing their maintenance loans increasingly consumed by the rising cost of private-sector accommodation, with purpose-built rooms in London now averaging £1,000 more than the maximum loan.

A survey of the student accommodation market carried out by the property consultants Cushman & Wakefield found that the average cost of en-suite private bedroom rentals in purpose-built blocks has reached 75% of the maximum maintenance loan outside of London and 110% of the maximum in London.

“Despite the nearly £12,000 maintenance loan available to London students, the price of a private-sector room is £1,000 higher,” the report states, blaming a “restrictive planning environment” and high demand from international students for causing rents in London to go up by more than 17% in the last five years.

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The study estimates there are now 660,000 purpose-built student bedrooms in the UK, a third more than five years ago, with annual rents and transactions worth £2.5bn to the end of October this year.

“The momentum behind student accommodation continues, with the marketisation of the higher education sector leading to an explosion of growth in student headcounts at many institutions,” said David Feeney, Cushman & Wakefield’s student accommodation lead adviser.

“The global prestige and brand strength of the UK’s academic institutions remains very strong, and there has been 33% growth in international student numbers over the past five years at the strongest [science and technology] universities. In light of this, demand for student beds continues to outpace the overall supply pipeline.”

The consultants also found that the boom in building student accommodation was continuing in many parts of the UK, with 87% of the 32,000 new bedrooms added this year being constructed for private operators.

But the report also warned: “2019 has been characterised by a number of schemes being delivered late, damaging both the reputation of the sector and the student experience of those affected.”

Evidence of the continuing appetite from investors this year is the £166m sale of a student block in Shoreditch, east London, with 482 bedrooms, to a joint venture including Allianz Real Estate that aims to establish “London’s premier student accommodation brand”.

The survey found that private providers were looking to add facilities, with the majority of newly built developments including gyms, study areas or libraries, while some go even further.

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Student Roost, a Birmingham-based company, this year opened a 970-bed site within a 10-minute walk of Sheffield University, which boasts a 17-storey tower as well as a dedicated karaoke room, private cinema, games room and a “hosting kitchen” for parties or communal events. The cheapest en-suite room available costs £135 a week, which adds up to £6,885 for a 51-week tenancy.

Rents in London remain well above the rest of the UK, with private-sector en-suites in the capital averaging 46% more than those elsewhere. London topped the league of average weekly rents at £232, while Belfast was the lowest at £116. Coventry’s average rents were surprisingly high at £156 a week, more than Manchester or Leeds.

The National Union of Students said its manifesto for the general election included a demand that the next government “tackle the spiralling costs of student accommodation and ensure rooms are accessible to all students”.

The survey found that accommodation was cheaper in university-owned or operated accommodation or halls of residence, although that varied by location. London universities and colleges had the biggest gap between their rents and those of private providers, but still averaged around £7,500 a year.

While the average private-sector en-suite rental outside London was £6,271 a year, similar university accommodation was only £80 a year lower.