PBSA rental growth slowed to 1.5% in the 2026/27 academic year as affordability pressures and increased competition reshaped leasing conditions across the UK, according to Knight Frank’s annual UK Student Accommodation Outlook.
Market performance is becoming increasingly polarised, with university-owned accommodation recording rental growth of 4.3% over the year, while rents for private direct-let purpose-built student accommodation (PBSA) fell by 0.7%. This marks the second consecutive year in which university-owned stock has outperformed the private sector.
Rental incentives accounted for 4.7% of advertised annual rent at schemes with availability in September, up from 4.2% a year earlier. The increase reflects greater competition for occupiers and a more price-conscious student population.
Despite the softer operational environment, approximately £2.7bn was invested in UK PBSA in 2026, while an estimated £1.5bn of assets are currently under offer, led by interest from North American investors.
“Despite a more complex market this year, investor appetite remains prevalent, as demonstrated by the volume of assets currently being traded across the sector,” said Merelina Sykes, joint head of student property at Knight Frank.
“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% year on year, reflecting ongoing policy uncertainty and recruitment pressures across higher education institutions.
PBSA rental growth diverges by ownership
Affordability is a key factor in students’ accommodation decisions, according to Knight Frank’s latest Student Accommodation Survey, conducted by UCAS on the consultancy’s behalf. Nearly nine in ten respondents (89%) said accommodation costs were important when choosing where to live.
Meanwhile, 74% of students said they would be more likely to remain in PBSA beyond their first year if it were more affordable.
“Accommodation is now central to how students choose where to study, with availability, cost and quality all playing a part,” said Katie O’Neill, associate and global living sectors lead at Knight Frank.
“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.”
The survey found that accommodation availability had influenced where 84% of respondents chose to apply, underlining the growing importance of housing supply as universities compete to attract and retain students.
Accommodation may also affect students’ academic performance and wellbeing. Nine in ten respondents said their accommodation environment affected academic performance, while 88% said it played an important role in supporting their wellbeing.
Meanwhile, a third of students said they were likely to use AI tools to help source accommodation and track pricing, signalling a shift in how students search for housing.
