Letter to ‘The Financial Times’ (unabridged version) Regarding Speculation in the Student Rental Economy

Sir — on the Monday 19th edition it is written that ‘British banks and insurers are pouring billions into the country’s housing stock as they look to cash in on rising rents and find wealth stores away from the turmoil rippling through the markets‘. Your correspondent adds that financial institutions invested some £2.2 billion into houses and apartments in the Uk during the twelve months to April this year, an increase of some 189% on the year earlier. We do not doubt that this is a sound, if morally abhorrent, investment – rental growth in the UK has been steady throughout the last several years, in spite of the financial crisis, as the country’s housing shortage and sclerotic mortgage market drives up demand for rented accomodation. All of this in spite of the fact that London already had one of the highest rates of median monthly rents in the world.

Your correspondent later writes that ‘One area that has seen a high level of interest by institiutions is student housing‘ with the sector having ‘…swelled during the past few years with universities handing over the leasing and management of their student accomodation to private companies’.

Such a situation, for those renting more generally and for students in particular seems deplorable.Those in the UK rental market already face paying the highest property rents in Europe, some 5% higher than France, the second most expensive. Indeed the UK is the least affordable country in Europe to rent when calculated relative to median earnings, with 15% of gross earnings being spent on rent, compared to 12% in Spain. On top of this London is already Europe’s most expensive city in which to rent, with an average monthly rent of £520. This is for a single person with no dependents.

Within this context it is utterly despicable that pension and insurance funds as well as as private equity buyers are now seeking to cash in further on an evident and growing crisis in theUK rental market. It is even more disturbing that they are striving to be particularly parasitic on students who already face having to pay rent of  as much as £200 a week in London. All of which is paid for by debt, the patronage of parents and often, precarious and minimum wage work.

In the United States where, just last month, student debt surpassed that of credit card debt at $1 trillion, student fees are being securitized and repackaged exactly like the toxic assets that triggered the latest economic collapse. Just as in 2008 ‘it was subprime mortgages; now it is subprime education‘ as Ananya Roy says. Andrew McGettigan has written with great clarity and sincerity that we can anticipate a wholly similar ‘funding’ system imposing itself in the United Kingdom within the short to medium term.

Two years ago our friends in the United States wrote how, “…the arriving freshman is treated as a mortgage, and the fees are climbing. She is a future revenue stream, and the bills are growing. She is security for a debt she never chose, and the cost is staggering. Her works and days are already promised away to raise up buildings that may contribute nothing to her education, and that she may not be allowed to use — buildings in which others will work for less than a living wage, at peril of no wage at all. This is the truth of the lives of students, the lives of workers (often one and the same).”

While we were fully aware of changes in funding UK higher education and the insidious ideology informing such change, which can only lead to the inexorable destruction of Higher Education institutions as we currently know them in the United Kingdom, this new development, of actors such as pension funds and hedge funds now seeking to further profit from our misery as participants within the student rental economy is, although not surprising, is contemptuous and reprobate. Money may not smell but one can not help but think of the stench of shit when ruminating on the motivations and ‘principles’ of such institutions.
Consequently we would like to draw the attention of those university institutions, particularly those within the University of London (UOL) of which we are students and graduates, namely SOAS, Birkbeck, UCL, Royal Holloway and KCL – to this issue. As the article itself points out ‘The sector has swelled during the past few years with universities handing over the leasing and management of their student accomodation to private companies’. 

While we fully appreciate that problems in the UK and London rental market are deep and pronounced for both students and indeed just about everyone else – we believe that in light of continued speculation by the very biggest players, pension funds and private equity buyers it is of the upmost importance that Universities within the UOL bring such housing services ‘back in house’. Should they fail to do so we will be left with little choice but to initiate a campaign of direct action against those private companies invested with the responsibility of ‘managing’ (ergo exploiting) our housing needs and will utilize every tool that is in our dispensation, including, if it is possible, organising rent strikes among students to remediate this increasingly untenable situation.

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