BtR Boom Challenges Traditional Student Housing in UK

December 3, 2024

With student occupancy in Build to Rent (BtR) properties reaching 40% in certain regions, the UK’s student housing market is witnessing an unprecedented transformation. This marks the first time that BtR developments have significantly impacted the supply of student accommodations, driven largely by increasing rental costs. For the 2024/25 academic cycle, the average rent in England has surged to approximately £150 per person per week, a burden that has considerably reduced students’ disposable income. This shift is challenging the dominance of Purpose-Built Student Accommodation (PBSA) and Houses of Multiple Occupation (HMOs), historically the primary options for student housing.

The allure of BtR developments lies in their central locations near universities, comparable amenities, and flexible contracts similar to PBSA offerings. However, BtR properties generally prove more affordable and offer larger living spaces, providing a better value-for-money alternative for students. Consequently, BtR is becoming an increasingly attractive option for those seeking cost-effective and comfortable housing solutions during their studies.

Impact on PBSA and HMO Markets

The BtR boom is particularly noticeable in cities like Leeds, where student occupancy trends illustrate the shift away from traditional student housing. A study conducted by StuRents has shed light on the drastically altered landscape. From 2017 to 2024, the influx of 12,000 additional students in Leeds was paired with an increase in PBSA beds by only 7,000. When taking into account the addition of BtR units, the supply increase rose to 15,000 beds. This marked a significant surplus relative to demand growth, showcasing BtR’s competitive edge.

This intensified competition is profoundly affecting the high-end PBSA market, which traditionally caters to more affluent students. PBSA operators, especially in heavily student-populated cities like Leeds, are facing immense pressures as BtR developments continue to capture a substantial portion of this demographic. The necessity for more sophisticated demand assessment and innovative housing strategies is becoming evident to remain competitive and appealing in a rapidly evolving market.

Adapting to the New Housing Landscape

Richard Ward, Head of Research at StuRents, has emphasized the inadequacy of traditional methods for evaluating PBSA demand in light of these new trends. The situation in Leeds serves as a compelling example of broader challenges where BtR’s popularity is reshaping the student housing landscape. This phenomenon is particularly acute in cities with large student populations, where PBSA investors need to adopt diversified pricing and inventive strategies to meet the evolving preferences and financial constraints of students.

Institutions and investors involved in the PBSA market are bracing for transformative changes as they navigate this new competitive terrain. The necessity to rethink their strategic approach is underscored by the rising appeal of BtR properties, which are compelling the student housing sector to innovate and adapt rapidly. In a market driven by cost-consciousness and the demand for quality living spaces, PBSA providers are compelled to reassess their existing models and develop new, more responsive solutions.

Future Prospects and Strategic Responses

The UK’s student housing market is experiencing significant changes with BtR properties now accommodating up to 40% of students in some areas. This marks the first time BtR developments have had a major impact on the student accommodation supply, largely due to rising rental costs. For the 2024/25 academic year, the average rent in England has climbed to around £150 per person per week, which has substantially diminished students’ disposable income. This trend is challenging the dominance of traditional housing options like Purpose-Built Student Accommodation (PBSA) and Houses of Multiple Occupation (HMOs).

BtR properties stand out for their prime locations near universities, similar amenities, and flexible contracts. They tend to be more affordable and offer larger living spaces than PBSA options, providing better value for money for students. As a result, BtR developments are becoming an increasingly popular choice for students seeking cost-effective and comfortable housing during their studies, reshaping the landscape of student accommodations in the UK.

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