The Provo Housing Racket

Parking in Provo may be a pain, but Provo student housing is the real racket.

Too often, BYU students are overcharged, abused, and taken advantage of by their landlords. And, despite good intentions, BYU is one of the greatest culprits behind Provo’s broken student housing market.

Ask yourself: how is it a shared bedroom with chipped paint, dirty furniture, and a kitchen the size of your closet can go for almost $400 a month in Provo of all places? Or how is it that, despite charging more per square foot, BYU’s largest apartment complexes have 100% occupancy when the prevailing vacancy rate is 4% among Utah County rentals?

The explanation is simple: BYU forces students to live in BYU contracted housing, but it doesn’t do much to back students up.

The university places significant hurdles in the way of would-be landlords, limiting the supply of available housing and costing students more. First, BYU contracted apartments are required to physically segregate male and female designated units. Since most apartments in the U.S. are gender-neutral by default, a large chunk of housing is written-off on that basis alone. Second, BYU contracted apartments must be located within a certain distance of campus, limiting the geography for BYU housing to a mere 2.7 square miles. That area includes established businesses and married housing, as well as streets and greenspace.

As a result, many BYU apartments are thirty-, forty-, even fifty-years-old. Building new is expensive, and the pool of non-BYU contracted housing within the zone is limited. Most newer developments are on the premium side of the market (The Village, College Place, etc.). If students had a wider range of affordable options to choose from, rent would fall and quality would rise. Studies have repeatedly shown that expanding the housing supply benefits other renters. Effectively, as the pool of available housing grows, landlords have to compete with other landlords to attract more tenants. For example, if Liberty Square had enough vacancies, management would lower rent to attract more tenants.

Exacerbating the situation in Provo is the fact that most landlords see their properties as investments rather than businesses. Businesses go above and beyond to satisfy their customers, but real estate investors are primarily concerned with their rate of return. In Provo, disinterested landlords have turned over their workloads to massive real estate management companies like Redstone Residential and Aspen Ridge.

The problem is that management companies drive up costs and cut corners to make a profit.

Redstone Residential manages over half of the large complexes contracted with BYU, and most students have no idea who their actual landlord is. Unmasking the real owners can be a lot like taking apart a Russian nesting doll—one shell company after another. After a deep dive into the Liberty franchise, we found that all three Liberty complexes are owned by MHE Real Estate, a California-based real estate company with a large presence in Provo. MHE’s website boasts 100% occupancy in the Liberty complexes.

While MHE owns the apartments, Redstone Residential manages everything from leasing to maintenance and rent collections. In other words: Redstone is essentially a middleman between landlords and renters. Most operating companies take a percentage of revenues, driving up rent and disincentivizing any expensive maintenance or improvements. 

Hint: there’s a reason the byline on Redstone President Jake Jarman’s LinkedIn is “Dominating the Student Housing Industry!”

Before MHE and Redstone took over, Liberty Square had a vacancy rate of 30-40% during the summer months due to the nature of fall/winter and spring/summer length contracts. Now, Redstone-managed properties almost exclusively offer 12-month contracts. Summer vacancies have fallen to near zero. The burden has shifted from landlords to renters, and students are left scrambling to find replacement tenants for the summer months despite the fact that most BYU students leave Provo in April.

Compare the quality of BYU’s middle-tier housing options ($400 range) with student housing by UVU. On average, UVU housing is newer, higher quality, and more fairly priced. Private bedrooms are cheaper, and the amenities are better, too. They also don’t have a homeless week. Even Provo has cheaper housing options available when you look outside of BYU contracted housing.

It’s bad enough that BYU has built a system primed for exploitation—a system where the rules of supply and demand no longer apply, and landlords can count on a captive audience of vulnerable renters. What’s worse is the way that BYU has abandoned its responsibility to protect students. Last winter, BYU moved classes online and told students to go home. Students on-campus were released from their contracts in the dorms without penalties. Students off-campus, however, were left to fend for themselves. BYU did little to pressure complexes to release students from contracts, even though the university could have threatened to rescind BYU approval for non-compliant housing. 

Landlords fought tooth and nail against arbitration suits filed by immuno-compromised and unemployed student renters. For the most part, the landlords won. Redstone Residential, meanwhile, received a $2-5 million (de facto) grant through the PPP. Aspen Ridge received $150k-350k.

Once again, students took the brunt end of the stick. They were let go from their jobs, but not from their student housing contracts. They were ineligible for stimulus checks, and yet BYU still rejected CARES Act funding that could have gone directly to students. When the summer rolled around and BYU students were left in the dark whether to buy a contract for the fall, BYU told students to “read their contracts carefully” but offered little in clarity or assistance. Thousands of students would have been locked into year-long contracts they didn’t need, had classes been online. If BYU is going to require students to live in BYU contracted housing with all of the drawbacks that entails—special rules, higher rents, lower quality—BYU needs to do more to protect students. This means:

• No more 12-month contracts: require complexes to offer fall/winter contracts since most students leave Provo in April. 

• No more monopolies: limit the reach of companies like Redstone Residential that exercise unfair control over the housing market.

• Finally, pick sides: when crises like COVID-19 break out, BYU needs to side with students. The university has played neutral for far too long.

Or better yet, BYU should let students live where they want and let the problems work themselves out. If BYU doesn’t take action soon, renters may have to take matters into their own hands. Tanking online reviews, jacking up electricity bills, unionizing, and lobbying Provo City Council are just a few of the options available to fed-up renters.

And we are fed-up.