Purpose-built student accommodation (PBSA) providers face a slowdown in delivering new housing, with construction costs outpacing the rents needed to fund development. Unite’s chief executive Joe Lister has warned that PBSA is no longer viable to develop in most student markets.
Speaking at the online Westminster Higher Education Forum’s policy conference, his warning followed Unite’s announcement of a 0.3% fall in annual rents for 2026-27, its first decline this century outside the pandemic in 2020.
Rents needed for construction
Asked by Inside Housing Living how rent cuts would affect Unite’s development pipeline, Mr Lister said: “The reality is that rents aren’t growing as fast as build costs and construction costs are growing, and that means it’s no longer viable to develop PBSA in all but a handful of markets.
“To put that in context, rents would need to be £12,000 to £13,000 per annum for us to build a new bed.”
He added: “I think in Plymouth that’s probably close to £5,000 to £6,000 per annum if you go for one of the more affordable rooms.
“Our average rents across the UK are £8,000 per annum.”
New student beds
Mr Lister said delivery was being hampered by rising construction and debt costs, planning delays and safety processes, Inside Housing reports.
He says there needs to be recognition of the PBSA sector in the UK’s National Planning Policy Framework and guidance from the Ministry of Housing, Communities and Local Government.
Universities, councils and providers should also collect local data to establish where student accommodation was needed.
Unite’s market update
In a market update, Unite revealed it has secured bookings for 95.6% of its beds for the 2026-27 academic year, slightly ahead of last year’s 95.3%.
However, rent cuts used to attract tenants held growth in like-for-like rent income to 0.6%.
In Nottingham, that approach helped lift income by 15%.
Mr Lister said bookings had met forecasts despite changes in student demand and university practices.
He explained: “We are making good progress on our strategy to increase alignment to the UK’s strongest universities and are on track to deliver £300-400m of disposals this year in a market which continues to adjust to higher interest rates.”
Unite, which operates in 29 university towns and cities, has plans to cut its portfolio from 70,500 beds to between 55,000 and 60,000 with a focus on universities with strong demand.
Projects and property sales
Meanwhile, Unite and Manchester Metropolitan University received approval last month to begin construction of a 2,302-bed student accommodation scheme.
The company, which provides 72,000 student beds across 207 properties, has now put four Leicester schemes up for sale, all from the Empiric Student Property portfolio it acquired in January.
Student landlords should research
Simon Thompson, the managing director of Accommodation for Students, said: “For private landlords, slower PBSA development could mean less competition for them from new blocks.
“Existing student houses, including shared homes, may attract demand that purpose-built schemes cannot accommodate.”
He added: “However, Unite’s rent cuts suggest higher charges are hardly guaranteed.
“Before committing money towards expansion or refurbishment, student landlords should examine local university recruitment, affordability and occupancy rather than assume national shortages will fill bedrooms.”
