Rental Growth in Student Accommodation: Why City-Level Metrics Can be Misleading

Rental growth is a pivotal metric for investors, developers, and operators in the PBSA sector, commonly used to gauge market health, asset performance, and investment viability. However, relying solely on city-level rental growth figures can be significantly misleading, masking crucial nuances that dramatically affect how these figures should be interpreted.

In the PBSA market, pricing dynamics are uniquely complex. Factors such as dynamic and tiered pricing strategies, inconsistent room categorisation across operators, varying contract lengths, and the divergence between rental growth and contract value growth further complicate accurate year-on-year comparisons.

In this blog, we highlight why simplistic rental growth comparisons at the city level can distort the true picture of market performance. We delve into common pitfalls, illustrate how underlying factors impact growth calculations, and provide practical recommendations for effectively interpreting rental data, ensuring your strategic decisions are grounded in meaningful data.

Contract Length Variation

One critical consideration is the variability in contract lengths across the PBSA sector. Analysis of tenancy lengths signed via the Concurrent platform shows significant diversity, where over 40% of PBSA contracts being signed are for 51 weeks. Shorter contracts, for example, 44 weeks, represent 19.8% of signed tenancies.

Chart 1: Signed PBSA Tenancies by Contract Length

*Min. 10 weeks, Contracts starting Aug '24 - Now

Source: StuRents

To accurately assess PBSA rental growth, investors, developers, and operators need to look beyond simple year-on-year (YoY) comparisons based solely on advertised weekly rents. Differences in contract lengths significantly impact the true revenue generated by a room, making total contract value a more reliable measure.

Consider the two anonymised examples below, drawn from real PBSA schemes:

Example 1: Studio room in Birmingham

• 2024/25: Operator A - priced at £270 per week for a 44-week contract.
• 2025/26: Operator A - increased to £299 per week for a 45-week contract.

At face value, weekly rent has risen by 10.7% year-on-year. However, when looking at the total annual revenue generated per room:

• 2024/25 Contract Value: 44 weeks × £270 = £11,880
• 2025/26 Contract Value: 45 weeks × £299 = £13,455

This reveals an even more substantial growth of 13.3% in annual contract value. The weekly rental growth figure alone understates the actual increase in rental income.

Example 2: Ensuite Room in Newcastle

• 2024/25: Operator B - priced at £190 per week on a 51-week contract.
• 2025/26: Operator B - Weekly rent increases to £200, but the contract shortens significantly to 44 weeks.

Here, the advertised weekly rental growth appears positive at 5.3%. However, looking at the total revenue for the academic year shows the true picture:

• 2024/25 Contract Value: 51 weeks × £190 = £9,690
• 2025/26 Contract Value: 44 weeks × £200 = £8,800

This means the actual annual rental income for the room has fallen by 9.2%, despite the higher weekly rent.

These examples illustrate why relying solely on advertised weekly rental prices to assess year-on-year rental growth can be misleading. By not accounting for variations in contract length, investors risk drawing incorrect conclusions about their assets' real performance and potential. Instead, analysing the total contract value and how this is changing over time is critical to understanding true rental growth trends.

Timing - Challenges with Year-on-Year Price Comparisons

When evaluating advertised rental growth, the timing of comparisons can significantly influence the results. PBSA operators typically begin marketing rooms for the following academic year in November, creating a scenario where two separate pricing cycles overlap. This overlap, combined with daily pricing fluctuations, can result in highly variable rental growth figures depending on when you measure them.

Using daily pricing data from select PBSA schemes in Birmingham, we can see the fluctuations in average weekly rents throughout the booking cycle.

For instance, early-cycle advertised rents for the 2024/25 academic year averaged around £212 per week in mid-November 2023. By contrast, initial prices for the 2025/26 cycle started at approximately £222 per week in November 2024, representing initial year-on-year growth of around 4.7%.

As the booking cycle progressed, the growth calculation changed markedly. Prices in March showed weekly rents averaging around £227 per week in 2024/25, whereas prices during the same period for 2025/26 reached approximately £231 per week, resulting in a smaller growth rate of approximately 1.8% year-on-year.

Even more variability emerges if we select mid-year comparisons: by May 2024, the weekly average for 2024/25 was around £231, while in May 2025, the equivalent figure reached nearly £231.30, reflecting almost negligible growth of just 0.1% year-on-year.

These examples highlight how dramatically rental growth perceptions can shift based on the chosen comparison point. Stakeholders must therefore adopt consistent timing benchmarks, preferably multiple points within the sales cycle, to accurately gauge market health and avoid misleading conclusions.

Chart 2: Sample Average Weekly PBSA Prices Birmingham

*7 Day Rolling Average, £ pppw

Source: StuRents

Room Categorisation Issues and Operator Changes

Operator transitions frequently involve significant changes to room categorisation, complicating direct year-on-year comparisons. Without consistent categorisation or accurate bed-split data, meaningful like-for-like rental growth analysis becomes challenging or impossible.

An anonymised example from Liverpool helps to highlight this complexity.

Chart 3: Scheme Level Rents, Liverpool

*51 Week Contracts, March-24 vs March 25

Source: StuRents

In the 2024/25 academic year, under Operator A, rooms were categorised into ten distinct room types. However, after the scheme transitioned to Operator B for the 2025/26 academic year, the room categories were restructured, with an additional two room types added. 

Straightforward year-on-year comparisons remain possible for certain consistent room types. However, newly introduced or restructured categories significantly complicate the analysis without detailed bed-split data. If we consider all twelve categories, the simple average rental growth across the scheme appears to be 9.6%. However, restricting the analysis to the ten like-for-like categories from the previous year reduces the calculated rental growth to 5.4%.

This difference underscores the critical point that without consistent categorisation or detailed bed-split data, city-level rental growth metrics quickly become arbitrary, potentially leading investors and operators to inaccurate conclusions.

Conclusion

Accurately interpreting PBSA rental growth demands more than a surface-level, city-wide approach. As demonstrated throughout this blog, several critical factors, including contract length variations, timing inconsistencies in year-on-year price comparisons, and room categorisation changes due to operator transitions, significantly affect the reliability and accuracy of rental growth metrics.

Stakeholders should recognise that deteriorating markets typically exhibit a trend towards shorter tenancy lengths, indicative of affordability pressures or decreased demand. Conversely, positive market conditions are often reflected in stable or lengthening tenancy durations. Tracking these trends in parallel with rental growth can provide deeper and more meaningful insights into actual market performance.

To avoid making strategic decisions based on misleading or incomplete data, investors, developers, and operators should consider the following recommendations:

• Prioritise total contract values rather than relying solely on weekly rental rates, factoring in contract length adjustments.
• Use weighted rental growth calculations whenever possible, incorporating detailed bed-split data to reflect true market movements.
• Prefer actual signed tenancy data over advertised pricing data, as this offers a clearer reflection of genuine market conditions.
• Maintain consistent comparison points year-on-year, ensuring you capture timing fluctuations accurately to avoid distortions in growth figures.
• Closely monitor rent trends throughout the booking cycle rather than selecting isolated points in time.
• Avoid relying exclusively on city-level averages when appraising individual assets; drill down into scheme-specific and room-specific details.

By incorporating these nuanced analytical approaches, stakeholders can base their strategic decisions on robust, meaningful insights, ultimately leading to more informed investments and sustainable asset performance.