The global property consultancy analysed the current difference in cost between an all-inclusive ensuite room within purpose-built student accommodation and a room in a shared house within the wider private rented sector marketed at students and found that PBSA could be the most cost-effective solution for students looking to avoid the ongoing cost of living crisis.
Mapping popular university towns and cities across the UK, Knight Frank found that in 80% of the markets examined, the overall average cost for a student in PBSA was lower than the cost of accommodation in the wider rental market.
The new research found that, of the 15 towns and cities analysed, London offered the greatest difference in price. In the capital, students living in PBSA pay 33% less than the wider rental market once bills are included – offering a saving of approx. £108 per week, or £5,527 over a 51-week tenancy.
Other popular university cities including Liverpool, Sheffield, Glasgow and Leicester offered students savings of approx. 25%, 15%, and 14% respectively. The cost of PBSA in Bristol and Nottingham is 10% lower than the wider rental market, while Edinburgh, Exeter and Glasgow all offer savings of approx. 8%. Students living in PBSA in Newcastle currently pay around 5% less than the wider rental market, while PBSA and PRS rent in Birmingham was, on average, the same.
Knight Frank found that students in only three out of the 15 markets analysed pay more for PBSA than they do for PRS. However, PBSA in Manchester and Southampton is only marginally more expensive than PRS (4% – the equivalent of around £5-6 per week). Brighton was the only location where PBSA costs significantly exceed PRS costs (17% – approx. £29 per week, or £1,479 over a 51-week tenancy).
Neil Armstrong, joint head of Student Property at Knight Frank, said: “Further energy cost inflation over the coming months will likely widen these differences; operators of PBSA will absorb much of the uplift and not pass it on to their customers – a luxury that won’t be afforded to students renting in the private rental market. The PBSA sector gives certainty to accommodation costs as the weekly rent includes essentials such as utilities and wi-fi. Often the rent also includes the provision of additional on-site amenities such as gyms and cinemas, which students would of course pay for separately if they lived in private rented accommodation.”
Merelina Sykes, joint head of Student Property at Knight Frank, added: “With rents, especially in locations such as London, on the rise, and reports that energy prices could reach £4,266 p/a per household by January, students renting in the PRS market are likely going to feel the pinch of the ongoing cost-of-living crisis. With PBSA in most markets already offering significant savings, the benefits will only become crystalised as inflation, rents, and bills rise. That said, PBSA is severely undersupplied across the UK, with delivery in most markets significantly outstripping local student population figures. Therefore we are likely to see stiff competition and long waiting lists for PBSA beds as demand strengthens in light of the current economic climate.”
Knight Frank’s latest UK Student Accommodation Survey, undertaken in partnership with UCAS, suggests that operators of PBSA have dealt better with the challenges that the pandemic has created than landlords in the wider private rental market. According to Knight Frank, some 69% of students living in UK PBSA, either privately operated or university operated, were pleased with their provider’s approach and handling of the pandemic. By comparison, just 25% of students living within house-shares rented from landlords in the wider private rented sector said the same.
Matt Bowen, Head of Residential Investment Research at Knight Frank, concluded: “There has been a perception in the past that PBSA is more expensive than renting on the private market, but student sentiment regarding the relative value for money offered by PBSA compared to the private rented sector has strengthened over recent years. This has been built on the goodwill developed by operators throughout the pandemic and cost-push inflation on bills in the wider private rented sector. Ongoing inflation is likely to entrench this position and push demand for PBSA from a wider range of students”
