New data from StuRents, a source of independent data on the student accommodation sector shows that by 2026 (when many of this September’s entrants will graduate), there will be a deficit of over 620,000 student beds across the country. This is up from a deficit of just 5,000 in 2018.
The rising shortage of beds has grown expeditiously from 2017, confirming that the supply and demand imbalance is increasing year-on-year; which the data from StuRents shows.
“A slowdown in the delivery of new PBSA, matched with rising numbers of students, is seeing students struggling to secure accommodation in cities like Glasgow and Manchester. This is exacerbated by the ongoing rental crisis in the HMO sector, which is seeing rents outstripping maintenance loans in many parts of the country.
“The situation shows no signs of letting up, with fewer beds set to come to the PBSA market over the coming years. Planning application activity has been in decline since a peak in 2016, with significantly fewer beds being submitted or approved year-on-year.
“In 2016 for example, more than 72,000 beds were proposed, and planning permission was granted for 56,000 of them. In 2022, the numbers dropped significantly to 27,000 proposed beds and 24,000 granted permissions. It’s hard to attribute this to a single factor. There’s a combination of things at play including fewer suitable sites, competition from other land uses, and an increase in construction and financing costs.”Richard Ward, Head of Research, StuRents
With projected numbers until 2026, the data shows that the PBSA sector is struggling to provide a consistent supply, with the bed to student ratio showing that the demand is not set to ease over the coming years.
PBSA property agency Harris Associates has currently instructed on over £750m of UK PBSA assets. From an investor’s perspective, the crisis does not seem to have a simple solution, despite the opportunity to establish successful schemes being available.
“As the UK continues to be a global destination for education, the current supply of appropriate student housing is woefully insufficient to meet the current and growing demand – placing further stress on other residential uses during the current housing crisis.
“In light of a 75% reduction in planning applications this year, the tailwinds for the PBSA market will continue to strengthen, with persistent rent increases in prime locations projected. This allows student housing to continue to represent a robust inflationary hedge for investors.”Jamie Harris, Head of Student Accommodation, Harris Associates
As both StuRents and Harris Associates have found, the lack of PBSA in key university cities is also having a negative impact on the residential sector, with rent increases and a need for more rental accommodation during the current housing crsis.