Forget the buy-to-let slump, the student housing market is booming! New research from CBRE shows that student accommodation across the UK is becoming increasingly expensive, with Bristol topping the list outside of London. This creates an opportunity for landlords and investors looking to capitalise on a growing market.

Bristol: The Most Expensive City Outside London

Student accommodation costs are spiraling, with Bristol now being the priciest city for Purpose-Built Student Accommodation (PBSA) outside of London. Students in Bristol are expected to pay an average of £335-£382 per week for a bed space, just a few pounds cheaper than London! That’s a whopping £15,000 per year, which is well over the maximum maintenance loan of £10,000.

The Student Accommodation Crisis

This price surge isn’t just a Bristol phenomenon. The UK is facing a major student housing crisis, with the demand for beds far outstripping supply. Here’s why:

• Shortage of Beds: CBRE predicts a shortfall of 620,000 student beds by 2028, with only 36,000 new beds being built annually.
• Maintenance Loans Not Keeping Up: Maintenance loans have increased by only 18% since 2018, while rents have risen by 27% to 37% in the same period.
• Buy-to-let Slump: A decline in buy-to-let homes has reduced the availability of private rented accommodation for students.

Bristol: A Case Study

Bristol has seen a significant increase in student population, but the number of PBSA beds hasn’t kept pace. The city has seen only 2,900 new beds delivered since 2018, while the need for PBSA has increased by 8,000. This gap is only getting wider, creating a perfect storm for investors.

Investment Opportunity

Despite the challenges, the student housing market is attracting a lot of attention from investors. Here’s why:

• High Returns: PBSA yields are typically higher than Build to Rent yields, with an average total investment return of 10.78% over the last 12 years.
• Strong Demand: The demand for quality student accommodation is consistently high, making it a reliable investment.
• Universities Seeking Partnerships: Universities are increasingly turning to the private sector to develop new PBSA, as they face budget constraints.

The Bottom Line

The student housing market is facing a significant challenge, but this presents an unprecedented opportunity for savvy landlords and investors. By investing in PBSA, you can help address the growing shortage of beds while securing a strong return on your investment. With the right strategy and partnerships, the future of student housing looks bright, and so does the future for landlords in this booming sector.