Property
Published: June 27, 2024 | Updated: 27th June 2024
The average rents on student accommodation are now more than the maximum amount allowed through maintenance loans.
This is according to research from CBRE, Purpose Build Student Accommodation Sector (PBSA) in the UK’s 30 major university towns and London.
It looked at the average price for en-suite rooms (with a shared kitchen and living space) and studios (fully furnished accommodation, with own kitchen and bathroom).
The maximum maintenance amount which can be secured by students outside of London is £10,277 per annum, but the average rent for an en-suite room is £10,500 per annum. A studio in the city, meanwhile, averages at £14,200 per annum.
Emma Eaglestone, Senior Director, Living Valuation and Advisory Services at CBRE Southampton, said: “What we are seeing in the market reflects the limited good quality student accommodation to house the growing number of students.
“The Build to Rent schemes in our university towns and cities have gone some way to alleviate the pressure and have provided additional quality housing mainly for overseas students, but there is still a lack of good quality accommodation.
“We have also seen some secondary providers filling in for the PBSA sector.
“With numbers of students expected to rise over the next few years, we expect to see the development of student accommodation increase to accommodate these growing numbers.
“It’s important that our university towns and cities in the south, remain attractive to students, to ensure there is a qualified talent pool for employers. The availability of accessible accommodation is fundamental to this.”
Average weekly rents for student accommodation across the south have been continuously rising over the past four years, according to the CBRE analyses.
Southampton has around 30,000 students with just approximately 13,700 dedicated student beds. The average weekly rent for a studio has increased by 50 per cent since the academic year 2021/22 (£189 to £284 in 2024/25). For an ensuite room, the average weekly rent has increased by 40 per cent (from £149 in 21/22 to £210 in 24/25).
In Winchester, there are nearly 9,000 students and just 3,000 dedicated student beds. The average weekly rent for an ensuite room has risen by as much as 24 per cent, from £173 per week in 2021/22, to £215 this academic year, while in Portsmouth the average weekly rent for a studio has increased from £197 in 2021/22 to £221 this academic year (24/25) – an increase of 12 per cent.
Constrained supply and a fall in the delivery of student beds to the market have exacerbated rental growth.
CBRE has predicted that by 2028, the market could face a potential shortfall of 620,000 student beds across the UK, relative to the 36,000 beds currently identified as being delivered in that period (assuming the student population grows by 1 per cent per annum for the next three years).
According to CBRE research, the sale of buy-to-let homes has contributed to an estimated loss of approximately 10 per cent of the UK’s private rented stock since 2016, impacting the largest accommodation pool for students.
Planning conditions, elevated construction costs, and the rising cost of debt have all influenced the supply pipeline and development viability in the sector and the shortfall in beds is increasing.
However, CBRE’s data shows there is still ample interest in the sector from institutional investors, which can be leveraged to increase the supply of beds. Just under £4 billion worth of investment deals took place in 2023 alone.
Tim Pankhurst, Head of Student Accommodation Valuation at CBRE, added: “As maintenance loan growth lags and the cost of attending university grows, we could see a shift in where students choose to go.
“More than ever, the cost of living is becoming a key decision driver for domestic students when deciding where to apply to study.”
“The loss of House in Multiple Occupation (HMO) homes has constricted supply further, driving up prices for existing accommodation and PBSA beds.
“Some universities are struggling to house their students in the same city. We need to encourage the development of student accommodation and increase its provision, so it’s affordable and accessible for all students.”
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