Residential vs PBSA – What is the best investment strategy for me in 2026?

October 24, 2025

There’s more to investment strategy than deciding whether to buy with cash or leverage your funds using mortgages. You also have to consider exactly what type of property to invest in to achieve your financial goals.

In the UK, that means looking at residential and Purpose-Built Student Accommodation (PBSA) for sale. Both types of investment have their own advantages and are suited to different investment strategies. We’ve taken a look at the benefits of residential and PBSA investment in 2026 to help you decide.

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Why buy UK residential property in 2026?

Residential property is by far the most popular type of investment property in the UK. It’s estimated by the Bank of England that buy-to-let property makes up almost 10% of the total housing stock in the UK.

Government statistics show landlords in the UK declared more than £55bn alone of income in the last full financial year, and figures from UK Finance show that another £10.5bn was borrowed by investors in Q1 2025.

So, what makes buy-to-let property investment such a good idea? Benefits include…

Reliable asset that has proven to be stable during economic turmoil
Two income streams: capital appreciation and rental income
Rents and house prices in the UK have both grown in 2025
Huge tenant demand and a lack of available housing
Construction levels are too low to close the housing supply gap
Future growth predictions are strong

That makes residential buy-to-let property a good short- and long-term investment. This type of property is a versatile addition to any portfolio, and Savills' forecasts show that this could be the ideal time to invest.

The agency’s research shows potential gains in the next four years could be very strong:

The UK average house price growth of 24.5% by the end of 2029
UK average rental growth of 17.6% by the end of 2029

In some regions, property value growth is set to be much higher. The North West is the best place to invest in buy-to-let property in 2026, and by the end of the decade, it is forecast that house prices in the region will have increased by 31.2%.

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Why invest in Purpose-Built Student Property (PBSA) in 2026?

PBSA is an alternative to residential property, and it comes with a list of benefits that make it a great fit for many investors.

It’s one of the fastest-growing UK property investment markets and has become the first choice for students across the UK – overtaking traditional university halls of residence.

PBSA investment has hit £3.9bn a year and landlords can access a range of advantages, including…

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Guaranteed tenant pool, low void periods

PBSA offers the most reliable pool of tenants an investor could ask for. You know when they will arrive, and you can be almost certain that your property will be rented out because there are far more students than available beds.

There will be an additional 358,000 students per year, according to the Higher Education Policy Institute, driving even higher demand for the available student beds.

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High rents and ROI

Too many students means more competition for places, and that means higher rents can be charged for the luxury PBSA apartments, which are in such high demand.

Data from StudentCrowd shows that student rents in PBSA have increased by an average of 7.5% annually since 2021, thanks to the supply issue. The same research shows that rents are likely to increase by 4-5% in the 2025/26 academic year.

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Lower price of entry

Investing in PBSA is a lot cheaper on average than buying residential property. That could make it the perfect choice for investors with less cash on hand, or those who want to spread their money over a larger number of properties. That affordability leads to two possible benefits:

Rental yields can be higher than when you invest in residential property
Your purchases are unlikely to qualify for Stamp Duty Land Tax

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Management took care of

Investing in PBSA means you can assume that the property will be managed by a professional team. That means you don’t have to worry about finding tenants, conducting viewings or furnishing the property.

Similarly, repairs, maintenance and building management will be taken care of without you having to arrange anything. For investors who are time poor – or who live overseas – this can make PBSA a particularly good choice.

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Less exposure to market fluctuations

While it is true that PBSA doesn’t grow in value like residential property, it is also not subject to the market in the same way. If you value rental income and stability over capital growth, PBSA offers those reliable features in good times and bad.

Additionally, when you come to sell, it is unlikely that your PBSA property will have gone down in value, so you can sell it without making a loss in many cases.

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How to invest in property in 2026?

No matter what your property preference, the first step is to talk to a professional property consultant to discuss your goals, strategy and investment capacity. Once you have determined that, our team of Investment Advisors can recommend the perfect properties to fulfil your needs – residential or PBSA.

Want to learn more about property investment in 2026? Contact us today for a free consultation.

Residential vs PBSA – What is the best investment strategy for me in 2026?

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