Defining Purpose Built Student Accommodation (PBSA)

4 Minute Read

A significant and now established asset class still making waves across the UK with little signs of waning.

• Over £3bn of PBSA traded during 2017

• 600,000 Students live in it

• 1 Million students live away from home

• Most PBSA is provided by Universities but the Private Sector Dominate ownership in London

• Premiums are paid for large portfolios

Purpose Built Student Accommodation (PBSA) is basically the new student halls of today. Designed to meet the demands of today’s students, ranging from studios to cluster apartments (large apartments with a number of rooms) with as many six or so rooms sharing living quarters. The design and dynamics of PBSA means it's been traditionally cheaper to build new Student Accommodation than it is to build living spaces in alternative types of buildings for other markets like in the Private Rented Sector (PRS), this is changing however.

Market leading annual rental growth and returns make it an in-demand investment for local & international investors

Shared areas of large student accommodation buildings usually include TV, laundry facilities, commons rooms, study rooms and increasingly cinemas & gyms amongst other quirky facilities. Parking is a rarity and for schemes that do provide parking spaces, they're chargeable, thus another income stream.

Student Accommodation blocks tend to be positioned in central locations and within walking distance of university institutions. An all utility bills inclusive rent is the norm and has proven a very popular and important aspect for students. Developments of 150 or more Bed Spaces tend to come fully managed with an on-site team, meaning the responsibility for the running of the building, finding tenants, conducting viewings, handling tenant queries and maintenance is usually done in-house with further aspects managed by a central office.

Smaller developments usually don't require on-site staff but do require a very hands on approach and a dedicated team to manage the asset and tenants effectively.

Local councils across the UK tend to favour PBSA over the House in Multiple Occupancy (HMO) property market as it confines a large number of students to specific areas and reduces the pressure on local housing stock which could be otherwise be let to families and non-student groups.

Many councils have also put in planning policy measures to restrict the number of student houses by way of an Article 4 Direction within specific areas meaning planning permission is required to convert a family dwelling for multiple occupancy use. This naturally helps to propel new PBSA Development projects in areas that have a high concentration of student housing and an undersupply of Purpose Built Accommodation.

Any questions about PBSA or Build to Rent Apartment Block schemes? Comment below and I'll answer as best I can or even write an article on it.