How student accommodation can diversify your portfolio and increase rental returns

June 26, 2025

The UK’s Purpose-Built Student Accommodation (PBSA) sector is a key market for investors worldwide. There is a huge shortage of available student beds in almost every single university town and city across the country.

That makes PBSA a high-quality, in-demand asset that is perfect for diversifying your portfolio and increasing your rental returns.

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Why is there such a demand for student accommodation in the UK?

A key part of what makes PBSA so attractive for investors is the huge demand. There aren’t enough beds to go around. That pushes up rents and increases returns for landlords.

Research from CBRE shows that 30% of students now stay in PBSA, and demand for quality private accommodation has grown by more than 20% in the last decade. However, that demand is far higher than the available supply. The agency estimates that the UK needs an additional 600,000 bedspaces to meet demand.

The research goes on to show that just 14,000 new beds are expected to be completed this year. It’s nowhere near enough, and it has consequences that make student accommodation for sale a great investment.

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Are rents growing in the PBSA sector?

The overwhelming demand for quality private student accommodation means that rents are going up fast.

The National Student Accommodation Survey 2025 shows that the average rent for PBSA is now £563 per month. In the busiest markets, that number is much higher. It’s also an increase over 2024, when the average of £550 per month.

Based on CBRE’s current projections, only 59,000 new beds are likely to be delivered by 2029. That could lead to a shortfall of 620,000 student beds by 2030 and even higher rental income for investors.

The average rental yield is also high. Data from Paragon Bank shows the average yield is now over 7% in the UK for student property investors.

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Are student numbers increasing in the UK?

Just like any property investment, a key indicator of long-term success is population growth. With PBSA, that means you need to look for growing student numbers.

By 2035, the UK’s admission regulatory body, UCAS, estimates that there will be an additional 358,000 students each year compared to the number in 2024. Of those, more than 25% are international students, often the most desirable student type for investors.

Global events make it more likely that the number of international students in the UK will keep increasing. Our universities are among the best in the world, and the quality of education on offer is first-class. As the USA becomes a less appealing destination for many students, it’s to be expected that they will see the UK as a premium alternative.

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Diversifying your portfolio with student accommodation (PBSA)

PBSA provides all the conditions for high rental income that an investor needs to see. But what are the other advantages of diversifying your portfolio with student investment property for sale?

The advantages include:

Guaranteed pool of tenants – You know how many students there are and when they will need the accommodation. Far lower risk of unexpected void periods.
Lower entry price – PBSA is cheaper than residential accommodation in almost all cases, making it easy to diversify and get more for your money.
Fewer price fluctuations – PBSA is not subject to market forces like residential property, meaning that it is unlikely to lose value.
Full management – All PBSA comes with on-site management, so it is a completely hands-off investment on your behalf.
Stamp Duty exemption – Unlike residential property, you will pay no Stamp Duty when investing in PBSA. That makes it a more affordable purchase.

PBSA represents an easy and affordable way to diversify your property portfolio. You can invest in student property with confidence, knowing that the market is growing and there is an overwhelming need for this type of property.

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Where to invest in student property to diversify your portfolio?

The best places to invest in student property are locations where there are more students than beds, and the universities are still growing.

For example, 20,000 students attend the University of Huddersfield each year. They make up one in seven of the town’s population, and the University’s halls of residence can only accommodate 1,300 of them. That means 18,000 students that need to be accommodated elsewhere each year, and PBSA developments like Vision are therefore extremely popular.

Likewise, Axiom in Stoke-on-Trent occupies a great city centre location within walking distance of Staffordshire University. The building is close to two universities and provides a high level of amenities, making it an extremely desirable home for student tenants across the region. Prices from £79,999 also make it affordable for the investor, and there’s even a 10% NET guarantee for three years.

According to Paragon Bank, student property in Stoke offers the highest rental yields in the UK at 9.43% per year.

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Start investing in PBSA today

If you want to buy student property, our team of expert property consultants are available now to help you diversify your portfolio and maximise your profits. Contact us today to take the first steps into the world of PBSA investment.