New analysis of the UK purpose-built student accommodation (PBSA) market reveals a complex picture of rising rents accompanied by growing financial incentives, set against a backdrop of acute affordability challenges, particularly in London. The latest report from our 2025 Insight Partner, StudentCrowd, highlights that while PBSA rents have grown at an average annual rate of 7.5% since 2021, the value of incentives—such as cashback, discounts, and voucher deals—has outpaced this, increasing by 15% annually. This indicates that accommodation providers are seeking to attract students amid mounting cost pressures and competitive booking patterns, with incentives now widespread across all room types and locations, including high-demand cities and traditional university hubs.

The StudentCrowd data, compiled from comprehensive live datasets covering all UK PBSA buildings and billions of data points, also reveals that since 2021, 58,000 new PBSA beds have entered the market, with a robust pipeline of 93,000 bedrooms approved for future development. Concurrently, student numbers have risen by 16% since 2019/20, with student satisfaction ratings averaging a strong 4.37 out of 5. This growth has motivated continued investment from developers, as reflected in a record volume of deals worth hundreds of millions of pounds, including major projects in cities like Manchester and London, according to Knight Frank’s 2024 sector report. These investments are driven by persistently high rental yields and a sustained imbalance between housing supply and demand, despite economic headwinds.

However, this market dynamic is most acute in London, where affordability pressures have reached crisis levels. Recent reports by Unipol and the Higher Education Policy Institute show that the average annual rent for PBSA in London now exceeds the maximum maintenance loan available to students, standing at approximately £13,595 for 2024-25—an 18% increase over two academic years. Many rooms in the capital now cost more than £20,000 per year. This sharp rise is outstripping inflation and scholarship support, putting significant financial strain on students. Observers warn that this affordability crisis risks pricing many students out of living comfortably in the city, potentially affecting university application rates and student wellbeing.

The shortage of housing supply is a critical factor in these rising rents. Data from the Unite Group, the UK’s largest PBSA provider, underscores this trend with a 4-5% rent increase planned for 2025/26, driven by strong demand, limited new housing developments—still 60% below pre-pandemic levels—and rising operational costs including energy and labour. Unite Group reports occupancy rates exceeding 97% and high levels of pre-leasing for the coming academic year. This shortage is exacerbated by the exit of smaller landlords from student housing and rising construction costs, which now exceed £100,000 per room, necessitating higher rents that are sustainable mainly in cities with already high private rental prices.

The student housing sector’s growth and profitability have attracted sustained developer interest, with notable university-private partnerships emerging, such as the £250 million deal between Newcastle University and Unite Students to add approximately 750 beds. Still, critics, including the National Union of Students, argue that the profit-driven student accommodation market is unsustainable and exacerbates affordability issues, especially in London. The combination of rising rents, increased financial incentives from providers, and an expanding stock of PBSA paints a nuanced picture: while the market is responsive to demand through incentives and new developments, affordability remains a pressing concern for many students and their families across the UK.