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UK student accommodation 2019-20

Issued: 13 December 2019


A new report highlights the development pipeline and, in many locations, the need for additional purpose-built student accommodation. At the same time, there are a number of local markets with absorption issues. Most new bed-spaces are now provided by the private sector, often in partnership with an institution. Mindful that student accommodation impacts recruitment and the associated reputational risks when provision is lacking, governors will find the report of interest.

The international commercial real estate company Cushman and Wakefield has issued its UK Student Accommodation report 2019-20. The report details the trends for purpose-built student accommodation (PBSA), including the number of new beds expected to be added over the next few years.

Demand for student accommodation

Against the backdrop of the overall demand for higher education and increasing marketisation, some universities are expanding their student numbers, and others experiencing a decline. This has had a corresponding impact on the demand for student accommodation in different geographical locations.

Local markets

From the perspective of an investor seeking to fund new PBSA, the authors of the report suggest “micro-market knowledge” is essential. While “long-term undersupply is set to continue in key towns and cities”, the pace of development has also led to locations where there is excess supply. This has arisen where there has been a “fundamental misreading of levels of student demand”, leading to an “absorption market.” Examples given in the report include Newcastle, Sheffield and Liverpool.


In the current year, 87% of all new beds have been delivered by the private sector. However, the late delivery of a number of accommodation schemes has had an adverse impact on the sector’s (and possibly the associated university’s) reputation. Higher quality accommodation is also now a standard feature across all new PBSA schemes.

New PBSA schemes are leading to “obsolete stock exiting the market.” Almost 7,000 bed-spaces are expected to leave the market in 2019-20, a quarter of which are in Newcastle and Liverpool.


Many private-sector providers of PBSA work in partnership with universities. Partnership with universities typically leads to the use of nomination and lease agreements. These forms of provision have been “shielded from the intensity of competition in some development markets and especially in those locations experiencing an absorption issue with new products.”

Nominated/lease rents grew by 3.3% in the year, against 2.3% for direct let rents (i.e. those based on individual annual leases to students, normally guaranteed by parents).

In 2019-20 new private sector en-suite beds costs were on average £6,883 per annum. This is more than three-quarters of maximum maintenance loan for students not living with their parents outside of London (i.e. £8,944). Excluding London, the average price of a new private-sector en-suite space in 2019/20 was £149.28 per week.

There is a lack of “affordable” new PBSA schemes of any scale. This reflects the prevailing land and building costs. The report notes that a lack of affordable provision is occurring at a time when increasing numbers of students are entering higher education from lower socio-economic groups.

Development pipeline

The report indicates that there are currently 114,000 PBSA bed-spaces planned, of which 76,000 (c.67%) have secured full planning approval.

Despite the size of the pipeline, the number of new beds entering the market in 2020-21 is likely to fall below 30,000 for the first time since 2015, with the number expected to rise in the following year to 47,000 (although only 28,000 have planning approval).

Given the anticipated continuing growth in student demand, the size of the development pipeline and old stock leaving the market, the provision of student accommodation is expected to “remain structurally undersupplied over the coming years.”

Ownership of PBSA

The three largest (the “Big Three) providers of student accommodation (Unite, iQ and Brookfield – 136,900 beds in total) own nearly 40% of the total supply. Almost 42% of their beds are offered in “agreement” with an institution.

The Financial Times has considered the position of Unite and some of the issues providers of PBSA face. An article titled Unite: a test case for corporate rent discusses the company’s recent performance and share price, and asks why is Unite doing so well?

Drawing from a report issued by Morgan Stanley the FT suggests that Unite is a test case for how corporate rent might cannibalise amateur landlords (i.e. those providers operating accommodation which is not purpose-built). The article notes that while rents offered by amateur landlords are generally cheaper, the stock tends to be older and in greater need of repair. A key question is: to what extent can providers of PBSA, operating with professional teams and greater efficiency, take market share from amateur landlords? PBSA providers may offer a better service, but the rental price for bed spaces may prove to be too high for most students.

PSBA income profile

The report includes a summary from the investor’s perspective of the different income models for PBSA, and their associated benefits and challenges. Typical models are:

  • University leases/income strip product
  • Nomination agreements
  • Direct let


The Cushman and Wakefield report highlights that while in general, a shortage in student accommodation is likely to continue in many towns and cities, there are equally a number of “difficult markets”, with excess supply.

The report draws attention to the cost of PBSA in relation to maintenance loans and the lack of affordable accommodation being developed. Given the impact of student accommodation on recruitment, the expectations now placed on institutions and their governing bodies to widen access from those groups under-represented in higher education, and the lead times for new PBSA schemes, governors and governing bodies may wish to consider:

  • Whether the institution’s current provision of student accommodation is adequate for all groups of students?
  • How is the institution plans to meet the accommodation needs of students in the future?

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