- Investor Exodus Deepens: 34% of investors plan to withdraw completely from student housing/HMOs in 2025, up from 22% in 2024. Whilst 20% of investors plan to significantly reduce their exposure to the them student housing/HMOs in 2025.
- Falling Appetite for Growth: Just 34.5% intend to increase exposure to student housing/HMOs—down sharply from 49.5% a year ago and 79% in 2023.
- Purpose‑Built Stock Under Pressure: Only 37.5% plan to grow their exposure to PBSA, while nearly one‑quarter will exit entirely.
UK property investors are pulling back sharply from student housing, according to the latest research from Handelsbanken. The bank’s fourth annual Property Investor Report – based on a survey of 200 larger portfolio investors and landlords – shows a decisive shift in sentiment.
Only 34.5% of investors now plan to grow their exposure to student HMOs, down from 49.5% last year and 79% in 2023. At the same time, a record 65% plan to either withdraw from the sector entirely or reduce their exposure at some level; highlighting an accelerating exodus as rising costs and regulation erode confidence in a once favoured asset class.
Demand from undergraduates remains strong and is likely to increase, as thousands of students that once would have headed to the US now plan to study in Britain instead. However, the economics of student housing investing have become more challenging. Higher interest rates and tighter regulation have pushed smaller landlords to sell, exacerbating the supply gap at a time when new PBSA development is still recovering from pandemic era delays. Though 37.5% of investors say they will expand their PBSA portfolios, 24% will withdraw entirely and a further 26.5% will reduce their exposure.
Non student HMOs fare worse still: only 26.5% plan growth, compared with 36.5% exiting completely. Across all residential sub sectors, including park homes, investors are reallocating capital towards core houses and flats, where 54% see safer, more predictable returns.
For developers and institutional investors willing to take a selective approach, the current environment still offers plenty of opportunity. Those who can negotiate competitive land and construction costs, target the right locations and structure debt to weather rate volatility will be best placed to capture the sector’s inevitable rebound.
As student numbers continue to outpace purpose-built supply, a strategically disciplined investor will balance near term caution with readiness to deploy capital where fundamentals remain strongest. Partnerships with local universities, flexible designs that cater to both domestic and international cohorts, and close attention to regulatory shifts will be critical levers for success.
The Handelsbanken Property Investor Report 2025 paints a picture of a sector in transition. As landlords navigate regulatory changes, inflationary pressures, and evolving tenant expectations, those who adapt, by diversifying portfolios and aligning with market signals, are best positioned to thrive.
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Patrick Evans/Marcus Dell
Citigate Dewe Rogerson
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