A growing number of purpose-built student accommodations (PBSA) across the UK are facing financial distress, leaving many students without secure housing as the new academic year begins. The collapse of Market Gate Apartments, a 116-room facility in Dundee, is one recent example that forced nearly 70 students to urgently seek alternative accommodation.

Nathalie Sriwiboonrattan, a fourth-year game design student at Abertay University, was at home in Thailand when she learned of the sudden closure of her Scottish studio flat's owner. "I was like, my hands are tied. I’m not in the country. I don’t know what to do," she said. Sriwiboonrattan had to arrange moving her belongings on short notice, incurring additional expenses.

The difficulties facing students echo broader challenges in the student housing sector. Falling numbers of international students, rising borrowing and construction costs, and a prolonged cost of living squeeze are straining the market. While PBSAs marketed towards more affluent renters often feature gym facilities, cinemas, and rooftop terraces, declining occupancy has led to some developments sitting partially empty or entering administration.

International students have been particularly affected as rent increases have outpaced the growth of maintenance loans provided by the government. Rents at PBSAs, excluding London, averaged £191 per week including bills, with London rates significantly higher, placing such accommodation beyond the budget of many. For example, Soham Chougale, a 23-year-old international student at University College Birmingham, explained that his capped 20-hour weekly work limit during term time made PBSA rents unaffordable. Chougale now shares a privately rented flat after previously living in university-owned dormitories, where rents increased by 10% in his second year.

In cities such as Coventry, Leeds, and Nottingham, experts cite an oversupply of high-end student flats, while demand has remained stronger in London, which attracts wealthier students. Data from the student housing charity Unipol shows that in Nottingham, the number of available student beds has decreased from a pandemic peak but continues to outstrip demand. The entry of 7,700 new PBSA beds in Nottingham over recent years illustrates the scale of excess capacity.

The shift in student demographics also plays a role. Whereas previous growth had been driven by Chinese students, whose numbers have stagnated, those arriving from countries such as India, Pakistan, and Nigeria are seen as more cost-conscious, influencing rental market dynamics.

Critics argue that the proliferation of PBSAs exacerbates local housing affordability issues. Deniz Yalcin, chair of Edinburgh’s Newington-Meadows branch of the Living Rent union, remarked that many new developments remain empty for much of the year and that some have been repurposed as temporary council housing.

The gap between maintenance loan levels and actual rents is seen as a key factor behind a rise in student commuting and housing insecurity. Richard Ward, head of research at StuRents, indicated that while rents for new PBSA developments outside London can exceed £300 per week, average British students typically pay less than £160 weekly, forcing many to seek alternatives.

Despite ongoing investment from major financial players like Blackstone and KKR, smaller PBSA operators are struggling to maintain occupancy levels, averaging around 85%, and some have resorted to selling assets amid weaker market conditions. The total investment in student housing fell to some of its lowest quarterly levels in recent months, though year-to-date figures remain higher than those for 2025.

In response to declining demand, some PBSA owners are diversifying, considering leases to young professionals or short-term hotel stays, as seen in a partially vacant building in Leeds.

The crisis has prompted calls for reform. Lewis Wilson, National Union of Students vice-president for higher education, emphasized the need for more affordable and better-regulated student accommodation. He highlighted the systemic issues in student finance, with some students facing homelessness or food insecurity. “For the students on lower incomes like I was, I would never have been able to afford a PBSA,” Wilson stated.

As universities grapple with funding cuts and staff strikes in several cities threaten disruption, student housing challenges add another layer of complexity to the evolving higher education landscape in the UK.