The majority of students spend over half of their student loan on housing every year, according to findings from StudentTenant.com.
Following reports of a critical shortage of student accommodation across the country, student rent prices in some locations have risen by as much as 18% in the past year, as landlords look to cash in on surplus demand.
As student room prices spiral out of control in key university cities – leaving students up to £600 worse off every year – some students are spending as much as 65% of their student loan on housing.
How much a student receives in their student loan depends on their household income – the lower the household income, the more student loan they are entitled to. Students from families in London with incomes below £25,000 are eligible for the maximum maintenance loan of £11,007 per year.
Danielle Cullen, the Managing Director of StudentTenant, comments: “I’m consistently shocked when I see the rising student rental price figures each year. Students are spending 65% of their loans on somewhere to live – it’s ludicrous and a real eye-opener. Essentially, the student property market is starting to spiral out of control. It’s becoming apparent that higher education is becoming less and less affordable for students from lower income households, who are unable to get additional help with their finances.
“So, who’s going to support students from low income households? Sure, they may be able to earn some money from a part-time job, but that then starts to uncover ethical issues. Is it fair some students have less study time as they are unable to afford to live? Will their grades suffer because they have to work excessive hours to pay for their home whilst they are away at university? Does it limit others opportunities as they are forced to study at a university closer to their family home?”
She adds: “Students are concerned with the marketisation of universities, rising rents and student debt. Students are leaving university with upwards of £40,000 worth of debt.”
The reason for a gradual hike in student rent prices has primarily been attributed to the demand for higher quality accommodation. While some landlords are investing in improvements to their rental properties and are charging higher rents, other landlords are dropping out of the student sector altogether, to target mainstream renters instead.
Cullen continues: “In the past, landlords could invest into an older property, fill it with some second-hand furniture, and bring in a regular income over the course of the university year. But, with the gradual rise in standards for student accommodation, we’re not only seeing landlords drop out of the student rental market, we’re also seeing a rise in prices.
“Given the choice, many students would prefer to live in high-quality accommodation and landlords need to improve their properties to remain competitive. But this is driving rental prices up even more. Landlords should be sensible with their renovation spending, as 5-star luxury is great, but doesn’t hold up well with new tenants passing through every year. Small things make a big difference. Cleaning the property thoroughly, supplying better furniture, and the option of an additional bills packages could attract more renters to view the property.”
We remind all landlords with student tenants, who may be struggling to make their student loan stretch, that our Rent Guarantee Insurance will cover all tenant types. Get a quote for this peace of mind cover here: https://www.justlandlords.co.uk/rentguaranteeinsurance