Further growth predicted in PBSA as HMO regulations change

Changes due to come into effect this October concerning HMO licensing regulations are likely to lead to a rise in PBSA investment. The licensing change will mean landlords now need to seek a license for their property if it is occupied by five or more people living in two or more separate households, regardless of the number of storeys the property spans. The changes will impact an additional 177,000 HMOs in the UK alone.

We are predicting that this additional red tape will lead to further growth in the PBSA market. And while investment into student accommodation continues to grow, there still aren’t enough PBSA beds to fulfil demand. There is currently a 400,000+ deficit in PSBA beds, compared with requirements, something that we don’t believe HMOs alone can fill – particularly once these new regulations come into play. As a result, it’s likely that we’ll see significant growth in PBSA.

As the number of people being accepted onto university courses increases year on year, teamed with a continually growing number of international students, PBSA will always be a clever choice for investors, as long as they recognise the importance of managing developments properly. Location is important, of course, but building with student requirements front of mind should be the number one priority. We actively seek out feedback from our students on what they value when it comes to accommodation, and equally, what they don’t. This ensures that we have satisfied students and properties that are fully let every year.

Ultimately, developers can no longer build a property and wait for the rent to roll in; it needs to be approached in a much more sustainable way. We’re seeing more and more firms buying a development, building it in an unconsidered way and then selling it on, with little thought for residents. This is opposite of how it should be approached, as welfare of students becomes even more important.

Investors looking to dip their toes in the water with PBSA should look to partner with a developer that holds a similar vision and values to them to ensure the partnership is a success.