The Student Accommodation Trap: How Adverse Selection Keeps Bad Halls in Business.

 

Source: Nagiev, Rudzhan. iStock

Have you ever paid for a room that you’re going to spend a year in, that you’ve never set foot in, in a city you’ve never lived in? Upon joining university, my freshers-self thought this was normal. Surely, I had all the information I needed to start what was supposed to be the best year of my life?

65% of students across UK universities have at least one issue with their student home (Save the Student, 2026). Students are unfamiliar with the realities of their accommodation and often have no way of finding these truths out. This is the economic concept of asymmetric information; when the seller of a good knows more about it than the prospective buyer (Löfgren et al., 2002). This creates great uncertainty for students, who are thus unable to make rational choices, leaving the whole market to suffer.

A failing market that fails students   

Because students are uncertain, they will be willing to pay a price that is lower than what the high-quality accommodation is really worth, since it’s difficult for them to know the true quality of the accommodation and therefore will pay a price based on average quality. This situation, ‘where there are stronger incentives for “bad” types of a product to be involved in a transaction than “good” types of the product is called adverse selection” (Goolsbee et al., 2024, p. 488). This creates a gap between high quality accommodation, and the average quality price students will be willing to pay. Now we reach a vicious cycle, students won’t pay high prices, high quality accommodation leaves the market, remaining accommodation is low or average quality, and this reinforces the students’ beliefs that accommodation is low-quality so willingness to pay drops further. We’ve all seen the narrative that student accommodation is poor right? At the University of Bristol, students launched the “Break the Mould” campaign after discovering dangerous mould in accommodation, a recent National Union of Students (NUS) survey found 84% of students reported at least one issue from, mould, damp, poor plumbing or rat infestations! (NUS, 2024). All this has culminated to what can only be referred to as a student housing crisis, driven by adverse selection.

Expectation vs. Reality: Brook Hall student accommodation

Sources: (1) Unite Students. (2) The Mancunian

Time for a simple fix

Students deserve better than mouldy walls, heating that gives up halfway through the year and catered food that makes you question your life choices. The simple fix here is an economic concept called market signalling.

Essentially, the basic idea is using cost signals; high quality providers prove they’re better in a way that a low-quality provider can’t fake (Spence, 1973). Universities should be making student reviews front and centre of their websites instead of making students hunt through the web for a dated file. This is real, verified feedback from people who lived there. Honest reviews on your future halls social life and quality could be the difference between the best year of your life and one worth forgetting!

Platforms like StudentCrowd are already doing this by providing verified reviews and feedback with student ambassador schemes to really see what you’re getting yourself into (StudentCrowd, 2025). Universities partnering with these 3^rd party platforms would give students an unfiltered look into what they’re signing up for, avoiding unexpected surprises when you move in, and is an explicit example of signalling.

Consistent positive reviews will separate the accommodation that is worth your money from the ones that aren’t. This market signalling bridges the information gap from universities knowing more about their accommodation than the students moving into it. The solution isn’t just about building nicer rooms but making it impossible for the bad ones to hide.

Aside from reviews, Spence (1978) argues a truly effective signal provides a cost for the person with more information, here, universities. For example, you might trust a university more if you know that if they fail to meet their promises, it will cost them. So, universities wouldn’t just show realistic images of accommodation, but would also disclose information such as maintenance response times, records of previous faults in heating or other appliances, the presence of pests, cleaning arrangements and actual room videos rather than just sample-room pictures. Additionally, these costs help good rooms stand out. Why? Because if a bad provider wants to get positive reviews, it will have to spend even more renovating rooms. Thus, for bad providers, the costs may outweigh returns to become high-quality, so they won’t signal.

So that students don’t have to scrounge around on TikTok, YouTube and dodgy forums to find a scrap of information about their future home, and quality of life, we need to call for universities to provide more information, and signaling is a key part of this! This is all in the hope that decisions can be made more efficiently, and there can be better competition in the market for student accommodation, that actually rewards real quality rather than merely marketing capability.

What actually drives a student’s decisions?

When considering how students make decisions, it’s important to consider behavioral economics and the writings of Thaler and Sunstein. Aside from students having their private preferences, when making decisions, behavioral economics is often at play. We’re all familiar by now with Thaler and Sunstein’s nudge theory; ‘any aspect of the choice architecture that alters people’s behavior in a predictable way' (Thaler et al., 2008, pg. 10). In the case of student accommodation, universities are so called choice architects since they set up the parameters in which we must make decisions. These parameters, as discussed, are pretty poor. As I said, we are all fairly familiar with nudge theory, but to add something special to this discussion, we turn to ‘Sludge’. In Thaler and Sunstein’s later, 2021 edition of Nudge, they discuss sludge, a friction created that makes decisions harder (Thaler et al., 2021). In this case, the time-consuming sleuthing that students are forced to do due to the asymmetric information in this market is how universities are letting students land in sludge!

No more buying blind

Student accommodation is a broken market relying on information asymmetry in desperate need of a fix. It’s up to market signalling to bridge the gap between what universities know and what students deserve to know. Better rooms start with better information.

References

Butler, J. (2026). Save the Student. [online] Save the Student. Available at: https://www.savethestudent.org/money/surveys/national-student-accommodation-survey-2026.html.

Goolsbee, A. Levitt, S. Syverson, C. (2024). Microeconomics. 4^th edn. Worth Publishers.

Löfgren, K., Persson, T. and Weibull, Jörgen W (2002). Markets with Asymmetric Information: The Contributions of George Akerlof, Michael Spence and Joseph Stiglitz. The Scandinavian Journal of Economics, [online] 104(2), pp.195–211.

Logan-Wilson, E. and Attwater, S. (2025). Maintenance issues in Brook Hall accommodation . Available at: https://mancunion.com/2025/03/11/i-wouldnt-go-back-if-you-paid-me-students-start-petition-to-lower-rent-price-of-dreadful-brook-hall-accommodation/.

Nagiev, R. (2021). Female dormitory roommates live together. College students, friends... [online] iStock. Available at: https://www.istockphoto.com/vector/female-dormitory-roommates-live-together-gm1300862577-393058652 [Accessed 23 Apr. 2026].

National Union of Students. (2024). New NUS research reveals extent of student housing crisis. Available at: https://www.nus.org.uk/housing-survey-2024 (Accessed: 15 April 2026).

Spence, M. (1973). Job Market Signalling. The Quarterly Journal of Economics, 87(3), pp.355–374. doi:https://doi.org/10.2307/1882010.

Spence, M. (1978). Job Market Signalling. Uncertainty in economics, Academic Press, pp. 281-306.

StudentCrowd. (2025). About Us - The StudentCrowd Story | StudentCrowd. [online] Available at: https://www.studentcrowd.com/about [Accessed 22 Apr. 2026].

Sunstein, C. & Thaler, R. (2008). Nudge: improving decisions about health, wealth and happiness, USA: Yale University Press.

Sunstein, C. & Thaler, R. (2021). Nudge: the final edition, USA: Yale University Press.

Unite Students (2026). Brook Hall student accommodation . Available at: https://www.unitestudents.com/v2/student-accommodation/manchester/brook-hall.