Under the title “Landlord exodus hits the student market” the Telegraph is reporting on the problems being experienced in the student market.

It can be seen here (subscription may be necessary) and says that for years, the student rental market was a reliable source of income for landlords. Houses of multiple occupancy (HMOs) offered above-average returns, while rising numbers of school leavers entering higher education pushed up rents in university towns.

The growth of international student demand, particularly from Asia and the Middle East, also created a lucrative market for high-end, purpose-built student accommodation (PBSA).

Pandemic Disruption

The COVID-19 pandemic disrupted the sector. Remote learning led many students to move home, reducing demand for rental properties. Official figures show that the number of foreign students fell last academic year for the first time in over a decade.

At the same time, landlords across all sectors have faced rising costs — from maintenance to compliance with new regulations. Smaller landlords have seen profit margins shrink, prompting some to exit the market.

Policy and Tax Pressures

Experts warn that the upcoming renters’ rights bill and potential tax rises on rental income could further threaten student landlords’ business models, possibly becoming the “final straw” for those considering leaving the market.

PBSA Investment Trends

Investment in managed student halls has expanded dramatically over the past 20 years. Privately owned PBSA beds have grown from 61,000 in 2004 to 412,000 in 2024, according to JLL, while university-owned beds have increased by only 12% to 353,000. CBRE estimates these managed properties are collectively worth £70bn, housing about one-third of the UK’s two million undergraduate students.

Volatility in International Student Demand

PBSA demand is heavily reliant on international students, which has become more volatile in recent years. Government measures — shortening graduate visas from two years to 18 months, tightening sponsorship rules, and proposing a 6% levy on international fees — have raised investor uncertainty.

Only 1,609 new student beds have been added so far in 2025, while 17,802 are required for the 2025–26 academic year. London, Nottingham, and Leeds are expected to see the largest supply increases, yet CBRE estimates a shortfall of 620,000 beds by 2029.

Rising Development Costs

PBSA construction costs have surged, from £65,000 per bed in 2018 to £110,000 in 2024, meaning only high-end accommodation (weekly rents over £200) is economically viable.

HMO and Flat Share Market Impact

As student rental returns decline, landlords are increasingly switching to renting to professionals or selling their student properties. A Handelsbanken survey found that one-third of landlords with student flat shares plan to sell within a year.

James Sproule, Chief UK Economist at Handelsbanken, explains: “The student accommodation market faces a paradox: demand from students remains strong, yet investor appetite is waning.

Higher interest rates, regulatory complexity, and rising construction costs have made new developments harder to justify, especially for smaller landlords.”

Supply Crunch and Rising Rents

The combined effects of regulation, higher costs, and post-pandemic construction delays have created a supply squeeze, particularly in university cities such as Durham, Oxford, and Glasgow. Students are queuing overnight to secure private sector housing.

Only 11,000 student beds were added in 2024 — barely a third of pre-pandemic levels. As a result, rents have risen sharply: halls of residence saw an 8.1% increase, while HMO rents rose 5.3%, according to StuRents.