Could the recent growth in student housing co-operatives be one solution to the challenge of housing students in an affordable, fair way?
With the start of a new university term, many students will have recently moved into halls of residence. The quality of student accommodation has generally improved a lot over the last few years, with many halls of residence now having en-suite rooms, cleaners and on-site gyms. Although high standards are to be applauded, the costs of such accommodation are often out of reach for many students and there have been several recent news reports about the increasingly high rents charged by universities for the student accommodation they provide.
The 'Cut the Rent' campaign represents a group of student activists who are holding their universities to account for allowing rents to soar, often exceeding costs in the private rented sector. The National Union of Students (NUS) claims that rent accounted for 73% of the maximum student loan last year, compared to 58% in 2011-12. This doesn't leave those students with much to live on, and it has a direct impact on studies, as many students are forced to have to work long hours at the same time as studying, to make ends meet.
Where university accommodation is unaffordable, students are forced to seek alternatives in the private rental sector, where they are subject to the varying standards of private landlords. Housing may not always be good quality, and recent research highlights the impact this can have on mental and physical health. Rents may also be high and students have little control over their living spaces.
What is the alternative?
Over the last couple of years, we have seen a rise in student housing co-operatives, presenting an alternative to university halls or private landlords. Leading this movement is Student Co-op Homes, which supports housing co-operatives in Birmingham, Edinburgh and Sheffield. It has just launched a share offer, to allow it to expand and purchase properties which would then be leased to student housing co-operatives in other university towns across the UK. Students pay rent to their local housing co-operative in return for the right to live in its property. As members of the co-operative, they are also responsible for management and maintenance themselves, learning important life skills and maintaining a degree of control over the condition of their property.
The responsibility associated with owning and managing a property may be a daunting one. However, with the right support from universities and student unions, this could be an interesting and effective solution to help students live more affordably. It puts control back in the hands of students themselves and provides opportunities to learn about property maintenance, financial management and working collaboratively. It also means that they are protected from the vagaries of the private market, where it is difficult to hold private landlords to account should accommodation standards fall short.
Funding a student housing co-operative
One of the biggest barriers for a student housing co-operative will be access to capital to buy a property. This is the point behind the community share offer launched by Student Co-op Homes: it wants to raise finance in order to purchase new homes for student co-operatives.
Student housing co-operatives may be able to access Community Housing Fund money, as it would fall under the general umbrella of community-led housing. Applications would need to be submitted immediately, as the Fund closes to new applications in December 2019 and we have not yet received the news we are hoping for that the Fund has been extended.
Student housing co-operatives may also be able to access other funding sources available for community-led housing (there is a useful list on the Community Led Homes website). This would be especially useful to access funding to cover early stage costs, such as legal set-up and professional fees.
A parent or generous relative who wished to support a student at university could lend money to a housing co-operative in order to purchase a property, perhaps joining together with other parents and relatives to share the costs. The loan could be repaid when the student moves out and someone else is found to buy in, or instalments could be repaid over time, through rental payments from those who live there. Any such loan should be documented in writing with the terms clearly defined and agreed, and a lender may wish to secure their interest via a charge over the property.
Finally, commercial finance may also be obtained, to enable student groups to purchase houses they need. There are specialist lenders who will lend to housing co-operatives, many of whom we work closely with.
What support might a students' union provide?
Most students' unions have charitable objects about the advancement of education of students, including through the promotion of their welfare and wellbeing whilst at university. Trustees might reasonably conclude that this would allow them to help out embryonic student housing co-operatives by providing training on matters such as property maintenance and financial management, and potentially even providing loans to enable them to purchase a property. Trustees would be well advised to take legal advice if they are considering providing this kind of financial support, to make sure they comply with the rules which govern charitable investments.
Homes in our hands
The wheels of change are slowly turning and we are seeing a slow but sure shift towards housing being put back into the hands of residents. The time has come for this to be reflected in student housing. With over two million students in the UK at the moment, enabling and supporting them to live in and look after their own properties whilst at university could and should be part of their educational experience, teaching them to be responsible, mature and engaged citizens.
Wrigleys Solicitors LLP has specific expertise in community-led housing, students' unions, charity and co-operative law. We would be able to advise you on setting up a new housing co-operative, documenting loan arrangements, purchasing a property and the nature of support which a students' union could provide.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.