Insurance companies are refusing to provide buildings insurance for landlords who want to let their homes to students. There are now so few insurers prepared to take on the risk that some prospective landlords cannot let their homes.
A spokesman for the Association of Residential Letting Agents said: 'We find the attitude of insurance companies deplorable. At a time when all are agreed that the private rented sector must be expanded for the good of the economy and the wellbeing of people, this is an unnecessary obstacle.'
The insurers argue that the claims insurance for houses let to students is not a good risk. A spokesman for the Association of British Insurers said: 'Students are very much coming and going and you can get malicious damage. There is also still very much the idea of fights and vandalism.'
Students may not be the tidiest of souls, but they do not usually go around causing irreparable damage to the fabric of the property.
In reality it is far more likely to be unscrupulous landlords who have deterred insurance companies. They claim for alleged damage caused by students when the properties were in a bad condition at the outset.
Laura Matthews, of the National Union of Students, said: 'The past action of these landlords is making it harder for students to find somewhere to live.
'Careful landlords who want to get insurance and let decent properties are being scuppered by a minority who see their insurance as a cheap maintenance scheme.'
Andrew Barr lives in London. He wants to rent his three-bedroom house in Northampton to students on a six-monthly tenancy. He has been trying for weeks to find an insurer to provide buildings cover.
He said: 'It is currently insured with the TSB, but the TSB said that it did not insure rented property so I began looking elsewhere. I must have rung at least 20 insurance companies and brokers.
'I went through the Yellow Pages. As soon as they knew it was to be rented to students they did not want to know. They do not discriminate specifically against students - it is the fact that the property is rented which puts them off.'
Eagle Star will only insure rented property for existing customers. Apparently there is an 'increased risk of fire' in tenanted houses.
Norwich Union will not consider rented property unless the letting is for more than a year. Commercial Union does not reject rented properties outright, but said: 'We look at them very carefully.'
Mr Barr was getting desperate. He had found suitable tenants - post-graduates aged 24 - but still could not get insurance. He contacted the Independent.
AA Insurance Services has now arranged buildings cover for his property with Guardian Royal Exchange. Mr Barr said: 'The premium is pounds 260, but I have taken a pounds 200 excess. Otherwise it would have been about pounds 320. But that is nothing compared with the only other quote I got for a minimum premium of pounds 1,500.'
Mr Barr is delighted, but GRE is very much the reluctant hero. A spokesman for the insurer said: 'The tenancy must be long-term - six months or more - and we also consider whether the owner will actually be living there.
'We do not wish GRE to be known as the company that welcomes students with open arms.'
However, there is a ray of hope. Endsleigh Insurance, which specialises in the student market, is putting together a scheme with the accommodation officers of universities and colleges. A spokesman for Endsleigh said: 'The landlord will be the insured, but the proposal will be endorsed by the university or polytechnic accommodation officer.
'The officers will act as intermediaries, sifting out the wrong type of risk. We should then be able to avoid the shark landlords.'
The scheme should be running in about six weeks. Meanwhile, prospective landlords can contact their local officers now to set the ball rolling.