61% of students in UK borrow to pay rent as accommodation costs surge 15%

Business Standard

5 days ago

Spending on student housing in the UK has jumped 15 per cent, driven by rising rents, an influx of international students and a growing preference for higher-end purpose-built student accommodation (PBSA), according to a new report by Graddinghomes.com, a global student accommodation platform.
'The 15 per cent increase in the proportion of student budgets dedicated to accommodation is a clear indicator of a worsening affordability crisis,' said Mamta Shekhawat, founder of Graddinghomes.com. 'Without immediate and effective interventions, the rising cost of accommodation will continue to risk student wellbeing, academic success, and the fundamental principle of equitable access to higher education in the UK.'
Notably, of the total number of students approaching Graddinghomes.com for UK accommodation, 52 per cent are Indians.
Rent exceeds maintenance loans
PBSA costs have now risen to an average of £13,595 per year for the 2024/25 academic session—up from £11,500 in 2022/23, marking an 18 per cent increase in just two years.
In London, the most expensive city for students, monthly rents average £1,211, far outpacing costs in places like Northern Ireland, where average monthly rents are £904.
The rise in rental prices shows no signs of slowing. Nationally, rent grew by 8 per cent in early 2025, and in cities like London, Manchester and Edinburgh, annual increases have ranged between 8 per cent and 12 per cent.
International demand and shrinking supply
More than 600,000 international students were enrolled in UK universities in 2023–24, and this figure is expected to grow, adding pressure to an already strained housing market.
Despite the demand, supply remains flat. The UK currently has around 678,000 PBSA beds, while demand is estimated at 1.4 million. Many landlords have also exited the rental market due to higher mortgage payments, further reducing the availability of shared houses—particularly houses in multiple occupation (HMOs), which are popular among international students.
PBSA on the rise
With features such as en-suite bathrooms and on-site amenities, PBSA has become a preferred option despite the price. But these costs often exceed what students can afford through government loans.
In London, for example, average annual PBSA rent is £13,595, compared to the maximum maintenance loan of £13,348. This gap is pushing many students into financial strain.
According to Graddinghomes.com, 59 per cent of students struggle to pay rent. To manage the shortfall: 61 per cent have borrowed money:
36 per cent from family or friends
25 per cent through bank loans, credit cards or overdrafts
Many have taken on more part-time work, affecting academic focus and mental health
The platform said its services offer verified listings, budgeting tools and resources on tenant rights to help students navigate the housing market.
Rising inflation in the UK
According to the latest data tracked by the Office for National Statistics (ONS), prices in the UK rose by 3.5% in the 12 months to April, with the inflation rate fuelled by higher household energy and water bills.
Inflation remains above the Bank of England's target, which is 2%. The Bank expects inflation to rise again this year after several months of gradual falls. It has cut interest rates four times since last August to the current 4.25%.
Why rising costs in the UK matter to Indians
The UK is home to some of the world's leading universities. Imperial College London ranks 2nd globally in the QS World University Rankings 2025, followed by the University of Oxford at 3rd and the University of Cambridge at 5th. Other top institutions such as University College London, ranked 9th, further add to the UK's appeal.
Indian students have become a key part of the UK's international student population. According to the Higher Education Statistics Agency (HESA), Indian student enrolment in the UK rose by 39% in the 2022–23 academic year to reach 173,190 students—surpassing China for the first time since 2018.
Between April and June 2023 alone, over 16,185 student visas were issued to Indian nationals. The UK has set a target of hosting 600,000 international students by 2030, according to ICEF Monitor.