Nottingham student rents reach record high
Rental growth for dedicated student accommodation in Nottingham is now outpacing maintenance loans, according to new research by real estate advisor CBRE.
At present, the maximum maintenance loan available to students in Nottingham is £10,227 a year. Rents in the city for direct let Purpose Build Student Accommodation (PBSA) for the 2024/25 academic year are set to rise by 5% to an average £229 per week for a studio (fully furnished accommodation, with own kitchen and bathroom). The rise in the average cost of cluster ensuites (where kitchen/living space is shared) is less sharp at 2% – to £189 per week – for the coming academic year. In contrast, maintenance loans are set to increase by just 2.5% next year.
CBRE analysed the PBSA sector across the UK’s top university towns.
Nottingham has more than 70,000 students – the fourth highest number outside London – with just 23,500 dedicated student beds. Whilst rental costs in the city are rising, they are even higher elsewhere in the regions.
Bristol is the most expensive city outside London for PBSA, where student bedspace ranges from £335-£382 per week. Manchester rents average £249 – £295 per week.
Supply constraints, a fall in the delivery of new student beds to the market and a rise in student numbers are among the reasons for the rise in rents in Birmingham.
Raj Bains, a director specialising in student accommodation in CBRE’s London Valuation team, said: “Historically, London has been the only UK city where the affordability of student rents hasn’t aligned with the available maintenance loan. However, we’re now seeing this same trend play out across our key regional university towns, including Nottingham.
“A student letting a cluster ensuite in Nottingham next year for a 51-week tenancy will pay more than £9,500 per annum in rent. That’s the bulk of the maximum maintenance loan of £10,482.”
Tim Pankhurst, head of student accommodation valuation at CBRE, said: “As maintenance loan growth lags and the cost of attending university grows, we could see a shift in where students choose to go. More than ever, the cost of living is becoming a key decision driver for domestic students when deciding where to apply to study.”
CBRE reports that challenging planning conditions, site scarcity, increases in construction costs and rising debt costs have contributed to a slow-down in the delivery of new PBSA. In addition, approximately 10% of the UK’s private rented stock has decreased since 2016, further impacting the accommodation pool for students.
However, interest in the sector among investors is strong. Just under £4bn of deals were transacted in 2023.
Bains said: “CBRE’s PBSA Index shows strong returns in the last decade. With demand for space expected to rise further in the next five to ten years, interest is buoyant among both domestic and international funds. It’s vital that this capital is leveraged in order to increase supply and ensure rents are more affordable for those in higher education.
“It’s also important that Nottingham remains attractive to students, to ensure there is a qualified talent pool for employers. The availability of accessible accommodation is fundamental to this.”
