Breaking the Barrier: Reforming Student Housing to Unlock Equity in Australian Higher Education

Dinethi Manataunge, Humanists Victoria, 2025 World Bank and IMF Annual Meetings

Executive Summary

Australia’s tertiary education system presents persistent inequities for students from low socioeconomic (low-SES) and regional backgrounds, who are disproportionately excluded from secure and affordable housing. Current income support schemes, including Youth Allowance and Austudy, fall short of covering basic living costs, leaving many students in precarious situations where housing stress undermines university retention and completion rates. Purpose-Built Student Accommodation (PBSA), while expanding rapidly, is dominated by private providers exempt from tenancy protections and largely unaffordable to low-SES students. Without reform, Australia risks worsening skills shortages, particularly in critical sectors such as healthcare and education, as disadvantaged students are forced to defer or abandon study.

This paper recommends amending the Housing Australia Future Fund (HAFF) Act 2023 to establish a Student Housing Cooperative Acceleration Stream, redirecting $150 million annually to co-operative housing models on university and surplus government land. This policy ensures long-term affordability by capping rents at 25% of Youth Allowance, embedding democratic governance, and prioritising equity groups through weighted ballot systems. Implementation would be led by Housing Australia in partnership with state co-operative registries, universities, and student unions, with an estimated cost of $750 million over five years. While barriers include limited governance expertise and land availability, these can be mitigated through training programs and federal-state collaboration. Risks such as political resistance and potential social segregation are acknowledged, but the benefits of delivering affordable and inclusive housing for students outweigh these challenges. This reform presents a sustainable, equity-driven solution to one of the most pressing challenges in Australian higher education.

Problem Identification

Australia's tertiary education system, while internationally respected, remains profoundly stratified, particularly for students from regional and rural backgrounds. These students face entrenched financial barriers that not only impede their access to higher education but also compromise their ability to persist and graduate. Although tuition is partially subsidised through Commonwealth Supported Places (CSPs), the non-educational costs of study - most notably housing - are critically under-supported. 

Housing is the most significant non-educational expense for students, with rents often consuming over 30% of their income, a threshold that places them in housing stress (Cook et al., 2021). According to the National Student Accommodation Survey (2022), 36% of student respondents reported seriously considering dropping out due to housing costs, while 31% reported adverse health outcomes often linked to substandard living conditions. Although PBSA is designed to address these challenges, it remains financially inaccessible to many domestic students. The Student Accommodation Council (2023) notes that while around ~76,000 students reside in PBSA, only 26% of these students are domestic. This underrepresentation highlights a structural exclusion problem: PBSA has become a domain largely reserved for international or affluent students. Without reform, the rapid expansion of PBSA will continue to bypass low-SES domestic students. Policy intervention can ensure the PBSA can provide  a pathway to equity.

Crucially, PBSA providers are often exempt from state-based tenancy protections, enabling exploitative practices such as excessive rent increases, short eviction notice periods, and absence of minimum safety standards. For example, Victoria has no legislated rent caps or minimum room standards for PBSA, despite hosting some of the country’s highest-demand universities and most expensive rental markets. These regulatory gaps are especially harmful for low-SES students, who are more likely to consider PBSA when forced to secure housing near campuses without viable alternatives. 

If housing affordability continues to be neglected, the implications for Australia are serious. One-third of domestic students who commenced a bachelor’s degree in 2015 had not completed it nine years later, with financial and housing pressures identified as key contributing factors (Universities Accord Interim Report, 2023). Low-SES students,, may be unable to relocate or forced to abandon their studies. This risks compounding regional skill gaps and exacerbating intergenerational disadvantage. Without targeted policy reform, student housing affordability will remain a structural barrier to tertiary participation, undermining national goals for equitable human capital development.

Context

The State of the Housing System Report highlights a long-term undersupply of affordable rentals, with national vacancy rates hovering at 1.2% in July 2025, far below a healthy market rate of 3% (SQM Research, 2025). These pressures are most acute in metropolitan areas where major universities are concentrated, intensifying competition for affordable dwellings (UMSU, 2023). Regional housing shortages further constrain options for rural students who must relocate to study, compounding both financial and social barriers (CHIA, 2023).

Housing stress is closely tied to educational disadvantage. Students from disadvantaged backgrounds consistently experience lower tertiary participation and completion rates, driven in part by the high cost of living away from home (Perry & Southgate, 2020). Rural and regional students face a “double burden” of higher relocation costs and reduced access to affordable housing near campuses (Alston & Kent, 2003). It explicitly links housing security to core educational equity objectives (Universities Accord, 2023).

Purpose-Built Student Accomodation (PBSA)

PBSA has emerged as a significant sub-sector in student housing, designed specifically for tertiary students. In 2024, PBSA housed  6.4% of the total student population, up from 5% in 2021 (AmberStudent, 2024). The sector is set for significant growth, with a pipeline of 28,000 new beds expected between 2025 and 2028, representing a 28% increase nationally (CBRE, 2025). Domestic students, however, make up only 26% of PBSA residents (Student Accommodation Council, 2023). Rents in PBSA commonly exceed $400 - $500 per week in metropolitan markets, consuming over 70% of Youth Allowance, despite the 30% benchmark typically used to define housing stress (Anglicare Australia, 2023; UMSU, 2023).

Exemptions from state tenancy protections compound these affordability issues. While NSW introduced reforms to protect student renters, Victoria and Queensland largely exempt PBSA from standard tenancy laws (Cook et al., 2021). Surveys of PBSA tenants have also indicated a high degree of financial and mental health distress, with many reporting unsafe living conditions and feeling pressured to withdraw from their studies due to housing insecurity. These outcomes mirror broader findings that rising housing costs in Australia directly reduce life satisfaction, particularly among renters and younger cohorts (Abayasekara, Kim, & Wang, 2025).

Current Policy Landscape

The Housing Australia Future Fund Act 2023 (HAFF) established a $10 billion fund to finance new social housing and is expected to fund 30,000 new homes (Department of Treasury, 2023). However, none are specifically earmarked for student housing. Similarly, the National Housing and Homelessness Agreement (NHHA), focuses on funding services, not mandating tenancy protections for students.

Governments possess multiple levers to encourage these outcomes. In Australia, these include Housing Australia concessional loans, which provide low-cost financing for affordable housing projects, and Australian Taxation Office (ATO) tax credits and land tax incentives, such as those for Build-to-Rent (BTR) developments (ATO, 2024). Specifically, the Treasury Laws Amendment Act facilitates this by offering investors tax concessions in exchange for providing a mandatory percentage of affordable housing dwellings in new BTR projects.

Case Studies

The student cooperative model has strong domestic and international precedent. Sydney’s STUCCO Housing Co-operative, established in partnership with NSW Housing and the University of Sydney, offers approximately 40% below market and has sustained this affordability for over two decades while training students in governance and cooperative management (Cook et al., 2021). Internationally, the Campus Co-op in Toronto houses over 900 students across multiple buildings through resident management, and Vienna’s WGE student housing co-ops deliver thousands of beds supported by municipal financing and planning incentives (Campus Co-op,2024.; Quince et al., 2023). These cases show that with targeted state support, co-ops can expand from niche pilots into mainstream PBSA alternatives, permanently decoupling rents from speculative pressures (Devlin, 2012; ATN Equity Report, 2024).

Beyond co-operatives, rent regulation is a viable lever for protecting young renters (Filandri, Pasqua, & Tucci, 2025). Adaptive reuse of existing buildings (e.g., offices) to residential use offers another pathway. In New York, the Section 467-m program offers property-tax abatements of up to 35 years for developers who convert offices into housing with at least 25% affordable units, resulting in over 17,000 new dwellings by 2025 (NYC HPD, 2024; CBRE, 2024). Similarly, the United Kingdom’s 2013 permitted development rights reform accelerated office-to-residential conversions, producing a multitude of new units across London and regional cities (UK Ministry of Housing, 2014). However, later reviews by RIBA (2020) and the TCPA (2021) found quality and safety concerns, highlighting that strong design and livability standards are essential to ensure long-term success.

Other Market Categories and Stakeholders

The PBSA sector, while growing, remains a small part of a broader student housing ecosystem dominated by private rentals. The comparative market share breakdown is as follows: Private accommodation (70%), PBSA (6.4%), On-campus (3.2%), and BTR (projected 20% student uptake) (AmberStudent, 2024). This reliance on the private rental market and commercial PBSA highlights the need for policy intervention.

Policy Options

Critical Measure of Success

Increase the proportion of low-SES tertiary students in stable, affordable(PBSA to 30% by 2030. Achieving 30% uptake, up from the previous 26% of domestic residents, would require structural reform and targeted investment. Progress should be tracked through a national student housing registry administered by Housing Australia, building on existing survey data to monitor rental stress, academic retention, and bed supply growth (Cook et al., 2021).

Option 1: Amend the National Agreement on Social Housing and Homelessness (NASHH) to include a "Student Tenancy Standards Conditionality Framework"

This reform would link federal housing payments under the NASHH to a state commitment to adopt minimum tenancy protections for students in PBSA. These standards would include capped rent increases (limited to CPI + 1%) and standardised 28-day eviction notices. Tying NASHH funding to compliance would close this regulatory gap without requiring constitutional overreach by the Commonwealth.

The estimated cost is $20 million over 4 years, covering federal compliance auditing and reporting infrastructure. Implementation would be overseen by the Department of Social Services in partnership with the National Housing Finance and Investment Corporation (NHFIC), with state housing authorities enforcing standards locally. The main advantage is national consistency in student protections. The drawback is potential resistance from states unwilling to tie their NHHA funding to student-specific provisions.

Option 2: Amend the Housing Australia Future Fund (HAFF) Act 2023 to include a "Student Housing Co-operative Acceleration Stream"

This amendment would allocate $150 million annually from HAFF’s $500 million fund to finance student-run housing cooperatives on university or surplus government land. Co-ops would cap rents at 25% of Youth Allowance (~$96/week in 2025 terms) and adopt 41-week academic leases. Residency would be allocated through weighted ballot systems: applicants from equity groups (low-SES, regional, Indigenous, or first-in-family) would receive additional weighting, ensuring disadvantaged students are prioritised rather than competing equally with higher-income peers.

Evidence from Sydney’s STUCCO cooperative shows such models maintain rents at below market rates with governance training enabling student boards to sustain affordability (Cook et al., 2021). Beds would be delivered through partnerships with universities contributing underutilised land, and construction could be supported through HAFF capital allocations.

The estimated cost is $750 million over 5 years. Housing Australia would manage grants, while state cooperative registries under the Co-operatives National Law would regulate governance. This model structurally lowers rent by removing profit margins and ensures long-term affordability of the housing stock. However, the process requires a significant commitment of 3 to 5 years to establish, which includes governance training and securing upfront capital investment.

Option 3: Amend the Treasury Laws Amendment (Affordable Housing Incentives) Act to establish a "Student Housing Conversion Tax Credit"

This measure would provide a 15% federal tax credit (via the ATO) for developers converting vacant commercial buildings into student housing. To qualify, at least 50% of units must be reserved for low-SES or Youth Allowance recipients and priced at ≤30% of Youth Allowance (approximately ~$100/week in 2025). The 30% threshold reflects the standard benchmark for housing stress (CoreLogic & AIHW, 2023).

Adaptive reuse is significantly cheaper and faster than new builds: SGS Economics (2022) estimate cost savings of 25%, while existing structural assets shorten delivery timelines by 12-18 months, meaning beds can be ready within 24 months. Although PBSA delivery costs average $150,000 - $300,000 per bed, adaptive reuse projects reduce these barriers (Savills, 2024).

The estimated cost is $350 million over 4 years in forgone tax revenue, with NHFIC accrediting eligible projects. It is derived by applying a 15% tax credit to the average A$225,000 per-bed conversion cost for 15,000 adaptive reuse student housing units annually assuming 70% uptake. This approach quickly accelerates the supply of affordable beds in urban centres, particularly in areas currently burdened by high commercial or office vacancy rates. A limiting factor is that not all existing buildings are suitable for conversion, and developers often require complementary planning reforms to reduce risk and ensure project viability.

Policy Recommendation

Amending the HAFF Act to establish a Student Housing Co-operative Acceleration Stream is the most viable and sustainable pathway to improving affordability, stability, and equity in the PBSA sector. Co-operatives provide a structural response to these inequities: they are purpose-built or adapted for student living, yet operate outside speculative markets, governed by residents and embedded with long-term affordability safeguards (UNSW-MCM, 2024). They therefore represent a non-profit sub-sector of PBSA, not an external solution.

Implementation should be led federally by Housing Australia, with $150 million per annum redirected within HAFF’s existing $500 million envelope to fund cooperative student housing. The relative uptake of the policy depends on universities willingness to provide underutilised or adjacent land for development and the ability of state governments to regulate governance structures through co-operative registries under the Co-operatives National Law.  Operational subsidies and governance training would be provided in the first five years to ensure sustainability. Stakeholders, including the Department of Social Services (DSS), NHFIC, student unions, and community housing providers, would support tenancy allocation, outreach, and compliance.

The estimated cost of $750 million over five years is based on observed cooperative housing expenditure (e.g., STUCCO’s refurbishment funding), international cooperative cost benchmarks, and comparative PBSA capital expenditure of $150,000-$300,000 per bed (Savills, 2024; Hulse et al., 2019). A ten-year minimum funding horizon would allow sufficient time for planning, construction, and governance capacity-building. Evaluation would be continuous and led by Housing Australia in partnership with DSS, with metrics including reduced rent-to-income ratios (≤25% of Youth Allowance), increased PBSA participation by students, higher retention and completion rates among cooperative residents, and annual delivery of new co-op beds (Universities Accord, 2023).

Risks

While student housing co-operatives present a sustainable pathway to affordability and inclusion, several barriers must be addressed for success. A key challenge is the limited technical and governance capacity among students, who often lack experience in property management or financial oversight. Without structured support, co-ops risk early mismanagement or financial instability. This can be mitigated through capacity-building programs funded by Housing Australia and regulated by state co-operative registries to provide training and advisory support. Another constraint is the scarcity of surplus government or university land in urban centres; universities and councils may require federal incentives or tied funding to release under-utilised sites for development.

Political and economic risks also exist. Redirecting HAFF resources to student-specific initiatives may face resistance from other affordable housing sectors, while high upfront costs could draw criticism during fiscal tightening. Socially, co-ops risk being perceived as “low-income enclaves” if not integrated into broader student housing markets. Mitigation requires mixed governance models combining student participation with professional management and embedding co-ops within diverse urban communities. Clear messaging that co-operatives are empowerment-driven, not charity-based, will further strengthen public perception. Despite these risks, the policy’s long-term benefits in delivering affordable, stable, and inclusive housing outweigh its challenges.

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