Students priced out of purpose-built student accommodation

Students are feeling the strain of rising rents as they struggle to afford purpose-built student accommodation (PBSA).

A new report from real estate firm Cushman & Wakefield reveals growing demand for student housing across the UK.

The research estimates that even if demand for accommodation increases by just 1% per year over the next five years, around 750,000 students could still be left without a PBSA bed, equivalent to a student-to-bed ratio of 1.9 to 1.

Many students are balancing lifestyle and value-for-money when considering accommodation location

According to the findings, just 18,200 new student beds entered the market this year, a net increase of 10,000, yet still well below pre-pandemic levels.

Over the last five years, an accumulative total of 88,000 beds has been delivered nationally, versus the 158,000 in the previous five years, which is a fall in delivery annually from an average of 31,600 new beds a year to 17,600.

The report also reveals that despite a slowdown in the number of new beds being delivered, there are still some empty rooms available. Nationally, there are more than two students for every available purpose-built student accommodation (PBSA) bed; however, in Sheffield, the situation is reversed.

In Sheffield, the demand pool is projected to have fallen by 17.3% between 2022/23 and 2024/25, resulting in a student to bed ratio of 1.21:1, down from 1.46:1. Cushman & Wakefield say such a ratio is unprecedented in a major market, and has resulted in the largest decrease in PBSA rents in the UK this year, at -5.5%.

In the latest academic year, analysis shows university rental growth outpaced the private sector for the first time in seven years, growing by 4.44%, nearly four times greater than the private sector’s rental growth at 1.16%. For only the third time in 12 years, the lowest quality accommodation delivered rental increases above those of the highest quality beds.

David Feeney, Partner in Cushman & Wakefield’s UK Student Accommodation team, said: “Unfilled beds is a concern. We project that postgraduate numbers have fallen by over 17% over the last two years, and whilst international student numbers are likely to stabilise after these initial visa shockwaves, we’re also seeing a rise in commuting students or those living at home because the cost of accommodation is simply too high for many.

“Meanwhile, stock at the same quality levels is competing for the PBSA student body, where en-suite cluster accommodation will lose out if the price point hits above affordability limits. Overall, in the post-covid world, many students are balancing lifestyle and value-for-money when considering accommodation location.”

23% of student beds in England, now cost more than the maximum Maintenance Loan

The data also reveals a record 23% of student beds in England, including London, now cost more than the maximum Maintenance Loan. Average annual rents are taking up a larger share of student finance than ever before, with Cushman & Wakefield saying this shows growing affordability pressures for students.

The poorest-performing en-suite developments this year were priced at around 110% of the loan limit, compared with 95% for the best-occupied schemes.

While in some major markets more than two-thirds of students can still find accommodation within the loan threshold, in others that figure drops to just 12%.