:
UK: A new report by Knight Frank has found that rental growth in purpose-built student accommodation (PBSA) slowed to 1.5 per cent in the 2026/27 academic year, as affordability pressures and increased competition reshaped leasing conditions across the UK PBSA market.
According to the firm’s annual UK Student Accommodation Outlook, market performance is becoming increasingly polarised. University-owned accommodation recorded rental growth of 4.3 per cent over the year, while private direct-let PBSA rents fell by 0.7 per cent, marking the second consecutive year in which university-owned stock has outperformed the private sector.
At the same time, rental incentives accounted for 4.7 per cent of advertised annual rent in schemes with availability in September, up from 4.2 per cent a year earlier and reflecting greater competition for occupiers and a more price-conscious student population.
Despite a softer operational environment, Knight Frank found that approximately £2.7 billion has been invested into UK PBSA in 2026, while an estimated £1.5 billion of assets are currently under offer, led by interest from North American investors.
Merelina Sykes, joint head of student property at Knight Frank, said: “Despite a more complex market this year, investor appetite remains prevalent, as demonstrated by the volume of assets currently being traded across the sector. That said, performance is becoming increasingly nuanced. Rental growth is no longer being delivered uniformly across the market, with affordability pressures, changing student priorities and growing competition placing greater emphasis on factors such as asset quality, location and operational strategy.”
The findings come as the number of study visa applications processed in the year to September fell to 303,200, down 20 per cent year-on-year, reflecting ongoing policy uncertainty and recruitment pressures across higher education institutions.
The report highlights affordability as a key factor in students’ accommodation decisions. Findings from the firm’s latest Student Accommodation Survey, conducted by UCAS on behalf of Knight Frank, show that nearly nine in ten respondents (89 per cent) consider accommodation costs important when choosing where to live. Meanwhile, 74 per cent of students said they would be more likely to remain in PBSA beyond their first year if it were more affordable.
Katie O’Neill, associate and global living sectors Lead at Knight Frank, said: “Accommodation is now central to how students choose where to study, with availability, cost and quality all playing a part. Universities face difficult choices of their own, as restructuring and mergers become a mainstream response to fiscal pressure. For investors, institutional resilience is now as important as student demand. Assets tied to a single financially challenged university, or to a campus that could be rationalised, face growing occupancy and nomination risk.”
Accommodation also plays an increasingly influential role in university choice. The survey found that 84 per cent said accommodation availability had influenced where they chose to apply, underlining the growing importance of housing supply as universities compete to attract and retain students.
A third of students said they are likely to use AI tools to help source accommodation and track pricing, signalling a growing shift in how students search for housing.
Highlights:
- A new report by Knight Frank has found that rental growth in purpose-built student accommodation (PBSA) slowed to 1.5 per cent in the 2026/27 academic year
- University-owned accommodation recorded rental growth of 4.3 per cent over the year, while private direct-let PBSA rents fell by 0.7 per cent, marking the second consecutive year in which university-owned stock has outperformed the private sector
- Rental incentives accounted for 4.7 per cent of advertised annual rent in schemes with availability in September
- The findings come as the number of study visa applications processed in the year to September fell to 303,200, down 20 per cent year-on-year
