Growing number of big student housing complexes adding extra fees on top of the rent

Leases and websites for eight of the city’s big private student accommodation providers suggest that two years ago, just one of them charged students extra fees for utilities or amenities on top of the rent.

For the coming academic year, seven of these eight are.

Among those adding fees for students moving in from the autumn is Aparto. Its new contracts now largely mirror the contracts used since last year by Yugo, another of Dublin’s big student housing providers.

Neither Yugo or Aparto addressed queries about how the contracts came to be aligned, and whether they discussed them at all.

A spokesperson for the Competition and Consumer Protection Commission (CPCC) said: “Under competition law, businesses must always act independently in setting their prices and the conditions under which they are prepared to provide their services, based on their business’s needs.”

“As the CCPC is an enforcement body, we cannot provide comment on individual business practices or indicate whether a business practice could be a breach of the law,” they said. “There are many considerations involved in making that assessment.”

When businesses don’t set prices independently, it can mean prices go up for consumers with no added benefits, says the CPCC website.

Extra charges at student complexes around the city for the coming academic year range from a €5/week “utility contribution” at Highlight, to as much as €65/week for broadly defined “room costs” for some Aparto rooms.

By law, rent increases in student complexes in rent pressure zones like Dublin are capped at 2 percent a year, or the rate of inflation, whichever is less. But these extra charges are presented as outside of the rent, and outside of that cap.

A spokesperson for Aparto said that it had brought in the service charges because of inflation. It couldn’t absorb the steep rises in costs as it had in the past, the spokesperson said.

Other student housing providers either didn’t respond to, or didn’t address, queries about why they had in recent times added extra charges, mostly for utilities.

Students and their union representatives have said they think fees for utilities or amenities should fall within the rent in these purpose-built blocks, that the squeeze puts extra pressure on students to work during term time rather than study or forces those who can’t afford Dublin rents into exhausting commutes.

“I feel as though they are already charging enough,” says Patrick Keegan, a Trinity student in business and politics, who lives in Yugo’s Kavanagh Court block on Gardiner Street Lower.

There, fees have gone up from €80 to €120 a month for utilities and amenities from the last academic year to the coming one.

Yes, energy prices are high, Keegan says, but he is already charged more than €1,000 a month in rent. “For what essentially is a small box.”

There are eight small bedrooms in his cluster around a shared kitchen and living room each paying that, he says. “They’re just trying to increase prices, just to increase profits, I feel like.”

Lorcan Sirr, a housing lecturer at TU Dublin, says that the fundamental problem – whether in student housing or the wider rental sector – is the lack of a definition of rent. “An appropriate definition would prevent extraneous and somewhat dubious charges.”

Rolling out fees

Last academic year, Highlight Thomas Street included utilities in the rent, its terms and conditions suggest. For the coming year, its website notes a €5/weekly “utility contribution”.

In January, Heyday Living’s website had said, “All inclusive fees. You will not pay anything extra for superfast broadband, electricity, water, TV licence, or contents insurance.”

Now, it promises “transparent fees”. A contract for the coming year lists an energy fee of €7/week, a one-off admin fee of €200, and a one-off kitchen contribution of €25.

“All bills included = no cheeky hidden costs!” said the Liv Student website to those thinking of booking for the last academic year. For 2023/24, it charges a fee of €20/week for gas and electricity.

Mezzino, according to its website, has “nearly zero-energy” buildings, so ones with high energy performance.

It had all-inclusive rent for students moving into Highfield House in September 2021.

But the company added in a utilities charge last year for Highfield House of €20/week, and ramped that charge to between €30 and €45/week (depending on room size) for the coming year.

Yugo also added on charges last year. Leases for some rooms show a charge for “room costs” for 2022/23 of €20/week. Leases for the coming year show a rate of €30/week.

In 2022/23, Aparto charged students an all-in “licence fee” which included utilities. From next year, though, its contracts now also list, like Yugo’s, “room costs” on top of the rent.

The “room costs” for students in Aparto complexes in the coming academic year vary by room, but are as much as €65 a week, show contracts.

Aparto defines these “room costs” in the same broad way as Yugo, essentially as a proportion of what it calls “residence costs”. They both define “residence costs” in the same way too, as relating to “residence services”.

“Residence services”, both say, “means wifi, broadband, water, gas, electricity, waste disposal, reception services and other utilities, services and amenities made available to” residents or licensees “of the Residence from time to time for use, consumption or enjoyment in or in connection with the Residence”, including but not limited to those set out in schedules to the agreement.

Necessity or opportunity?

A spokesperson for Aparto said that inflation was behind the need to break out the extra charges from the rent.

Service charges are normal in a landlord-tenant scenario, they said. “While the cost of these additional services has risen steeply, some of this has been absorbed by aparto.”

“However, as high levels of inflation persisted, the balance of this increase could no longer continue to be absorbed by aparto,” said the spokesperson.

Other student housing operators didn’t directly address queries as to why they had now broken out charges on top of the rent.

A spokesperson for Yugo said: “We take a transparent approach with all our tenancy licences that include a room rate and any associated room costs that relate to services within a residence.”

Similar behaviour – like the roll-out of extra fees – doesn’t necessarily mean that companies have exchanged plans and agreed how to act together. But it doesn’t mean they aren’t imitating each others’ behaviour either.

The risks are greater in concentrated markets. “It’s a central tenet of economics that it’s easier to coordinate with fewer firms,” says Hal Singer, an antitrust expert in the United States, and coauthor of a recent paper on rental inflation in concentrated property markets.

That’s because consolidation gives you incremental pricing power that you wouldn’t have had otherwise, he says.

A landlord might become a monopoly, he said. So, “you’re going to have new-found pricing power to raise rents and to do it on an annual basis that you wouldn’t have had prior”.

Or it might be a case of a few big players, he said. “Even if you don’t become the monopoly, it’s just easier to coordinate price increases if the neighbourhood is controlled by, say, five people, five owners, as opposed to 50.”

His recently co-authored paper on the relationship between rents, rent inflation, and ownership concentration also argues that at times of high inflation, it is easier for firms to hike rents more without any explicit agreement to do so.

Consumers are less likely to resist, he says, and the rate of inflation can act as a focal point or floor for companies looking to raise prices without communicating.

The paper – which looks at rentals and neighbourhoods in Florida – found that concentration there is contributing to higher rental prices and higher rental inflation, although it is inconclusive as to how that happens.

Singer dismisses the idea that big corporate landlords set rents by looking at rising overheads or incremental costs.

A pharmaceutical company doesn’t set the prices of a drug based on the wages of the chemists on its payroll, he says. “It’s laughable.”

It’s the same thing with a big landlord, he says. They might have a mowing crew, a security guard, but their wages aren’t how they determine rents, he says.

“They’re certainly not looking at overhead costs when they’re setting their price. They’re basically revenue maximisers. They’re just looking at elasticity of demand,” he says.

Whether purpose-built student housing in Dublin can be considered a concentrated market is debatable.

But you could make that case, says Mick Byrne, a lecturer in political economy at University College Dublin (UCD). “As it’s a type of housing distinct from general-purpose rental housing in what they offer.”

Some academics argue that there isn’t just one housing market, but several markets carved up by location and sector, he says.

Given the small number of purpose-built student housing operators enjoying quite a captive market in international students new to the city, that could count as concentrated, he said. “It is a niche there.”

A spokesperson for Aparto didn’t address queries as to whether it planned to lower its “room costs” for students if inflation continues to ease and energy prices fall. Neither did other student housing operators.

Mezzino didn’t respond to queries as to how its utility charges – which cover electricity, internet and waste, it says – had risen from €20/week for the current year to, for some rooms, more than double that for the coming academic year when it has “nearly zero-energy” buildings.

Beyond the RTB

How to deal with rent inflation fuelled by top-up charges is a tricky question, says Byrne, the UCD lecturer. “It’s very difficult to regulate the sector in general.”

Landlords find ways to operate outside of regulations and creative ways to extract income from tenants, he says.

That’s common to rental sectors, he says. Well-regulated markets tend to harbour a large black market for subletting, Byrne says.

But for purpose-built student housing, effective regulation should be doable given the small number of operators, says Byrne.

You could make the argument that everything should be included in the rent, he says. “That would make it easier to regulate.” Or have controls for different components, he said.

In March, Social Democrats TD and housing spokesperson Cian O’Callaghan asked the Minister for Housing in the Dáil what the government was doing to ensure that corporate landlords are not using extra charges on top of the rent to circumvent rent-pressure zone laws.

“To give one example, aparto, the student housing platform, which is owned by real estate giant Hines, is charging students as much as €65 a week for room costs on top of their rent,” he said.

(The Aparto spokesperson says that it adheres to the statutory rent cap.)

Outside of student housing, LRC Group, which owns hundreds of homes in Dublin, adds service charges on top of the rent.

Research for the RTB in late 2021 hinted at other examples. “For rent controlled properties the question is ‘what add outs can I charge to bridge the gap between the market rent and what the rent control is,’ the report quotes one letting agent as saying.

“If the market rent is €1,500 and the rent is €1,000, well I am going to charge for letting fee, management fee, utilities, service charges, parking etc. which might bring it up to €1,300. The tenant is still getting a bargain.”

In the Dáil, Minister of State for Housing Kieran O’Donnell replied to O’Callaghan, saying that tenants can file disputes with the Residential Tenancies Board (RTB) if there is a disagreement.

Tenants have to pay charges in a lease unless they are unlawful, he said. “In general, the question of whether or not a tenant has to pay charges to a landlord depends on the terms of the lease or tenancy agreement.”

It is often unclear to tenants what is lawful or unlawful within a lease, and across different kinds of housing.

Said O’Callaghan last week: “I don’t think it’s good enough to say that’s a matter for the RTB.”

If there are apparent breaches of the rent regulations in student accommodation, the state needs to be proactive, he says. “Not put the onus on individual students.”

He doesn’t think inflation can justify the extra charges on top of rents, and that these can sit outside of the rent-increase cap, given students have no choice, he says. “If this is a core payment, if it’s not an optional payment, I don’t see how it can’t be covered by the [rent pressure zone] rules.”

Neither does Maria Corcoran, who has been living in Yugo’s Kavanagh Court block. Like Keegan, she points out that there are seven other bedrooms in her cluster around a shared kitchen.

The fees aren’t justified, she says. “But there aren’t a lot of options for people.”

Keegan, the other student at Kavanagh Court, said he thinks that students will rarely be aware of the small-print breakdown of leases and that operators know that. “I feel like most people won’t do anything.”

Looking elsewhere

Byrne, the UCD lecturer, says he thinks the real solution to unaffordability of student housing is that somebody else needs to own and run it.

Approved housing bodies (AHBs) maybe, he says, because they want to make it affordable.

AHBs have know-how in providing housing for people with specific needs – the elderly, people with disabilities, he said.

But they are already overstretched and financing costs are hurting affordability at the moment, Byrne said. “It would be interesting to see how cheaply they could deliver.”

AHBs seem to make more sense than universities, Byrne says.“I think one of the challenges of the sector is that the incentives for universities aren’t helpful.”

Universities also often charge for utilities on top of the rent in their accommodation. Trinity College Dublin has charged between €15 and €19 a week for utilities both last year and this coming year, shows research by a collective at the university, Students4Change.

Universities are really dependent and geared towards international students, given the opportunities for growth in numbers and higher fees, says Byrne. “They’re very focused on the international market.”

So their big incentive is to have accommodation for international students, he says. Meanwhile, the purpose-built student accommodation is simply profit-oriented, he says.

Martha Ní Riada, president-elect of the UCD Students’ Union, said private purpose-built student accommodation just isn’t affordable. “Students are really struggling.”

Holding down jobs and having to commute long-distance to get to college, having no time to make friends – that all has a massive impact, she says.

Attendance at lectures is an issue, she says. “It hasn’t increased that much since the return to in-person lectures.”

The union attributes that to a great extent to cost-of-living issues, she says, with students opting to work for a day if that’s on offer rather than head in to college for a single lecture.

Ní Riada expects to hear more about students struggling with all this, she says. “We really feel for students trying to find somewhere for the coming year.”

Keegan meanwhile is back in New York working the summer at an Irish bar. “I feel like the cost of everything is just going up in general. And I’m just trying to work as much as I can to save up money for next year.”

He’ll try to find a job once he is back in Dublin during term-time too, and juggle that on top of the rest of college life, he says. “A bartender or be a waiter somewhere.”

“I worked like in high school basically to save up for college,” says Keegan, “and then money is kind of going away slowly.”