Student housing crisis deepens as rents head towards £300 a week

Builders pull back as Britain’s student housing market hits breaking point

Britain’s student housing crisis is about to become much worse. The country’s biggest student accommodation provider has warned that soaring construction costs, tougher regulations and falling investment returns are making new developments financially impossible. Developers say they now need rents of more than £300 a week to make projects viable, far above the current average outside London. As builders abandon schemes and landlords leave the market, the result could be fewer homes, higher rents and even greater pressure on a housing system that is already struggling to cope. The warning extends far beyond university towns. If developers cannot afford to build homes for students, the outlook for the wider housing market looks equally bleak.

STUDENT HOUSING CRISIS

The UK’s biggest student landlord warns construction is grinding to a halt and rents could soar past £300 a week.

Photo by Tolu Olubode on Unsplash

Britain’s largest student accommodation developer has warned that new student housing is about to fall off a cliff because construction costs have gone through the roof.

Unite Group says the numbers simply don’t stack up anymore, with builders needing rents of over £300 a week to justify new projects outside London. Right now, the average rent in those areas is just £190. The group says new supply will slow significantly over the next two to three years.

It’s not just student digs that are affected; the Build‑to‑Rent sector is struggling too.

BUILD COSTS plus NEW RULES adds up to NO NEW HOMES

Developers across the board say they’re being crushed by:

• soaring construction prices

• tougher safety regulations

• falling investment values

• new levies and standards landing at the worst time

Most new student housing schemes are now financially unviable. Even though demand is booming, with older blocks closing and private landlords quitting, developers simply can’t afford to build.

TWO PROJECTS STILL GOING AHEAD

Unite says it’s sticking with just 1,653 off‑campus beds currently under construction:

• Hawthorne House, Stratford (719 beds)

• Central Quay, Glasgow (934 beds)

Even these aren’t straightforward. Hawthorne House is finished but students can’t move in until the Building Safety Regulator signs it off. Central Quay won’t be ready until 2027.

Meanwhile, Unite is reviewing 2,400 more planned beds in London and Bristol and may sell them off or bring in outside investors.

With off‑campus building becoming too risky, Unite is switching strategy focusing on university partnerships instead. It has 4,311 beds lined up through joint ventures at:

• Castle Leazes, Newcastle

• Cambridge Hall, Manchester

These deals give universities guaranteed supply and give Unite safer, long‑term income.

FIRE SAFETY

On top of everything else, Unite says it will spend £61m more on fire safety remediation over the next two years. It expects to recover 50–75% of cladding costs from contractors but warns payouts will lag behind the money it has to spend upfront.

STUDENT HOUSING CRUNCH

• demand rising

• supply collapsing

• costs exploding

• safety rules tightening

• landlords exiting

• rents likely to jump

Unite’s warning is blunt: If costs don’t fall, new student housing won’t get built. With the Build‑to‑Rent sector facing the same pressures, the UK’s wider housing market could be in for a rough ride too scuppering the Government’s ambitions for resolving the housing crisis.