The UK’s students should snub the private rented sector (PRS) and instead look to rent in purpose-built student accommodation (PBSA), according to analysis from Knight Frank.
Students in the UK are currently paying as much as £16,500 per year in living costs, while that amount is set to rise in the coming months thanks to a sharp rise in rents, bills and utilities.
However Knight Frank research suggests there’s better value to be found in accommodation specifically built for university students.
Neil Armstrong, joint head of student property at Knight Frank, said: “Further energy cost inflation over the coming months will likely widen these differences; operators of PBSA will absorb much of the uplift and not pass it on to their customers – a luxury that won’t be afforded to students renting in the private rental market.
“The PBSA sector gives certainty to accommodation cost as the weekly rent includes essentials such as utilities and wi-fi.
“Often the rent also includes the provision of additional on-site amenities such as gyms and cinemas, which students would of course pay for separately if they lived in private rented accommodation.”
Of the 15 towns and cities analysed, London offered the greatest difference in price. In the capital, students living in PBSA pay 33% less than the wider rental market once bills are included – offering a saving of approximately £108 per week, or £5,527 over a 51-week tenancy.
Other popular university cities including Liverpool, Sheffield, Glasgow and Leicester offered students savings of around 25%, 15%, and 14% respectively.
The cost of PBSA in Bristol and Nottingham is 10% lower than the wider rental market, while Edinburgh, Exeter and Glasgow all offer savings of approx. 8%.
Students living in PBSA in Newcastle currently pay around 5% less than the wider rental market, while PBSA and PRS rent in Birmingham was, on average, the same.
Merelina Sykes, joint head of student property at Knight Frank, said: “With rents, especially in locations such as London, on the rise, and reports that energy prices could reach £4,266 p/a per household by January, students renting in the PRS market are likely going to feel the pinch of the ongoing cost-of-living crisis.
“With PBSA in most markets already offering significant savings, the benefits will only become crystalised as inflation, rents, and bills rise. That said, PBSA is severely undersupplied across the UK, with delivery in most markets significantly outstripping local student population figures.
“Therefore we are likely to see stiff competition and long waiting lists for PBSA beds as demand strengthens in light of the current economic climate.”
According to Knight Frank, some 69% of students living in UK PBSA, either privately operated or university operated, were pleased with their provider’s approach and handling of the pandemic.
By comparison, just 25% of students living within house-shares rented from landlords in the wider private rented sector said the same.
Matt Bowen, head of residential investment research at Knight Frank concluded: “There has been a perception in the past that PBSA is more expensive than renting on the private market, but student sentiment regarding the relative value for money offered by PBSA compared to the private rented sector has strengthened over recent years.
“This has been built on the good-will developed by operators throughout the pandemic and cost-push inflation on bills in the wider private rented sector. Ongoing inflation is likely to entrench this position and push demand for PBSA from a wider range of students”