Student Accommodation Update: Big Business Continues to Flock to the Sector
The recent Student Housing Conference, held in London last
Wednesday, saw some of the world’s richest individuals and institutional
investors flock to Covent Garden, so much so that the annual gathering ‘had
grown from 200 people to more than 500’ and ‘potential
buyers were forced to stand during presentations’. In addition to this, the
new trend sees foreign investment flooding the marketplace, with ‘more than 70%
of investment coming from overseas’ because ‘they
have seen how much others have made from student housing’. The increase,
which is represented by a doubling in sales values last year compared to
2013-15 combined, is one thing, but
the development of standards and, crucially, costs for students, is of
importance for our understanding. The newspaper article in The Guardian that
discusses this issue promotes the notion that, based on research by Knight Frank, students are now ‘willing’
to pay more than £160 per week ‘if
the facilities impress them’ – whatever that means. Yet, as is the modus
operandi here in Financial Regulation
Matters, we must question everything; so, who are these students who are willing to pay more than £640 per
month for their accommodation?
The newspaper article discusses the benefits of these accommodation
blocks that charge increased rents, ranging from concierge services – that,
apparently, will have a ‘chat’ with you if you are feeling homesick - to in-house
cinemas that include ‘scarlet velvet love seats’ which, in the words of the
designer, ‘at
least help today’s students to behave badly’. However, both qualitative and
quantitative research is clear on this issue. In terms of the origins of
university students, only around 10% of students hailed
from private-schooled backgrounds, with one academic study suggesting that University
is now aimed at those who rely upon familial wealth – leaving the lower
classes, and even the working-middle class ‘squeezed’.
The author makes the point that the British Governments, of successive
generations, have assumed that families have more wealth than they actually do,
which has led to a model that is making the process of bettering oneself via
education that much harder. Rather than ‘students’ being concerned with a
helpful concierge service, or velvet seats in an in-house cinema, studies
actually show students struggling to pay rent, having to accept
poorer quality accommodation because of the increased costs in the sector,
and working
to help fund their living and course costs (often more than they are
technically allowed to do so by their Universities). The façade of plush
apartments with contemporary amenities covers the reality of an ever-increasing
level of student poverty, which is demonstrated clearly in examples like the
University of East Anglia establishing
a food bank for its students. On this basis, the increase in foreign
investment in the sector is particularly
bad news for a number of reasons.
The positive headlines that this increased investment brings
for our politicians come at a time when the more localised student
accommodation sector, one which is, for the most part, unregulated, is coming
under pressure. In Warwick and the surrounding areas, to provide just one
example, there is a push
to rid communities of anti-social behaviour by students by forcing them
away from residential communities in shared houses (for example) that are owned
by private landlords, into ‘purpose-built’ accommodation. Whilst on the one
hand this sounds perfectly reasonable, the other side of the equation is that
these residential dwellings are affordable to a number of students, whereas
purpose-built accommodation is not. Rather than regulating the residential
student accommodation market more tightly, the government and local councils
are seemingly more than happy to push students into the purpose-built
accommodation that massive investors are flocking to because of the ‘low
risk’; it is indeed ‘low risk’ for investors, because the government will
continue to set the environment so that ‘consumers’ for continuously pushed
towards their products. But, it is not ‘low risk’ for students.
The majority of students in the U.K. do not have familial
wealth to call upon. The majority of students are struggling to focus on their
studies, because they have to work more than they allowed in order pay their
rent, and to feed themselves. As a cohort, the modern-day students are under
more pressure than before, face an appalling
attack on their mental health, are being forced to use food banks for sustenance
and, ultimately, are being deterred at every conceivable angle from bettering
themselves and contributing, positively, to society. Even though this post
absolutely detests the governmental policies of the Conservative Government,
the proposals
by the opposition seem to be as equally frustrating, but for different
reasons – there are doubts as to the practicality of making tuition free when
this current system is so entrenched in its ways; is free tuition even practicable
with the current numbers of students? However, this post finishes with a point
that crops up consistently here in Financial
Regulation Matters – this attachment to extremes is a negative, not a
positive. Why is that we must either have students being forced through the
offal-machine of big business’ foray into student accommodation, leading them
into a mental health/suicide/poverty crisis, or either no tuition fees at all
which would likely lead to the reduction in opportunity? This is not the case,
but is the one that is presented. It is not unimaginable that residential
landlords are held to account for the actions of their student tenants so that
communities do not suffer the blight of an unregulated market, whilst it is
also not unimaginable that some of the money that is raised via increased
tuition fees could be reinvested into purpose-built student accommodation that
is not at the mercy of large institutional investors, making it a realistic
possibility that poorer students would be available to afford such surroundings
without having to starve themselves in the process. In all the stories emanating
from this explosion of interest, one element is consistently missing – for the
student to prosper, they must be allowed to focus
on their studies and give everything they have to their own development; how
likely is it that a student will be focusing upon their studies as they make
their way to a food bank?
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