Student Supply & Demand Highlights Growing Importance of PBSA
Student Supply & Demand Highlights Growing Importance of PBSA (Purpose-built Student Accommodation)
September is the biggest milestone in the academic calendar. In higher education, the month marks first year undergraduates moving into halls, experienced students taking their first steps into the world of privately rented property, graduation ceremonies and A level students visiting campuses to see where they might end up in a year’s time.
While there’s always focus on university league tables, post-graduate employment prospects and who has the best freshers’ week, student accommodation – or the lack of it – has been stealing the most serious headlines.
Demand and supply imbalance
A 2024 CBRE article revealed the depth of the undersupply. It estimates 30% of university students stay in purpose-built student accommodation (PBSA) while studying, with demand for beds growing by almost 20% over the last 10 years.
The disparity between accommodation available and student demand is most acute in London, where CBRE says there are around 400,000 students and just over 100,000 PBSA beds. Pronounced imbalances were also noted in Bristol, Manchester and Nottingham, where students face a significant accommodation shortfall.
Purpose built beds on the rise
There is some good news. New units are forthcoming at an increasing rate. CBRE confirmed just 9,000 new beds were delivered to the PBSA market in 2023 but a 2024 Knight Frank report found more than 16,300 new PBSA beds were delivered across 63 schemes in 2024.
Keen monitors of the student accommodation sector, Knight Frank has recently released its UK Student Market Update Q2 2025 report, with a warning that delivery may stall. The agent observed that newly-built PBSA has faced challenges in the form of planning delays and high build costs, with some investors turning to standing stock instead.
What unites all types of PBSA is safety, especially the adherence to the Building Safety Act (BSA). Meeting these crucial standards always has the potential to delay the supply of units, with the report detailing how less than 60,000 beds are presently under construction across the UK.
Record number of applicants
Delivery delays are against a backdrop of increasing student numbers. The latest applicant figures from UCAS, published at the end of July 2025, revealed the number of 18-year-old UK applicants by 30th June 2025 had reached a record high of 328,390 – up 2.2% compared to the same point in 2024.
The appetite to study in the UK also appears to have returned among overseas students. This year saw a 2.2% increase in international undergraduate numbers when compared to 2024. Highlights include an influx from China, up by 10%, as well as year-on-year increases in applicants from Ireland (+15%), Nigeria (+23%) and the USA (+14%).
Enduring educational appeal
This is where opportunity lies. The UK consistently ranks second behind the USA for the highest number of educational institutions in the global top 100. Its reputation for educational excellence, underpinned by the Russell Group of universities, combined with relative political stability, cultural riches and future employment prospects, keeps domestic and international students in the UK’s university ecosystem.
Knight Frank went on to highlight the opportunity that PBSA presents in the property sector, with almost £830 million invested in the UK PBSA in Q2 alone. This took half year investment volumes to circa £1.6 billion – a level that is now above the long running average.
Institutional investment turns to PBSA
Glimmering prospects are attracting new names into the UK’s PBSA investment and delivery market. Relatively new are AustralianSuper and CVC DIF, who join existing super-providers including Unite Students, IQ Student Accommodation (Blackstone), UPP (University Partnerships Programme) and Host Students.
Earlier in 2024, Savills, together with Savills Investment Management, found PBSA had overtaken ‘multifamily’ for the first time as the highest priority target sector among those property investors questioned (investors who collectively have almost €720 billion of real estate assets under management).
PBSA is now a target for pension funds, insurance companies and sovereign wealth funds, who are increasingly prioritising stable income, high occupancy and demographic tailwinds.
The growth of PBSA is against a more punitive landscape for the small-scale suppliers of student accommodation. While Houses in Multiple Occupation (HMOs) serving the student sector are still returning good yields, when compared to traditional private rentals for singles and families, the private property investor market has turbulent times ahead.
Private landlords being edged out?
The Renters’ Rights Bill may have already gained Royal Assent by the time you read this, carrying with it the biggest set for reforms for decades. Sole trader landlords and those heavily mortgaged will find the coming years tough, with student-focused landlords among the biggest losers.
For example, the House of Lords requested the new Ground 4A within the Bill, which pertains specifically to landlords regaining annual possession of student lets, be extended to all student properties no matter their number of bedrooms. The request, however, was rejected.
This means only landlords with student HMOs of three or more bedrooms will be permitted to regain possession of properties rented to full-time students to ensure they are available with vacant rooms in line with the next academic year. Landlords with smaller one- and two-bedroom student lets will have no such privilege. Instead, they will be subject to the incoming and mandatory switch to rolling, periodic tenancies.
Tough love for landlords
Private landlords are also reeling at another tranche of news that will affect the viability of their student lets. Proposed ideas being considered by Labour include replacing council tax with a new property tax to be paid for by homeowners (falling to landlords and not student tenants) and National Insurance applied to rental income.
The undercurrent in the property investment sector firmly points to a Government set on forcing out small-scale private landlords and replacing them with big corporate vehicles who have the funds to absorb the cost of reforms and deliver PBSA en masse. As such, we may see an end to the type of student digs that were featured in TV shows such as Rising Damp, The Young Ones and Fresh Meat.
Viewber: your PBSA partner
Viewber has long cultivated relationships with suppliers of student accommodation, from HMO landlords and letting agencies to PBSA organisations and property managers. We continue to assist the growing student accommodation sector with our property visit and viewing services, with a particular focus on safety and compliance. For student accommodation, this includes fire door checks, person-centred fire risk assessments, and audible checks on smoke alarms and carbon monoxide detectors – find out more here >>
