What is PBSA (Purpose-Built Student Accommodation)?
The number of students in the UK is growing year-on-year whilst the residential housing market is becoming increasingly strained. As a result, more students are living in PBSA (purpose built student accommodation). This type of accommodation caters better for student needs, frees up housing for everyone else and also offers fantastic opportunities for investors.
Purpose-Built Student Accommodation
Rob: Hello everyone and welcome to our latest video series which is focusing on PBSA or purpose-built student accommodation. I'm here with Paul Winder from Residential Estates and we're going to cover a series of topics to look into what purpose built student accommodation is, why investors should consider it and why students should consider it, as well.
So, Paul, first question: What is PBSA? What is purpose-built student accommodation?
Paul: It is what it says it is. Over the last few years, there's been a large demand, for the increase in students in the country, whether UK nationals or from overseas. It is one market that is growing by about 3% or 4% per year.
Combine that with the fact that there is not enough residential housing and so councils are wanting the houses back. You had the old, stereotypical, houses of multiple occupancies, shared housing. There was a need to fill a void, where students could go.
So, purpose-built student accommodation is designed to let students have their own freedom. So, self-contained studios, generally. It's like living in their own apartment with full facilities like a gym, a common room... They have the freedom of living in their own place with full management. And that then frees up the space for local councils, to have the houses back for residential because there is an undersupply in the housing market.
But it also creates a chance for investors to then invest in this sort of market where it's a lot simpler than it was if you were investing in houses of multiple occupancy.
Rob: We will go into it in other videos, coming up, but I guess it's a step up, from a student's perspective, in terms of the services that they have.
I remember one place we lived in, in Manchester, there were lots of different areas that would be, in theory, not designated, but they tended to be student locations. Older-style, terraced houses, that were converted into houses of multiple occupation. People lived there with a couple of friends for a few years. The old stereotype of what was, maybe, a run-down house. Students would take any old rubbish. I guess it's just matured as a market.
And that's where these newer-build developments have come from.
Paul: Absolutely. And we fully appreciate that back in the day it was a very viable investment, an HMO because a student had no choice unless they were looking at living in halls for one year. Or if they were lucky enough to have a wealthy parent that bought them an apartment.
The fact is, your only option, was to find a shared house and then, from a landlord's point of view - and I'm not saying that all landlords are like this - the service you got could be questionable because it was a massive market. If you don't want it then someone else will.
All markets mature and the fact is, this will be the future.
Where we are now, Keele House, there are 160 students on a plot of land that would probably take up three houses but they are in the centre of town, the perfect location for them, close the university. As we've seen today, there are people coming in, we've got parents with the students and the parents have been through that trauma of living in these houses. And when they see these, they feel more comfortable.
So, I think, it is something that we have to get used to. And I think, one of the ideas of this is to debunk the myths of what student accommodation is.
It is an investment in property, at the end of the day but it's an investment in property that we feel is growing in certain areas and there are certain areas where, maybe, we don't.
It is certainly something to look at when looking at something that has got a long-term supply and a long-term demand that will carry on growing because it's got a base.
In a way, it's Brexit-proof as students are going to carry on coming to this country to study and they are going to need accommodation.
Rob: Obviously, with PBSA (purpose-built student accommodation), from an investor viewpoint, they are effectively buying an apartment, within a larger development, which is designed and designated for students.
Paul: It's like being in a residential block, you are buying an apartment within a specified development.
Rob: But with a student, tenant profile.
Paul: For students, specifically for that purpose.
- 2018: Trends in the purpose-built student accommodation sector - Taylor Wessing (.pdf)
- EY - UK purpose-built student accommodation (.pdf)
- Allsop - Time to put the purpose-built student accommodation myth to bed
- Net House Prices - The purpose-built accommodation revolution
- Knight Frank - UK student housing update (.pdf)