FT Big Read is about the problems in British Student Housing.

Financial Times: Financial Times

For about a 20-year period, you’ve seen phenomenal numbers of purposebuilt student rooms being built . . . it spawned a huge industry in some places,” says Martin Blakey, the former head of student housing charity Unipol.

The building spree has allowed universities to expand, enriching investors and drawing in institutions such as Blackstone, the real estate giant that is a big player in student housing on both sides of the Atlantic.

But students complain that the business model, based on charging what the market will bear, has made university life increasingly unaffordable.

The UK faces particular challenges since those living in purpose-built accommodation are mostly overseas students, whose numbers are set to fall as immigration rules are tightened. Yet the country’s universities, now struggling financially as costs rise faster than revenues, are more reliant on such housing providers than those in the US.

Providers of purpose-built student accommodation, or PBSA, face rising financing, construction and maintenance costs, which are no longer so easy to pass on through rents. Town and city councils, once grateful for the investment and the stimulus to the local economy, are becoming concerned about an oversaturated market.

Shares in Unite, the UK’s largest listed PBSA provider, have fallen by more than two-fifths in the past year. The group is cutting rents in some cities to fill unoccupied units and has scaled back development plans.