Who owns my student digs?

In 2020, BlackRock, the world’s largest asset manager with a portfolio worth $9.42 trillion, closed a deal worth £4.7 billion to buy IQ’s portfolio of purpose-built student accommodations (PBSAs), making it the biggest private property acquisition in the UK’s history and the biggest student housing acquisition ever. This groundbreaking move of the global financial investor demonstrates the increasing commodification and financialisation of student housing and will have far-reaching consequences for students, their universities, and the communities they reside in. 


It has become evident that all rental properties, including student housing, are now commodities. Their evolution into financial instruments for wealth accumulation and investment speculation has led to a prioritisation of market value over utility. Since the implementation of neoliberal policies in the early 80s, this trend has been reshaping the housing market and is now the driving force behind housing construction itself. Recent accommodation developments in the UK reflect the shift towards the construction and operation of high-density PBSAs and mixed-occupancy housing by increasingly influential corporate landlords, often funded by global equity funds. The transformation in ownership and housing types within the student housing market can be attributed to both external and internal factors.


On the external front, higher education has witnessed heightened internationalisation: universities have been encouraged to attract a higher number of international students who are prepared to make substantial investments in their studies in the UK in both fees (averaging £22,000 yearly) and luxury accommodation. The surge in the demand for high-cost, high-quality PBSA has created a lucrative market that private developers and their backers can capitalise on for extreme profits. In response, much of the student housing market has been bought up by corporate landlords, transforming the market from low-quantity private landlordism or university ownership to more internationally financed and corporately operated accommodations. This polarised and extractivist market excludes students who cannot afford luxury options, a trend that is undoubtedly exacerbated by government policies. For example, the government currently focuses on PBSA spread across neighbourhoods to curb the studentification of regular houses, ultimately reducing the options available to less wealthy students. Student housing offers stability in volatile property markets, boosted by high rental yields and consistent short-term demand, making it an appealing asset for experienced global investors aiming to diversify their portfolios. But why does this matter? What difference does it make who owns my student digs?


Well, the commodification of student housing goes hand in hand with increased rent.The growing increases in student rent have been exacerbated by the cost-of-living-crisis: over the past two years, the average student rent has surged by an alarming 14.6%. On the other hand, student loans, a vital resource for many students, have increased at a significantly slower pace, with a mere 5.2% rise over the same period. This disparity is not only increasing the financial burden on students but is also a key proponent of the cost of living crisis. 


For those already in university, this constitutes an extreme squeeze in spending ability, with maintenance loans that no longer cover soaring rents leaving very little wiggle room for food, let alone the tribulations of student life.  For prospective students, accommodation costs are pricing students out of some universities, often Russel Groups, with knock-on implications for the future of disadvantaged students in the job market, who may find themselves restricted to lower quality, locally oriented unis. Redbrick Unis will continue to serve a wealthier middle-class student population, reinforcing career opportunity differences between socioeconomic groups in access to top graduate roles. For many, access to redbrick universities and their cities now comes with the necessity of taking on more debt to finance accommodation, a risk that can have far-reaching consequences on future earnings and financial stability of students and their families.


The government has encouraged the steady growth in the proportion of young people attending universities but has done little to support the new generation of students in an increasingly costly and privatised market. In an ideal world, higher education access should not be determined by socioeconomic status or willingness to undertake debt but by academic prowess. But even in this neoliberal economy, more must be done to cushion the most disadvantaged from the increasingly higher costs. Grants should be given to universities to encourage ownership of and subsidise student accommodation. This could be funded by a windfall tax on big business owning student property who have profited the most from the cost of living crisis. Moreover, student housing (excluding those marketed as deluxe) should face increased rent regulation, and the Government should consider installing caps on student rent to close the gap between costs for students and enlarged private profit. Greater state action funded by windfalls on profits that remain unequal, unearned and untaxed can go a long way in reducing the consequences of commodification and improving access to accommodation and higher education.


Global finance has moved into the UK student housing market and is here to stay, the effects of which will become clearer in the years to come. All we can do for now is hypothesise, make projections for the changing housing market, and use our platforms to call for responsible landlordism especially when it comes to higher education. The inequality gap can be closed if there is a restructuring of the systems that cater for the few and not the many. Big businesses should direct a greater portion of their profits to ensure access to their services and the opportunity to study in competitive universities remains open to everyone. Regulation through rent caps and subsidised ownership funded by windfall tax could be a start, however, it remains to be seen if there is an appetite in government to be bold and prioritise wellbeing over extractionist profits.


All articles and opinions posted give the views of the author(s) and do not necessarily reflect the views of the Leeds Think Tank, the Leeds University Union, or the University of Leeds.