London’s student rent rises outpace the maximum maintenance loan

Some students are in danger of being priced out of studying in London after research reveals that rent costs are now more than the maximum maintenance loan. 

Research from Unipol and Higher Education Policy Institute (HEPI) highlights that students are paying an average rent of £13,595. 

However, the maximum student loan is £13,348. 

The 'Priced Out? The Accommodation Costs Survey 2024' also shows that over the past two academic years, purpose-built student accommodation (PBSA) rents have risen by 18%. 

And 14% of PBSA student accommodation in the capital is costing more than £20,000 per year. 

'Cost of student accommodation in London' 

Unipol's deputy chief executive, Victoria Tolmie-Loverseed, said: "The rising cost of student accommodation in London is being driven by a combination of factors.  

"Competition, increasing overheads, construction costs and compliance requirements are all pushing rent levels higher. 

"Meanwhile, the supply of new purpose-built student accommodation is struggling to meet the rising demand, and much of what eventually gets built is prohibitively expensive." 

She added: "London is a renowned global hub for higher education, but our report shows English students receiving the average student loan will struggle to pay their way and could be priced out." 

The widening affordability gap 

The research is based on data from more than 70,000 student beds across various private providers and universities in London.  

It underscores the widening affordability gap and the increasing financial strain on students in the capital. 

An English student not living at home while studying in London will have an average rent shortfall of £247. 

For those receiving the £10,705 average loan, the shortfall is £2,890. 

The funding gap means that students are increasingly having to work or have family help to cover their accommodation costs. 

Purpose-built student room in London 

Nick Hillman, a director of HEPI, said: "The numbers in this report are shocking.  

"The average purpose-built student room in London now costs more than the maximum maintenance loan, leaving students with a shortfall even before they've bought any food, paid for their travel or covered other living costs.  

"The level of maintenance support has been overlooked by policymakers at Westminster." 

He added: "We have sleepwalked into a situation where four-in-10 English students studying in London are now living at home, often out of necessity rather than preference.  

"As a result, higher education in London is coming to look completely different from higher education elsewhere in the UK and by accident rather than design." 

PBSA rents in London 

The 14% rise in PBSA rents in London costing more than £20,000 is a 5% increase from 2022/23.  

Some of the dearest accommodation, such as private studios in areas like King's Cross and Bloomsbury are now more £40,000 per year. 

The report says that weekly rents are up to £800 for 51-week contracts. 

However, university-owned accommodation is more affordable and costs £226 per week for en-suite rooms on average for 41 weeks.  

In contrast, private providers are charging £341 per week on average for similar rooms and a 50-week contract. 

Student accommodation in London 

There is still strong demand for London’s student accommodation, despite the financial pressures.  

Both university and private sector and respondents report rising student demand and limited supply. 

The report urges the government and universities to increase supply to meet demand to reduce rent levels. 

There’s also a need for better student financial support with increased incentives and bursaries.  

Plus, there’s a need to overhaul the student maintenance loans to help students can cover basic living costs. 

Financial pressures facing students 

The managing director of Accommodation for Students, Simon Thompson, said: "The findings of the Unipol and HEPI report paint a stark picture of the financial pressures facing students in London.  

"Rising rents, coupled with a maintenance loan system that fails to keep pace, have created an affordability gap. 

"As the report highlights, average rents now exceed the maximum loan available, forcing students to find additional funds just to cover basic housing." 

He added: "Unfortunately, unless the government helps student landlords in London, I can't see the supply and demand imbalance improving - which means rents will continue rising."