Why Student Accommodation Remains One of the UK’s Strongest Assets

Introduction – A Market That Stays Full

While parts of the UK property market look fragile in 2025, student accommodation continues to stand out as a resilient asset class. With strong demand for university places, international enrolments at record levels, and a chronic shortage of supply, the sector offers stability for investors even as wider markets wobble.

1. Consistent Demand, Year After Year

• The UK is home to more than 2 million students across universities and colleges.

• Demand for places has remained robust, with applications often outpacing available spaces.

• UCAS applications hit a record 767,000 in 2022, up from ~697,000 in 2010, dipping only slightly in 2023 (~750,000).

• International enrolments have grown strongly: from ~430,000 in 2011 to over 605,000 in 2021/22, making up ~22% of all students.

• Unlike other rental markets, student demand is counter-cyclical — in recessions, applications tend to rise as people upskill instead of facing unemployment.

2. Supply Struggles to Keep Up

• Purpose-Built Student Accommodation (PBSA) has grown, but still lags far behind demand.

• Many universities can only house 20–30% of their students, leaving the majority reliant on private rentals.

• Licensing rules for HMOs, planning restrictions, and council caps on student lets slow down new supply.

• The result: PBSA providers report occupancy rates of 90–95% nationwide, even through challenging economic periods.

3. Rental Premiums and Yield Performance

• Student lets often deliver higher yields than traditional buy-to-let, especially when let on a room-by-room basis.

• Cities like Nottingham (~7.88%), Leeds (~7.87%), and Exeter (~7.72%) are among the strongest performers for student rental yields.

• Nationwide, student rental growth reached a record 8.02% in 2023/24, with Glasgow leading at 19%.

• Market reports from Savills and Knight Frank highlight that student housing outperforms wider residential rentals in terms of stability.

• For investors, this translates into predictable cash flow, even as other property sectors become more volatile.

4. Regional Powerhouses

Certain cities stand out because of the sheer density of students within the local population, creating built-in demand for housing.

• Manchester (≈18%) and Nottingham (≈18%): nearly one in five residents is a student, driving year-round demand.

• Edinburgh (≈11%): international reputation makes it a global student hub, ensuring resilience.

• Birmingham (≈7%): despite a smaller percentage, the city’s huge absolute student population keeps accommodation in constant demand.

This density matters because student housing is recession-resistant:

• Demand is supported by loans, grants, and parental contributions, less tied to wage cycles.

• International enrolments remain robust, even during domestic slowdowns.

• Applications to higher education often increase in recessions, as people choose study over unemployment.

5. Graduate Retention Boosts Local Property Demand

• Birmingham retains around 49% of its graduates, keeping talent and housing demand local.

• Manchester retains roughly 50%, adding to population growth and rental demand.

• Leeds shows a net graduate gain, meaning more graduates stay than leave, supporting long-term demand.

This retention effect means student accommodation isn’t just about university years — it drives long-term rental and housing demand, supporting population growth and price stability.

6. The Realities for Landlords

While student accommodation offers strong yields and resilient demand, there are practical considerations investors should weigh:

• Lower fit-out standards: Student rentals often use more basic finishes (sturdy flooring, simple furniture, minimal luxury), reducing initial costs compared to professional lets.

• Higher turnover: With a new cohort each year, landlords face more frequent check-ins, marketing cycles, and void management.

• Maintenance needs: Students typically take less care of properties than long-term tenants, meaning higher wear and tear. Landlords often budget for annual redecorating, appliance replacement, and regular compliance checks.

• Management intensity: Coordinating multiple tenants per property (especially in HMOs) requires tighter management or professional letting support.

Despite these challenges, the high occupancy rates and premium yields usually offset the extra maintenance, making the sector attractive for investors willing to manage the operational demands.

Conclusion – A Resilient Asset Class in Any Market

Student accommodation stands out in 2025 because it combines:

• Higher-than-average yields (7–9%+ in major cities),

• Built-in demand, including from graduates who stay,

• Persistent supply limitations,

• Ongoing investment interest, even in uncertain economic times.

But investors should also plan for greater turnover and maintenance needs compared to long-term rentals.

For investors, the takeaway is clear: this isn’t just another rental segment — it’s a resilient asset class that blends stability, demand, and growth potential.

At Fractional Keys, we uncover these kinds of opportunities — bridging financial education and property investment to empower smarter decisions.