HEPI: Average student rents in London overtake the maximum maintenance loan: The 2024 Accommodation Costs Survey

A new report from Unipol and the Higher Education Policy Institute (HEPI) reveals alarming trends in the London student accommodation market:

• the maximum student loan (£13,348) is now less than the average student rent (£13,595), leaving students unable to afford basic living costs;
• rents for Purpose-Built Student Accommodation (PBSA) have risen by 18% over the past two academic years; and
• 14% of Purpose-Built Student Accommodation rooms in London now cost more than £20,000 per year.

The report, titled Priced Out? The Accommodation Costs Survey 2024: London Edition(HEPI Report 182) presents data from a wide range of universities and private providers, covering over 70,000 student beds in London. It highlights the growing affordability gap faced by students and the escalating financial pressures on those choosing to study in the UK's capital.

The Accommodation Costs Survey began in 1967 and this new report presents the results of the 2024 wave, which focuses solely on London. (The previous wave, published in late 2023, focused on 10 other UK cities.)

Victoria Tolmie-Loverseed, Deputy Chief Executive of Unipol, 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. 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.

“This affordability crisis is putting students in an impossible position. The findings in the report underscore the urgent need for action from policymakers, universities and accommodation providers to address the affordability crisis in London's student housing market. As rent levels continue to rise and the supply of affordable accommodation stalls, it is critical that the sector responds to ensure students can continue to study in London.”

Nick Hillman, 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 impact of the current London Plan is making the provision of more new beds unviable.

“The level of maintenance support has been overlooked by policymakers at Westminster. We have sleepwalked into a situation where four-in-ten English students studying in London are now living at home, often out of necessity rather than preference. Others feel unable to study in London at all, even though they had planned to do so. As a result, higher education in London is coming to look very different from higher education elsewhere in the UK and by accident rather than design.

“It is time for a full and open review of student maintenance support, looking at the different needs of different students. We need something with the same ambition as the Anderson report of 1960, which laid the original foundations for the system we have today.”

Summary of key findings:

• Average rent for Purpose-Built Student Accommodation: The average annual rent for a room in London from a Purpose-Built Student Accommodation provider (which includes universities and private providers) is £13,595 in the 2024/25, up from £11,500 in 2022/23. This is an 18% increase in just two years.
• Maintenance loan gap: The maximum maintenance loan for an English student studying in London and not living at home (which is paid to those from households on under £25,000 a year) in 2024/25 is £13,348. This is less than the average annual rent and leaves students needing to find an additional £247 just to cover their accommodation costs – yet the loan is meant to cover other costs too, such as food, travel, clothes, books and personal items. For students receiving the average loan of £10,705, the gap is £2,890, piling pressure on parents to find extra support.
• High-cost accommodation: The survey shows 14% of Purpose-Built Student Accommodation rooms in London now cost more than £20,000 per year, which is a near tripling from just 5% in 2022/23. Some of the most expensive rooms, primarily private studios in areas like Bloomsbury and King's Cross, cost over £40,000 annually, with rents of up to £800 per week for 51-week contracts.
• University-owned accommodation: University-owned accommodation is more affordable, with average en-suite rents for institutional housing at £226 per week for 41 weeks. In contrast, private providers on average charge £341 per week for a comparable room over a 50-week contract.
• Demand for Purpose-Built Student Accommodation remains high: Despite growing financial pressures, demand for student accommodation in London is still strong. Both private sector and university respondents report sustained interest, driven by increasing student numbers and limited supply.

The report makes several key recommendations to help address the growing affordability issue and ensure the future sustainability of student accommodation in London:

1. Support the London Plan: The report urges the Government and universities to uphold and support the principles behind the London Plan, which emphasize affordability and sustainable development. Allowing supply to meet demand will help bring rent levels down and ease the pressure on students.
2. Prioritise financial support for students: Universities and private accommodation providers should increase efforts to offer financial incentives, bursaries and support to students, helping to attract and retain talent in London.
3. Fix the student maintenance system: A key recommendation is for the Government to overhaul the student maintenance loan system, which currently leaves many students unable to cover their basic living costs. This includes renewing calls for more information, advice, and guidance for students navigating the accommodation market.
4. Make student accommodation integral to local plans: The sector must be recognized as a critical component of the overall student experience, with greater integration into local housing and planning policies.

Notes for Editors

1. Unipol is a non-profit organisation that supports students and higher education institutions in the UK. It provides services that help students secure affordable and quality accommodation, and it works to improve standards in the private rental market.
2. HEPI is the UK's leading think tank dedicated to higher education policy. It conducts independent research to help shape and improve policies affecting universities, students, and the broader higher education system.
3. The Accommodation Costs Survey looks at accommodation costs over time. The survey analyses trends in the provision of student accommodation and its cost and captures the strategic direction and key issues facing student accommodation providers in the UK.