Nathalie Sriwiboonrattan stared at her phone in disbelief, thousands of miles from Scotland, when she learned the owner of her Dundee studio flat had collapsed. The fourth-year game design student at Abertay University faced an immediate housing emergency mid-academic year, paying £850 to relocate her belongings while her studies continued abroad. Her ordeal reflects a broader crisis gripping purpose-built student accommodation (PBSA) across the UK, where tower blocks once marketed as luxury student living now sit half-empty or have folded entirely.
Once hailed as the future of student housing—smart city-centre blocks with gyms, cinemas and rooftop terraces—the premium accommodation sector is confronting a perfect storm of financial headwinds. Falling international student numbers, surging construction and maintenance costs, and a widening gap between rental prices and student finance support have left even well-capitalised developers struggling to stay afloat.
From Luxury to Liquidation: The Fall of Premium PBSA
The collapse of Marketgait Apartments in Dundee left nearly 70 students scrambling for alternative accommodation at the start of July. The 116-room city-centre block, which boasted a concierge and shared games lounge with pool table, was marketed as a premium offering for affluent students. Now, many of these developments sit vacant or are being repurposed for short-term lets or professional housing.
Outside London, oversupply has become a growing problem in cities like Coventry, Leeds and Nottingham. According to Unipol, a student housing charity, demand in Nottingham fell from a peak of 46,295 beds in 2022-23 to 42,290 in 2025-26, while 7,700 additional PBSA beds were added to the market during the same period. In Edinburgh, housing activist Deniz Yalçın warns that the proliferation of luxury student blocks is exacerbating the city’s housing affordability crisis, with many units lying empty for much of the year.
“In Edinburgh, we’re seeing an explosion of PBSA despite the fact that this type of development is not needed and actually fuels the housing affordability crisis here,” Yalçın told The Update Desk. “Many of them lie empty during most of the year, using the Fringe to bolster profits.”
Rising Rents Meet Stagnant Student Finance
The financial pressures on students have intensified as maintenance loans fail to keep pace with soaring rents. National average weekly rent for PBSA, excluding London, stands at £191 including bills, while premium en-suite rooms in Manchester range from £170 to £320 per week. In London, the picture is stark: en-suite rooms command between £250 and £650 weekly, with studio apartments in Bloomsbury costing between £550 and £800 plus.
Richard Ward, head of research at StuRents, highlights the widening gap: “Maintenance loans have declined in real terms because of below-inflation increases and frozen parental income thresholds. And what have we seen? More students commuting.”
For British students, the reality is increasingly unaffordable. Ward notes that viable PBSA schemes require rents of around £300 per week outside London—well above the average student’s weekly budget of roughly £160. Meanwhile, international students like Soham Chougale, an aviation management student at University College Birmingham, face additional constraints due to visa restrictions limiting work hours to 20 per week during term time.
“I wasn’t able to get into PBSA because it is very expensive in Birmingham,” Chougale explained. He now shares a two-bedroom private rental with a friend, having previously lived in university-owned accommodation where he paid £660 monthly in his first year—increasing to £700 in his second year, excluding bills. While he valued the sense of community in halls, basic issues like poor wifi, broken facilities and even a mouse infestation made his experience far from ideal.
Institutional Retreat and Regulatory Scrutiny
The financial strain is prompting major players to reassess their portfolios. Unite Group, the UK’s largest PBSA developer and manager, aims to reduce its holdings from 72,000 beds in 29 cities down to 55,000-60,000 beds in 20 cities. This strategic retreat focuses on university cities with stronger demand, particularly those hosting Russell Group institutions.
“We expect higher education providers to consider the supply, and affordability of student accommodation in relation to their anticipated student intakes and across all years of study at least five years ahead,” a government spokesperson stated. “Recognising the inherent uncertainties in student demand and housing delivery timelines, providers should engage with the local planning authority on need.”
Rents in struggling markets have been cut to attract tenants. Rooms in Coventry now start from £99 per week, while Unite has shortened tenancy lengths in cities like Nottingham, Leicester and Sheffield. Yet smaller operators continue to grapple with occupancy challenges, with Unipol estimating average sector-wide occupancy at 85%.
The Sanctuary housing association has struggled to sell over 5,600 beds across 21 properties in eight locations, with potential buyers reportedly revisiting pricing assumptions amid changing economic conditions. Investment in the sector has also slowed, with £164m poured into PBSA between April and June—the lowest quarterly total on record, though total first-half investment of £2.3bn remained ahead of 2025.
Student Unions Rally Against Affordability Crisis
The mounting pressures on students have sparked widespread concern among student unions. Lewis Wilson, vice-president for higher education at the National Union of Students, argues the entire system is broken around student finance and loans. “Some students are going homeless, some students are relying on food banks,” he warned.
A quarter of UK student unions now operate food banks or pantries in response to escalating living costs. Wilson, a former Sussex law graduate, contends that PBSA developments must become better regulated and more affordable to serve students on lower incomes. “For students on lower incomes like I was, I would never have been able to afford a PBSA,” he said.
