Purpose-built student accommodation (PBSA) rental growth slowed to 1.5% in the 2026/27 academic year, according to a new report from Knight Frank.
The firm’s annual UK Student Accommodation Outlook found market performance is becoming increasingly polarised with university-owned accommodation recording rental growth of 4.3% over the year, while private direct-let PBSA rents fell by 0.7%.
At the same time, rental incentives accounted for 4.7% of advertised annual rent in schemes with availability in September, up from 4.2% a year earlier.
Despite the softer operational environment, Knight Frank found that approximately £2.7bn has been invested into UK PBSA assets in 2026, while an estimated £1.5bn of assets are currently under offer, led by interest from North American investors.
Merelina Sykes, joint head of student property at Knight Frank, said: “Despite a more complex market this year, investor appetite remains prevalent, as demonstrated by the volume of assets currently being traded across the sector. 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.”
Katie O’Neill, associate and global living sectors lead at Knight Frank, added: “Accommodation is now central to how students choose where to study, with availability, cost and quality all playing a part. 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.”
