Meeting demand for modernised university accommodation

In collaboration with MEETING DEMAND FOR MODERNISED UNIVERSITY- OWNED ACCOMMODATION A Student First Group research report April 2026

Castle Leazes: a JV partnership between Unite Students and Newcastle University

FOREWORD 2 EXECUTIVE SUMMARY 3 A QUICK TAKE 5 SUPPLY AND DEMAND TO 2029/30 AT A GLANCE 6 1 THE IMPORTANCE OF UNIVERSITIES’ RESIDENTIAL ESTATES 7 2 QUALITY 11 3 DEMAND AND SUPPLY OUTLOOK 22 4 CAPITAL SOLUTIONS 32 5 DELIVERY SOLUTIONS 36 CONTACTS 43 APPENDIX: NOTES 44 GLOSSARY CAGR Compound Annual Growth Rate CAS Confirmation of Acceptance for Studies CPI Consumer Prices Index CPIH Consumer Prices Index (including owner occupiers’ housing costs) CUBO College and University Business Officers ( cubo.ac.uk ) DBFO Design, Build, Finance and Operate FM Facilities Management HEPI Higher Education Policy Institute ( hepi.ac.uk ) HMO Houses in Multiple Occupation JV Joint Venture OfS Office for Students ( officeforstudents.org.uk ) ONS Office for National Statistics ( ons.gov.uk ) PBSA Purpose-Built Student Accommodation PG Postgraduate PGT Postgraduate Taught UG Undergraduate CONTENTS AND GLOSSARY A Student First Group research report | April 2026 | Page 1

Over the last three years we have produced more than 30 residential strategies for universities, and taken many student accommodation partnership projects to market on their behalf. Indeed, so much of our work is focused on supporting individual universities that it is valuable to stand back and consider what kind of quilt you get when you stitch these individual strategies together. In this report we have combined our unmatched breadth of insight into universities with Unite Student’s unique depth of experience of the student accommodation market. We are proud to partner with Unite and create this report, with its thought- provoking findings that we hope will help move the whole UK Higher Education sector forward. Please do contact us to discuss how we can help your university to navigate the challenges ahead. Robert Kingham Director – Head of Advisory m: +44 7311 275 105 e: robert@sfg.ltd FOREWORD Page 2 | SFG | Meeting demand for modernised university-owned accommodation

Most UK universities agree that providing enough student accommodation, of the right quality, in the right location, and at a range of price points, is of vital importance to students’ experience and well‑being, and to recruitment and retention. This does not always translate into universities investing enough in it. What scarce capital they have faces stiff competition from their non-residential estates, and from priorities around investment in teaching, learning and research. We estimate that more than 60% of university- owned accommodation (c. 200,000 beds) is in what we call Quality C or D, i.e. falling below the level that students expect. The proportions are worse at the top and the bottom of the league tables, probably for different reasons. Construction inflation and interest rates have hampered universities’ efforts to remedy this situation. Pressures on viability, and the need to maintain affordability to combat the cost-of-living crisis, are driving universities towards refurbishment, where once they would have been readier to knock older halls down and start again. We estimate that it might cost c. £13.8 billion to bring university residential estates up to a decent quality, assuming all PBSA in Quality C can be refurbished, and all that in Quality D requires rebuilding. Naturally there will be exceptions to both; plus, universities are likely to take the opportunity to increase density at the same time. If we further assume that an average 60% uplift in the number of beds is possible for each redevelopment project, this would add a further c. 22,500 beds to such a capital programme, and a further £3.5 billion to the cost. Some cities still have a shortfall of student accommodation, which has pushed up rents. We estimate that c. 70,600 additional beds across the UK are required to bring those student accommodation markets with a student- to-bed ratio greater than 1.9 : 1 down to that level. The figure of 70,600 excludes our estimate of 36,200 new beds that may be required to replace those of poor quality, mostly on university campuses rather than the private sector. This brings the total new beds required to c. 106,800 . The demand and supply dynamics in each market may be EXECUTIVE SUMMARY A Student First Group research report | April 2026 | Page 3

Page 4 | SFG | Meeting demand for modernised university-owned accommodation disrupted by the unpredictable impact of the Renters Rights Act, and by an increasing number of students commuting from their own or their parents’ homes. Our estimate is more restrained than others, which means that we also think the gap between demand and delivery is smaller. Despite all the pressures on viability, c. 23,750 new-build beds are predicted to be available for 2026/27. We estimate that the annual rate would only need to increase to c. 27,700 in each of the following three years in order to close the demand gap described above and replace all university beds in Quality D by 2029/30. However, some of this demand for additional or replacement beds is in markets where rents are not yet strong enough to support viability, and so the actual rate of delivery may be well below this. Universities have a palette of funding options available to make this happen. Only a very small proportion are likely to use their own capital. Partnership projects will continue to be prevalent, leveraging the inherent value locked up in UK universities’ freehold residential estates, which we estimate at c. £25 billion . We discuss the different partnership structures that are currently in the market, and the aspects that are most important to universities when considering them: the experience of the partner, the length of the deal, the options for exit, the level of control over rents, the control and flexibility over operations, and the impact on universities’ balance sheets. Universities must also consider internal and external procurement regulations. While the accommodation challenges that universities face are considerable, our analysis suggests that they are not insurmountable , and that closer partnership working between universities, funders, operators and developers ought to make significant inroads to improving the student experience across the UK, and supporting one of its most important sectors: Higher Education.

A Student First Group research report | April 2026 | Page 5 More than 60% of university ‑ owned accommodation falls below expectations £17.3bn needed to upgrade universities’ residential estates c. 26,800 beds at higher ‑ ranking universities are of the lowest quality £25bn estimated to be locked up in universities’ freehold residential estates More than 60% of university-owned accommodation (c. 200,000 beds) falls below the standard students expect. These beds are categorised as Quality C or D, meaning major refurbishment or rebuilding will be needed. Our current estimate is that it will cost around £13.8bn (equivalent to £6,000 per full-time student) to modernise universities’ residential estates. A further £3.5bn will be needed if universities take the opportunity to increase the density of their accommodation (i.e. the number of beds). Universities in the upper half of the UK league table have c. 26,800 beds of the lowest Quality D (5.2% of their total), while the lower tariff universities have c. 9,400 beds (6.7% of their total). Universities that rank in the middle of the league tables generally have higher-quality accommodation. Universities are showing continued and growing interest in private sector partnerships to unlock funding and make use of the £25bn tied up in their residential estates. A QUICK TAKE

1 By 2029/30 there will be demand for c. 70,600 additional PBSA beds (either university or private sector) to balance under ‑ supplied student accommodation markets... 4 There are c. 34,300 PBSA beds (both university and private sector) already in the planning and development pipeline... 5 ...and so ideally, a further 72,500 PBSA beds (both university and private sector) are needed by 2029/30. 2 ...as well as replacements for a further c. 36,200 university beds in Quality D (the poorest). 3 Thus, ideally, a total of 106,800 new PBSA beds are needed by 2029/30. 6 Of this total requirement, only c. 60% ( c. 63,800 ) are in PBSA markets above a viability threshold of £240/week. SUPPLY AND DEMAND TO 2029/30 AT A GLANCE Page 6 | SFG | Meeting demand for modernised university-owned accommodation

THE IMPORTANCE OF UNIVERSITIES’ RESIDENTIAL ESTATES 1 A Student First Group research report | April 2026 | Page 7

Most universities seek to control at least some of their accommodation in order to ensure a quality student experience The role student accommodation plays at each university across the UK varies greatly. At one extreme, for time immemorial, Oxford and Cambridge have offered accommodation to many students for the duration of their degrees. At the other, many post-92, teaching-focused universities with predominantly local students have functioned with much less accommodation. Some have never had their own halls and always relied on the local private sector; a few have sold their stock and focused on their core business of teaching and learning. The majority of universities between these extremes, though, are of the view that it is important to own (or at least have some control over) enough accommodation to be able to offer a guarantee to a minimum number of students, particularly first years and international students; and once this priority group are accommodated, universities take the pragmatic view that most returning students have gained enough local knowledge to make informed decisions and navigate the local private sector. Some universities do offer accommodation to returners: at a minimum, to those with physical or mental health needs, although some have been extending their offer, either due to under-occupancy from first years, or a lack of capacity in the private PBSA or HMO market. So, although each university has different requirements and challenges around their accommodation, there are some common themes, which SFG summarised in its Student Accommodation Strategy Toolbox . ...although each university has different requirements and challenges around their accommodation, there are some common themes. Reception at Unite Students’ Broadcasting Tower, Leeds Page 8 | SFG | Meeting demand for modernised university-owned accommodation

Most universities focus on quantity, quality, location, a rent ladder, a consolidated estate, and efficient operations To generalise, most universities are seeking the following from their residential estates: • The right quantity of beds: enough to meet demand, but not so many to risk under- occupancy. The right balance will vary according to what else is in the market: rural universities at a distance from cities may need to be more self- sufficient, while those in locations well-supplied with PBSA can rely more (or completely) on the private sector. • The right quality of beds. Few universities seek the kind of luxury product that high-end developers have been delivering, but all will aspire to a minimum level of quality. Unfortunately, this is often not met: we explore this in more detail in Section 2. • Beds in the right location . On-campus is generally always the gold standard, although there are many students who will prefer a city centre location if the campus is within reach. For universities in cities where development has been constrained, such as London, then some degree of travel to campus is unavoidable, so other factors also become important: good transport connections, social and study amenities, and economies of scale. • Closely connected to quality, a ladder of rents . Students’ needs are not homogeneous, and universities want to offer a range of price points that suit every budget. Nearly every university is concerned about affordability, in a climate where the cost of living is for some prospective students a barrier to engaging in Higher Education; but many also report that there is finite demand for the very cheapest accommodation. • A consolidated residential estate rather than a dispersed one, in order to foster thriving communities and reduce operating costs. Generally, a smaller number of larger halls in fewer locations is far better than many smaller scattered ones. There are exceptions to the rule: e.g. some postgraduates will be perfectly happy with smaller quieter options. • Efficient and high-quality operations that maximise the student experience. A Student First Group research report | April 2026 | Page 9

Naturally, what we describe here is an ideal that few universities can meet in all respects. All of the universities that SFG has been working with have been seeking improvements in several of these areas. All of them accept the principle that providing a good student experience through residences is critical to their recruitment and retention of students. However, in many cases, this ideal has been compromised by chronic under-investment. In the next section we attempt to quantify the extent of this key issue. Section 1: Conclusion The role of student accommodation varies enormously across universities in the UK. At one extreme, Oxford and Cambridge house students throughout their degrees; at the other, some post-92 universities have never owned halls. Most fall somewhere between, aiming to guarantee beds for first-years and international students while leaving returners to the private market. Regardless of their scale, universities broadly want the same things from their residential estates: the right number of beds, appropriate quality across a range of price points, good locations, a consolidated rather than scattered estate, and efficient operations that enhance the student experience. Page 10 | SFG | Meeting demand for modernised university-owned accommodation

2 QUALITY Castle Leazes: a JV partnership between Unite Students and Newcastle University A Student First Group research report | April 2026 | Page 11

More than 60% of university- owned accommodation falls below the level of quality that students expect Universities are driven to invest in their residential estates either through a lack of accommodation, or a lack of the right sort of accommodation, and often both. Many capital projects are in response to chronic under-investment which has left universities with poor quality halls with obsolete layouts or amenities, which are difficult to let, or impair the student experience. Over the last 30 years, the private sector has stepped in to fill the gap in many cities and provide new and better accommodation where needed. In Section 3 we consider how under-supplied the UK is as a whole, but first we consider the extent of the issue around quality in UK university residential estates. For this report, SFG refreshed its independent assessment of the quality of each university hall of residence in the UK, drawing on its inspections of universities’ estates (carried out while preparing residential strategies) augmented by a review of universities’ websites. SFG’s assessment of quality is based on the likely perception of students and their parents, considering the standard of other PBSA available in the private sector and at other universities. It considers factors such as the age of the property, available amenities, specifications, and overall condition. For older buildings, the level of refurbishment is relevant, as well as any inherent limitations in the buildings’ construction, layout, and overall impression. Chart 2.1 defines SFG’s rating system (Quality A – D), and summarises the whole UK university residential estate on this basis. This also includes long leases and income strips where the university is the tenant and long-term partnerships with private sector investors (e.g. JVs and DBFOs), but excludes shorter-term (e.g. less than 10-year) nomination agreements with the private sector. Despite a great deal of investment by universities and their partners in the last 30 years, c. 200,000 beds (more than 60%) are in the lowest Quality C or D and thus fall below the level expected within new PBSA. However, there are so many factors that influence a university’s growth and reputation that it is impossible to isolate what impact the quality of their student accommodation has had. Page 12 | SFG | Meeting demand for modernised university-owned accommodation

Chart 2.1 : Number and proportion of beds in quality bands across university residential estates in the UK 36,155 163,897 106,835 18,871 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000 250,000 275,000 300,000 325,000 350,000 Quality A – new, or nearly new, attractive accommodation that provides a level of finish and facilities over and above that seen generally across new PBSA. 33% 50% 11% 6% Quality B – modern, attractive accommodation that offers a level of finish and facilities expected within new PBSA. Quality C – accommodation that offers a functional minimum but may be in need of refurbishment or otherwise falls below the level expected within new PBSA. Quality D – accommodation that is legally habitable, but functionally poor, with refurbishment long overdue, or otherwise falls well below the basic level expected for PBSA. A Student First Group research report | April 2026 | Page 13

Universities in the top quartile of the league table have the most beds but have significantly under-invested in them The number of beds, and their quality, are not distributed evenly across the league table. Chart 2.2a splits university bed numbers and quality according to the Times university ranking for 2026: so quartile 1 includes universities with rankings from 1 to 33, quartile 2 for rankings 33-65, etc. The universities in quartile 1 are all predominantly older, larger research-intensive institutions that traditionally have had smaller proportions of local students, and so their whole infrastructure is geared around large residential intakes. Thus, they have more beds than the other three quartiles put together. In quartile 1 universities, there are nearly 17,000 (c. 10%) beds in Quality D and only c. 61,000 (c. 35%) in Quality A or B: there is still a long way to go in improving their residential estates. Often, in SFG’s experience, the driver for many quartile 1 universities to invest only comes when accommodation drops to the lowest quality level and buildings approach the end of their economic life, and the risk to student well-being and reputation becomes unignorable. Chart 2.2a : Number of university beds in quality bands by league quartile 16,976 9,781 4,049 5,349 95,261 32,737 18,953 16,946 50,610 32,345 15,733 8,147 11,003 6,680 752 436 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 League quartile 1 League quartile 2 League quartile 3 League quartile 4 Quality A Quality B Quality C Quality D Page 14 | SFG | Meeting demand for modernised university-owned accommodation

Universities in the middle of the league table tend to have invested most in their halls Chart 2.2b shows the same data as Chart 2.2a but as proportions within each league quartile rather than as absolute numbers. The universities in quartiles 1 and 4, at the two ends of the league table, have the smallest proportion of beds of Quality A or B. This is likely to be for different reasons. The universities in quartile 4 may have more modest sources of capital to invest in their estates, and also their students may be more price-sensitive and less disposed to pay for newer, higher-quality PBSA. Conversely, while universities in quartile 1 may have better access to capital, there has inevitably been strong internal competition to invest this in research facilities and equipment, and in other parts of the estate that are not directly income-producing but support the student experience. Also, their strong academic reputation means that they enjoy more applicants per place, which means their ability to recruit and retain students is not quite so dependent on the quality of the accommodation, and there is thus less corporate incentive to improve the residential estate. By contrast, universities in quartile 2 have made far larger investments into their residential estates. c. 48% of quartile 2 university beds are in Quality A or B. With lower tariffs than quartile 1, they have had to compete more strongly in the market for students, and the quality of accommodation is something that they have found easier to push up the governance agenda. Chart 2.2b : Proportion of university beds in quality bands by league quartile 9.8% 12.0% 10.3% 17.3% 54.8% 40.1% 48.0% 54.9% 29.1% 39.7% 39.8% 26.4% 6.3% 8.2% 1.9% 1.4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% League quartile 1 League quartile 2 League quartile 3 League quartile 4 Quality A Quality B Quality C Quality D A Student First Group research report | April 2026 | Page 15

Sustainability regulations and targets are factors, but not drivers, of investment Every university that SFG has worked with has wanted to promote sustainability within its new development. Nobody has set themselves the low bar of wanting to meet building regulations and no more. Some have been content to let the level of sustainability be decided by the prevailing regulations as well as cost-benefit analysis of features and interventions that may have an impact on operating costs. Many, though, have wanted to push the levels of sustainability further than this, in the belief that it is the right thing to do and in line with their institutional ethos, with the understanding that students increasingly expect this as a norm. While we have seen student surveys sometimes indicate a willingness to pay a premium for more highly sustainable accommodation, we have yet to see any data that demonstrates it in practice. It is easy for the evidence to be muddied, given that generally the most sustainable accommodation options are also the newest and highest quality, so other factors are likely to be driving the student decision-making process. However, SFG has not to date come across a project that was primarily driven by considerations around sustainability. In nearly all cases the main driver was linked to the university’s underlying business case of needing to recruit and retain students, and therefore needing to grow bed numbers and/or improve quality. Improvements in sustainability were always a lower- order benefit or driver, but never near the bottom of the list. Many universities have sustainability as a key driver for their high-level campus masterplan, so their vision is around creating an estate that meets their ambitious commitments around carbon neutrality. The challenge always comes at the point of taking that masterplan to the individual project stage, where business cases consider viability. Compared to residential projects, it is easier to justify (and control) highly innovative and sustainable academic buildings, as there isn’t such a clear income stream to bring a financial return on investment into sharp focus. Accommodation is still generally considered separate and ancillary to the main university operations, and as such is normally at the very least expected to wash its face financially. Nevertheless, what is included in the costs that need to be covered can vary between a full-cost model, including life- cycle, allocations for other university service team overheads (finance, human resources, central estates etc.), through to models which look at direct operational cost only. Page 16 | SFG | Meeting demand for modernised university-owned accommodation

A Student First Group research report | April 2026 | Page 17

The tipping point between refurbishing or redeveloping ageing halls has shifted Rising new ‑ build costs and interest rates in the last five years have considerably changed the decision process for a university on whether to refurbish or redevelop old stock. The tipping point between the two options has become much higher, so that refurbishment is coming out as a preferable option far more frequently, particularly where the older stock was built from the 1990s onwards and the room sizes are comparable to modern new-build specifications. In these instances the refurbishment can focus upon improved fit-out and mechanical and electrical upgrades, with structural changes possibly limited to knocking through a small number of bedrooms to enlarge kitchen/lounge/dining areas to modern specifications and expectations. Also, universities are increasingly concerned about affordability, and refurbishments will often be more economically viable, enabling rents to stay lower. However, there are still instances where redevelopment, on balance, is the preferable option. This tends to be the case where some or more of the following factors are present. The layout is too cramped to be readily convertible to modern PBSA specifications, and even if the internal quality were improved, it would be difficult to justify the rental uplift necessary to make the cost of refurbishment viable. This is often the case with older catered halls. Most universities report students steadily favouring self-catered more and more with every passing year. Such halls are often also laid out with shared bathrooms. However, the oldest halls often enjoy the most central locations on campus, and so retain some popularity even though students would prefer a different product. Some halls simply lack the kerb appeal to remain attractive to students, regardless of the quality of the accommodation inside. Back in 2019 while at JLL, Robert Kingham and David Stephens of SFG undertook a joint study with CUBO members to review occupancy trends across university portfolios. The study, involving 20 participating institutions, demonstrated a clear correlation between the outward appearance of a hall of residence and the level of occupancy (and retained occupancy). While it is possible to improve the external appearance, as well as the thermal performance of a building through overcladding, options are often limited by planning considerations and overall viability. There are a number of residences SFG is aware of, both across university and private sector accommodation, which have encountered issues around fire compartmentation and/or cladding . The complexities and costs involved in the rectification have made complete redevelopment the better option, particularly if additional opportunities were available to increase density or realign the product with the needs of contemporary students. Refurbishment usually attracts VAT whereas new build can often be zero-rated , thus narrowing the cost gap further. Page 18 | SFG | Meeting demand for modernised university-owned accommodation

Redevelopment can be the better option if universities need to increase quantity as well as quality There are some other factors that may carry variable weight depending on the specific circumstances. Accessibility is very important for universities, but they do recognise that in instances where there would be a real difficulty in bringing older stock up to modern specifications, and there are options for better accommodating students’ needs elsewhere in their estate, then this requirement can be relaxed. If they are undersupplied with accessible rooms, however, and the older stock is more conveniently located on campus, as is often the case, then this is a compelling case for new build. Sustainability is also very important but this is double-edged. A refurbishment will score better on embodied carbon then a new build, but over longer periods may produce more carbon given its inherent inefficiencies. Universities will often cite avoidance of future backlog maintenance costs as a justification for redevelopment over refurbishment. However, given universities’ poor track record in setting aside sinking funds for investment in lifecycle, this is ironic, as the argument rests on saving money that in all likelihood would never have been spent anyway. Redevelopment can also improve density and land use, which is particularly important if universities need to increase quantity as well as quality. Note i in the Appendix shows a selection of on- campus projects, encompassing demolition of old halls of residence and construction of new PBSA, that have either received planning permission or been built within the last 10 years. All of these projects have involved an increase in the number of beds, and two-thirds of them have at least doubled the number of beds. Each site will have been very different but the common theme across all of these examples was the ability to increase density through redevelopment. For universities with a strong need to increase the number of beds available to students, redevelopment will often have an advantage over refurbishment. Shared kitchen at Unite Students’ Bromley Place, Nottingham A Student First Group research report | April 2026 | Page 19

Universities need to invest c. £17.3 billion to improve the quality of their residential estates There is a wide variation in quality of accommodation in UK universities, with c. 200,000 beds (or c. 60% of university bed stock) rated by SFG as either Quality C or D, meaning that investment is either imminently required or long past due. This broad estimate gives an indication of the magnitude of the problem facing universities, on top of the other current financial challenges. We can make some assumptions in order to reach a reasonable estimate of the likely required capital investment, and we detail these in Note ii in the Appendix. Table 2.3 shows that using these assumptions and applying them to UK university accommodation only (not private PBSA beds) we arrive at an estimate of £13.8 billion of investment required. This includes £8.0 billion for refurbishment of Quality C-rated accommodation and £5.8 billion to redevelop the Quality D-rated beds. This figure will apply to non- partnership beds only, as virtually all those delivered through partnerships with the private sector will attract a Quality rating of A or B, and thus do not generate an investment requirement. This broad estimate gives an indication of the magnitude of the problem facing universities, on top of the other current financial challenges. For a full- time student population of c. 2.3 million (in 2024/25), this represents a capital outlay of c. £6,000 per student to bring university accommodation in the UK up to a reasonable standard, and as we have shown, this is not evenly distributed across each university. If we make the further assumption that through redevelopment of the Quality D-rated beds, universities can increase the density by c. 60% and thus deliver a further c. 22,500 beds, c. 20% of which are in London, this would add a further c. £3.5 billion to the capital cost. Table 2.3 : Estimated total investment required across UK universities to address quality issues Quality band and approximate number of beds Investment per bed Totals Regional London A 17,800 - - - B 98,800 - - - C 166,900 £45,000 £52,500 £8.0bn to refurbish beds in Quality C D 37,600 £150,000 £175,000 £5.8bn to rebuild beds in Quality D £13.8bn total to address quality issues D 22,500 £150,000 £175,000 £3.5bn for additional new beds assuming re - development enables uplift in density £17.3bn total investment required Page 20 | SFG | Meeting demand for modernised university-owned accommodation

Section 2: Conclusion The accommodation challenges that universities face are considerable. To improve the quality of the existing UK university residential estate could cost £13.8 billion. There are currently c. 2.4 million students in the UK, so this represents nearly £6,000 capital expenditure per student. Allowing a further £3.5 billion for increasing bed density, total investment could be £17.3 billion. It will be possible to recoup some of this through rent increases to reflect the improvements, but student budgets are not endlessly extendable, as we have seen through the significant trend for increased commuting. Study room at Unite Students’ Olympic Way, London A Student First Group research report | April 2026 | Page 21

3 DEMAND AND SUPPLY OUTLOOK Eslanda Robeson House, a DBFO partnership between LSE and DIF Capital Partners, opened 2025 Photograph courtesy of Willmore Iles Architects and LSE Page 22 | SFG | Meeting demand for modernised university-owned accommodation

We estimate the size of the student accommodation shortfall in the UK as c. 70,600 beds Over the years, a number of estimates have been made of this figure A HEPI article from November 2024, ‘ Student Accommodation after 2024 and the Need for Strategic Realignment ’, set out to “cut through some of the developer-led spin” for future demand. HEPI quoted some of the large property firms, who estimated between 234,000 and 620,000 additional beds would be needed by 2029, the year that the Office of National Statistics predicts a peak population of 15-19-year-olds. The market has had a tendency to proclaim large estimates of never-ending growth. The shocks to the market in 2025, by way of reduced numbers of international students, increased numbers of home commuter students, reduced occupancy in some markets, and wildly fluctuating rents, have spelt the end of this familiar narrative. We attempt our own estimate here, which we do not claim as definitive (because of the ‘unknowns’ that we describe as we explain our methodology) but is nevertheless a useful restrained counterpoint to these more exuberant estimates. We believe the UK-wide shortfall is closer to c. 70,600 beds. There are many student housing markets in the UK: some we would consider under-supplied, some balanced, and some saturated. To bring some objectivity to gauge where each sits, we have looked at two potential measures: one is a student-to-bed ratio, and the other is rental growth. We detail our methodology in Note iii in the Appendix. Several elements are adding uncertainty to this picture of demand The Renters Rights Act 2025 may impact the supply of student HMOs across the country, although we are yet to be convinced that it will cause a major swing from letting to students to young professionals. It is more likely that it will be dictated by the demand in each micro-location. Recruitment for the 2025/26 academic year appears to be somewhat polarised across providers, with different types of universities appearing to outperform others depending on the cohort involved. There have been some clear ‘winners and losers’ in recruitment across the sector, with large Russell Group clients tending to fare better despite challenges around international PGT cohorts. There has been an increasing shift towards commuting students , with many universities experiencing a drop in accommodation demand, despite strong overall student numbers. SFG has explored this through research undertaken in partnership with CUBO. There has been a clear increase over the last three years. While much of this can be attributed to the increased cost of living, there were some notable outliers, which had seen similar increases in commuting students despite being located in cities with very affordable rents. A Student First Group research report | April 2026 | Page 23

We have considered latent demand, together with that driven by the demographic ‘bulge’ towards the end of the 2020s Defining a balanced market From this analysis, we derived a ‘target’ ratio of 1.9 : 1 students per bed as representative of a relatively balanced market, which is neither under- or over-supplied. Then, to consider under-supply in the UK as a whole, we looked at the student-to-bed ratio for each market (based on 2024/25 student data), and assumed that: • cities whose ratio is lower than 1.9 : 1 do not need any more PBSA beds; and • cities whose ratio is above 1.9 : 1 could bear further development that reduces their ratio to 1.9 : 1. In this exercise we are only considering the need for new additional beds to address under-supply, and not as replacements for poor-quality beds, which we considered separately in Section 2. Demand in 2025/26 First, we considered how many beds are required purely for latent demand, i.e. ignoring forecast growth. We detail our methodology in Note iv in the Appendix. In order to ensure that no student housing market in the UK had a student-to-bed ratio greater than 1.9 : 1, a total of c. 50,500 net additional beds would be required. This would increase the total UK stock from c. 751,700 to c. 802,300. This figure of 50,500 includes all beds in the development pipeline, either under construction or at an earlier stage of planning permission. This is a figure based on 2024/25 demand, and so assumes that a magic wand can be used to build these overnight, and that the wand also has enough power to magic away any viability issues, as there may not be 50,500 students waiting in the wings to take up PBSA offered at the kind of rents that are currently required for new build. We consider viability challenges later in this Section. Study room at Unite Students’ Hayloft Point, London Page 24 | SFG | Meeting demand for modernised university-owned accommodation

Demand in 2029/30 To refine this analysis further, we should then take into account forecast population growth, as the demographic bulge at the end of this decade is coming, followed by a demographic dip during the 2030s. We detail our methodology in Note v in the Appendix. The analysis is more speculative as it requires some significant assumptions about future trends, but assuming that their effects balance each other out, then the impact of the ‘demographic bulge’ could generate demand for a further c. 20,100 beds. This means that the total number of additional beds required in the UK by 2029/30 would increase from c. 50,500 to c. 70,600. Demand in 2039/40 We have not modelled beyond 2029/30, but we do need to be mindful of what might happen beyond then: after all, we are considering investment in assets with a design life of 50+ years. ONS tells us that the population of 15-19-year-olds will then begin to shrink: by 2039/40 it will be 14.8% smaller than the peak of 2029/30. However, we are not implying that some of those 70,600 beds should not be built: first, because without a magic wand it is unlikely that all of them will be, and second, because there is a need to replace ageing stock. A Student First Group research report | April 2026 | Page 25

Our methodology is to consider those cities and markets that are at present undersupplied, plus GLA targets for London Summary of analysis Table 3.1 summarises these figures: they are presented unrounded but this does not imply they should be treated with that level of accuracy. The table shows: • Existing number of PBSA beds • Additional beds required to reach either 1.9 : 1 students per bed or the London Plan target • Total beds assuming these additional beds are built Each of these estimates are split between London, other under-supplied cities, and ‘saturated’ cities (with a student-to-bed ratio of less than 1.9 : 1). Each of these estimates are also shown for estimated student numbers in 2025/26, and also in 2028/29, at the zenith of the ‘demographic bulge’. See Note vi in the Appendix for the main assumptions that go into these estimates. With these targets in mind, we consider in the next section how these compare against the actual rate of delivery. Table 3.1 : Estimated number of additional beds required to bring all university cities up to a minimum student-to-bed ratio of 1.9 : 1, in 2025/26 and 2029/30 Year Measure London Currently under- supplied cities excluding London Saturated cities Totals 2025/26 Existing total beds 105,497 115,243 530,976 751,716 Additional beds required 8,503 42,047 0 50,550 Target total beds 114,000 157,290 530,976 802,266 2029/30 Additional beds required 14,000 6,092 0 20,092 Target total beds 128,000 163,382 530,976 822,358 Page 26 | SFG | Meeting demand for modernised university-owned accommodation

On top of the PBSA development pipeline, a further c. 15,600 beds per annum are required to catch up with demand alone Since private PBSA first began to be built at scale in the 1990s, most of it found a ready market, and in most places, demand continued to outstrip supply. With funding more readily available at attractive rates, it was reasonable to assume that a stable proportion of PBSA with planning permission would actually get built. For many years, therefore, the number of beds in the planning pipeline in any particular city was a useful indicator of what supply would look like in the coming years. However, this is no longer a reliable measure, as while delivery has slowed down, developers have continued to identify sites and improve their value by seeking planning permission. There is far more PBSA now in the planning pipeline than is likely to be built . Cushman & Wakefield’s ‘UK Student Accommodation Report 2025’ estimates that c. 18,200 new beds were delivered for 2025/26, offset against closure of c. 8,000, providing a net gain of c. 10,000. Another c. 23,750 are expected to open for 2026/27, with a further c. 10,500 under construction and ready in subsequent years. A further c. 96,000 have planning permission, and c. 16,000 are pending approval. Chart 3.2a compares these pipeline estimates with our estimate of demand. The columns show existing beds, and the dotted line our estimate of latent and future demand. The gap between the two in 2025/26 is the latent demand for 50,500 beds. The light blue columns show beds under construction, and the teal columns show the number of beds needed each year for supply to catch up with demand by 2029/30. It is surprisingly small – only 15,600 new beds every year – fewer than the number of beds actually expected to be delivered for 2026/27. The number is small because it does not take into account the number of poor-quality beds that also need to be replaced every year. We address this on the following page. Chart 3.2a : UK PBSA: estimated demand vs pipeline 730,000 740,000 750,000 760,000 770,000 780,000 790,000 800,000 810,000 820,000 830,000 840,000 850,000 860,000 870,000 2025/26 2026/27 2027/28 2028/29 2029/30 Latent and future demand c. 23,750 beds due for 2026/27 Latent demand for 50,500 beds A further c. 15,600 beds per annum required to catch up with latent and future demand alone by 2029/30 Existing beds Target to catch up Under construction A Student First Group research report | April 2026 | Page 27

The need increases to c. 27,700 beds per annum if also replacing poor-quality university stock by 2029/30 In Section 2 we estimated a total of c. 36,200 poor- quality university beds that also need to be replaced, bringing the total required to 106,800 . There will also be some in the private sector that have reached the end of their economic lives, though probably not as many. Assuming a third of these are replaced every year from 2027 to 2029, there would need to be c. 27,700 beds delivered per year (which supersedes the 15,600 modelled on the previous page). We show this in Chart 3.2b. This would suggest that the rate of delivery needs to ramp up from c. 23,750 beds per annum up to c. 27,700 to address the very worst of the university stock. This is a conservative figure and would be higher if you account for additional university beds in Quality C for which replacement is more appropriate than refurbishment, and also for poor-quality beds in the private sector. In practice, the prospect of these poor-quality beds being replaced in the next three years is remote, as universities will need to progress through governance, planning and construction. It is more likely that some private PBSA will be built to fill this gap. What is surprising about this analysis is that the scale of current delivery is actually not lagging that far behind the need for it. If the UK had not been hit by increased interest rates and construction inflation, the scale of delivery might actually be on track with this particular analysis (acknowledging that it is only one way of measuring UK demand). Of course, another constraining factor is availability of land. Also, this analysis is aggregating supply and demand at a UK level, and that some of the beds under construction are being delivered in markets that we would already consider reasonably well-served. On the whole, though, it is interesting to observe that our present estimates of the demand for additional and replacement PBSA beds in the UK – which are more cautious than many previous estimates – are much closer to the actual rate of delivery. However, this analysis is simply comparing the total UK demand with the total UK pipeline, and is ignoring the fact that many of the markets in which these additional or replacement beds are needed do not have rents that are strong enough to support new development. On the next page we attempt to quantify this issue. Page 28 | SFG | Meeting demand for modernised university-owned accommodation

Chart 3.2b : UK PBSA: estimated demand vs pipeline 730,000 740,000 750,000 760,000 770,000 780,000 790,000 800,000 810,000 820,000 830,000 840,000 850,000 860,000 870,000 2025/26 2026/27 2027/28 2028/29 2029/30 A further c. 27,700 beds per annum required to meet latent and future demand plus replace poor-quality university stock by 2029/30 Replacements for poor-quality university stock Latent and future demand Latent demand for 50,500 beds Existing beds Target to catch up Under construction A Student First Group research report | April 2026 | Page 29

Only c. 60% of those additional or replacement beds that are needed are likely to be viable at present To estimate how many beds in the development pipeline (plus those additional ones we think are needed) are currently viable, we have carried out some simplified analysis, by assuming that a typical new-build PBSA development would require weekly en-suite rents of at least £240 (in 2025/26 prices) to achieve viability. Of course, this figure will vary geographically, and according to site- specific constraints and funding terms; furthermore, developers will offer a variety of room types and rents to achieve the appropriate rent roll. However, given that cities with lower en-suite rents tend to have correspondingly lower rents across other room types, it is possible to use this figure as a proxy for the viability of particular markets. Therefore, we have used weekly en-suite rents for the most recent typical development in that market, avoiding studio- only schemes which would tip the balance. Graph 3.3 plots these average market rents against the number of additional and replacement beds that are needed in those markets, according to our analysis on the shortfall in certain markets and the number of beds required to replace poor-quality university beds. The vertical dotted blue line shows the indicative threshold for new build viability, set at £240/week. We have not identified which cities each dot relates to, as the purpose of the analysis is to arrive at an aggregated UK picture, rather than to inform investment decisions in specific markets. The astute reader will easily identify the outlier on the right of the graph, with rents above £400/week, as London – and while this figure relates to central London, nearly all outlying zones are also above the £240/week threshold. We estimate that c. 63,800 (c. 60%) beds that are required to meet the shortfall or replace poor-quality university beds in certain markets fall above the viability threshold. This would impact the pipeline ‘target’ of 27,700 new beds per annum posited on the previous page. If these economic constraints persist, then it could be that annual delivery rates do not hit this target. However, if interest rates continue to gradually drop, and universities continue to support delivery through active partnership with the private sector, then the gap between target and delivery may narrow. Graph 3.3 : Indicative viability vs demand for additional or replacement beds in each PBSA market 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000 85,000 90,000 95,000 100,000 105,000 110,000 £100 £150 £200 £250 £300 £350 £400 £450 Number of additional or replacement beds required Typical weekly en-suite rent for most recent development in that market c. 63,800 (c. 60%) additional or replacement beds required in PBSA markets above this viability threshold Indicative (£240/week) threshold for new build viability Page 30 | SFG | Meeting demand for modernised university-owned accommodation

Delivery rates are not dramatically behind unmet PBSA demand shortfall in the UK, but they are hampered by viability Section 3: Conclusion Many of the estimates that have been made of the shortfall of student accommodation across the UK have been through the lens of developers and agents, who are naturally keen to tell a story of fervent demand for their potential schemes. Our own estimate, while not definitive, provides a useful restrained counterpoint, suggesting that the shortfall through to 2029/30 is c.70,600 beds. When comparing the current PBSA pipeline to our more cautious estimate of shortfall, the gap looks surprisingly small. However, adding the number of poor-quality beds that need to be replaced (mainly university, but some private sector too), the actual requirement is c. 27,700 new beds per year. At a UK level, current levels of delivery would not be too far behind the level of need, had it not been for the impacts of (for example) increased interest rates, construction inflation and land prices. However, some markets have unmet demand but without rent levels strong enough to support new development. If we make a broad assumption around a ‘viable’ rent level of £240 per week, we estimate that only c. 63,800 (c. 60%) beds that are required to meet the shortfall or replace poor- quality university beds in certain markets fall above the viability threshold. A Student First Group research report | April 2026 | Page 31

4 CAPITAL SOLUTIONS Student Village: a DBFO partnership between Hochtief, Plenary and University of Staffordshire, due to open 2026 Image courtesy of Corstorphine & Wright Architects Page 32 | SFG | Meeting demand for modernised university-owned accommodation

Most universities have limited capital. For others, investing in accommodation faces competition from teaching and research Competition for capital at universities Much has been written about the UK Higher Education sector’s financial challenges. Faced with frozen home tuition fees, universities have increasingly chased recruitment of international students, some with more success than others, and some are better placed to maintain recruitment in the face of a slowdown in this market. The majority of universities have limited capital, and even those who are better placed – with larger reserves, and limited borrowing – face the same constraint: investment in accommodation, no matter how pressing, often ends up as a lower priority than investment in their core business of teaching and research. Funding and capital options In this situation, where accommodation is the only one of these to have its own separate funding stream through rents, universities have tended to focus their own capital on teaching and research, and to seek alternative funding for accommodation projects. We review these in more detail in Section 5, but broadly, these sources have tended to be bond finance, income strip funding, and private real estate investment, which then split into other options depending on how they are structured, whether a third party investor or developer is involved (e.g. with a JV), and how the risk is split with them or the university. Universities’ financial performance metrics for their residential estates These vary greatly, and are often sub-optimal or even non-existent. They are a world away from the more systematised approaches that professional PBSA operators employ. This is partly because of the way the different costs associated with the residential estate are often scattered across a number of university departments, and so the seemingly simple question of ‘what are your residential operating costs?’ often becomes very hard to answer accurately. In turn this is often because financial performance is measured with a different set of criteria in mind than one finds in the private sector. Universities are often more concerned with balancing the twin priorities of keeping rents affordable and not losing money; they are not preoccupied with measuring return on investment as the private sector is. A Student First Group research report | April 2026 | Page 33

We estimate c. £25 billion for the market value of UK universities’ freehold residential estates The value of a university’s residential estate is informed by a large number of factors such as size, title and tenure, macro- and micro-location, quality and specification, amenity provision, and market conditions at the time of assessing value. One factor that has increased in weighting is fire safety: any issues associated with this can have a potentially significant impact on value, to account for remediation costs that are required for fire safety compliance. In addition, transactional evidence for university-owned residential assets is often very scarce, so to arrive at an estimate of the value that universities have tied up in existing student accommodation, a set of broad assumptions are required. To do this, for each university-owned residential asset in the UK, we have applied a simplified classification based on the location and credentials of the relevant PBSA market that would affect investor appetite, e.g. number of full-time students in the city, the ranking of the universities, and the supply and demand dynamics. We have excluded assets that form part of a private sector partnership, where we consider value as already ‘extracted’. We have then applied a very broad assumption of capital value per bed to the assets in each market based on available comparable evidence. Depending on location, our assumptions of capital value per bed range from £60,000 to £300,000 for assets ranked as Quality A or B, and between £25,000 to £180,000 for those ranked as Quality C or D. Reception at Unite Students’ Charlton Court, Bath Page 34 | SFG | Meeting demand for modernised university-owned accommodation

Using this very simple methodology – which, it should go without saying, does not constitute a formal valuation – we arrive at an estimated value of c. £25 billion attributed to UK universities’ freehold residential estates. Table 4.1 shows that this figure is made up of 249 assets classified as Quality A and B, and 858 that are Quality C and D. The assets categorised as Quality C and D make up c. 77% of the total residential estate, but only c. 62% of the total value of c. £25 billion. These poor-quality assets are more likely to be included by universities as part of any stock transfer into a partnership, as if they are capable of refurbishment they are likely to add value to the partnership, and could help the overall viability if new build opportunities are also envisaged as part of the arrangement. Table 4.1 : Estimated value of freehold UK university residential estate Quality rating Assets Gross value (£ billion) % of total value Number % A 26 2% 1.5 6% B 223 20% 8.3 33% C 656 59% 12.7 50% D 200 18% 2.9 12% 1,105 25.4 Section 4: Conclusion Frozen tuition fees and intense competition for scarce capital have forced universities to deprioritise accommodation investment in favour of teaching and research. Where funding is needed, they have turned to bond finance, income strips, and private real estate partnerships. Universities also tend to measure residential financial performance poorly — costs are scattered across departments, and the focus is on affordability rather than return on investment. SFG estimates the total market value of UK universities’ freehold residential estates at around £25 billion. A Student First Group research report | April 2026 | Page 35

Cambridge Halls: a JV partnership between Unite Students and Manchester Metropolitan University 5 DELIVERY SOLUTIONS Page 36 | SFG | Meeting demand for modernised university-owned accommodation

Doing nothing will cease to be an option It has become a platitude, at this point in similar studies, to say that doing nothing is not an option. This ignores the fact that many universities have done exactly that. It is not a good option. The widespread issues over quality in a lot of old and poorly-maintained university stock have an impact on student well-being, mental health, and individual academic success. Whether this in turn has an impact on recruitment, retention and reputation largely depends on the underlying academic strength of the institution. Those at the top of the league table are better inured against this impact: for every student who cannot afford their accommodation (or having seen it cannot abide the thought of living in it) and chooses to study somewhere else, another student will take their place. Those towards the middle and bottom of the league table tend to measure this impact more readily, and on the whole have done more to improve their residential estates to ensure that accommodation is not an open-day turn-off. This is the picture we get from a helicopter view of the sector. If we zoom in we can of course see many accommodation teams in institutions at the top of the league table who see at first hand the impact it has on students, and who are doing their level best to convince their executive teams and governing bodies that doing nothing should not be an option. Therefore, perhaps it is more accurate and fairer to say that ‘doing nothing is an option that only a minority of voices in universities are advocating, but is the default option for universities who have found it difficult to make a successful case for investment’. And that ‘minority of voices’ tends not to say that poor- quality accommodation somehow doesn’t matter, but rather that it shouldn’t be a university’s issue in the first place, and that the private sector should be leant on to deal with it, be it through selling off assets or replacing with nominations at off-campus schemes. Social space at Unite Students’ Sky Plaza, Leeds A Student First Group research report | April 2026 | Page 37

Types of partnership solutions available to universities to modernise their residences We have seen a shift away from university-funded accommodation and towards partnerships, including JV, DBFO and other forms of partnership direct with funders (e.g. University of the West of England and Canada Life). With no end to the financial squeeze on universities on the horizon, we expect this to increase over time. SFG has described options for universities seeking a partnership solution in its series of research papers , notably ‘Student housing: university partnerships in the UK’ (2022) and ‘Student Accommodation Strategy Toolbox’ (2024). Since these were written, JVs have gained more traction through Unite Students’ partnerships with Newcastle University and Manchester Metropolitan University. Table 5.1 summarises the various types of PBSA in the market, ranging from university-owned at the top through to privately-owned at the bottom, with all the gradations of partnership in the middle. University risk and control gradually reduces from top to bottom. The number of universities considering major investments into their own residential estates with their own capital or through traditional borrowing has dwindled to a small minority. Most universities do not have the spending power to consider this option, and those that do (either through reserves or unused bond facilities) face strong internal competition for deployment of capital for academic or research investments that are not directly income-producing. A lack of capital, and a desire to minimise the impact of agreements on the balance sheet, will continue to be the primary driver for partnerships. There are many other secondary benefits to partnerships that universities enjoy, through access to experience and expertise in terms of planning, development, funding and operations. The structure of long-term partnerships also means that funders and equity providers insist upon sinking funds for lifecycle being in place, which universities have very rarely done due to pressures to reduce their operating costs. Page 38 | SFG | Meeting demand for modernised university-owned accommodation

Table 5.1 : Types of PBSA ownership and partnership in the UK Who owns it? Who operates it? Who sets the rent and licence lengths? How many beds in the UK? University University University University c. 272,000 More University control Less University control Finance lease (income strip) University with lease to funder University University (to cover finance costs) c. 11,000 Operating lease Private investor with lease to University Private operator (hard FM); university (soft FM) University (to cover lease rent) Joint Venture (JV) JV between University and partner JV JV c. 4,300 under development Design, Build, Finance, Operate (DBFO) University with lease to partner Partner (hard FM) Partner or university (soft FM) Index and collar c. 62,000 Nomination agreements Private investor Private operator Negotiated with private operator Reservation agreements Private investor Private operator Private operator Direct let Private investor Private operator Private operator c. 416,000 A Student First Group research report | April 2026 | Page 39

Universities typically have a series of major considerations in choosing the partnership solution that is right for them Considering a partnership is a significant step for a university, particularly if it has traditionally relied solely on its own accommodation, operated by an in ‑ house team. Many different factors will influence the decision around the most appropriate solution: there is no one size fits all. Each university will reflect on its own balance of priorities, which form part of wider reflections around its residential strategy and how it prepares for its capital programme. SFG explores this process in its research papers (see previous page), which includes aligning estate and residential strategies to the corporate plan, establishing governance support and clear delegated processes, data room preparation, and ensuring the project team is properly led and resourced. Balance sheet treatment. One of the biggest drivers for partnerships has been the ability to achieve off ‑ balance sheet status, freeing the university to use its borrowing headroom on academic ‑ related investment. The nature of the partnership structure affects how it is treated through the balance sheet, so this area needs very careful planning with auditors to ensure the university’s requirements will be met. How should it be procured? Universities are tightly governed by procurement rules, whether they are considered as Contracting Authorities under the Procurement Act 2023 or not. Even though property transactions are considered outside of the regulations, universities are always keen to ensure that they are getting the best value, so will want to balance the risks, opportunities, timescales and costs of different approaches. Page 40 | SFG | Meeting demand for modernised university-owned accommodation

What happens when buildings reach the end of their operational life? Creating new or refurbished beds under a partnership gives security over the medium term, however universities are interested in what options they have when new or refurbished stock eventually reaches the end of its useful life. What is being given up, and for how long? All partnerships will involve the granting of leases, and this can be more palatable to universities than selling a freehold (which is often seen as ‘selling the family silver’). However, unlike the family silver, that can be kept in the safe, retaining student accommodation comes with significant ongoing liabilities. Control over rent levels. Universities are used to having almost complete control of their rents, which must be relinquished in a partnership. The level of retained control can differ both through the different types of partnership and how each one is structured. Typically, for a DBFO, rents are indexed (e.g. against CPI) within a collar, while for JVs there is a market review and agreement at board level. Track record of partnership. While all universities consider themselves unique in some ways, knowing that there are clear demonstrations of successful partnerships, be it in terms of the type of structure, or the potential partners themselves, provides a sense of security, reduced risk and reference point for peer ‑ to ‑ peer support. The partner’s track record in terms of delivering a consistently high ‑ quality student experience will be a major criterion. Operational control and flexibility. Most universities are used to the flexibility and control of operating their own accommodation, whether that is through an in ‑ house team or via a mix of in ‑ house personnel and short ‑ term FM contracts. They will need to consider how much of this control and flexibility they wish to retain, as different partnership structures come with different levels, regardless of whether the actual FM operations are outsourced to the partner or retained by the university. A Student First Group research report | April 2026 | Page 41

Closer partnership working between universities, funders, operators and developers ought to make significant inroads to improving the student experience across the UK Section 5: Conclusion Inaction on poor-quality accommodation is not a viable strategy, even if it has become the default for many universities unable to make a successful internal case for investment. Poor housing affects student wellbeing, retention and reputation — though top-ranked universities are more insulated from the consequences. For those who do act, self-funding is now rarely feasible. As a result, JVs, DBFOs, and other private partnerships are increasingly the norm, bringing not just funding but expertise in development, operations, and lifecycle planning that universities typically lack. Reception at Unite Students’ Greetham Street, Portsmouth Page 42 | SFG | Meeting demand for modernised university-owned accommodation

CONTACTS Student First Group Ltd Registered office: 1 Newton Road, Little Shelford, Cambridge CB22 5HL w: sfg.ltd Martin Hadland Founder & Managing Director m: +44 7772 064 600 e: martin@sfg.ltd Richard Gabelich Founder & Chief Executive Officer m: +44 7407 399 117 e: richard@sfg.ltd Robert Kingham Director – Head of Advisory m: +44 7311 275 105 e: robert@sfg.ltd Andrew May Director – Head of Commercial m: +44 7710 899 014 e: andrew@sfg.ltd The Unite Group PLC Registered office: Number One, Welcome Building, Bristol BS2 0PS w: unitegroup.com Simon Jones Group HE Director m: +44 (0) 7983 596 372 e: simon.jones@unitestudents.com Moray Notman University Partner Commercial Director m: +44 (0) 7507 664 491 e: moray.notman@unitestudents.com A Student First Group research report | April 2026 | Page 43

A APPENDIX: NOTES Page 44 | SFG | Meeting demand for modernised university-owned accommodation

Many redevelopments are driven by improving quality and as a benefit deliver higher density Note i (to page 19) Redevelopment can improve density and land use, which is particularly important if universities need to increase quantity as well as quality. As an example, Chart i.1 shows a selection of 12 on-campus projects, encompassing demolition of old halls of residence and construction of new PBSA, that have either received planning permission or been built within the last 10 years. Each of the 12 columns shows: • the number of old beds in that project that were, or will be demolished (as the light blue column beneath the x axis); and • the number of new beds in the new building replacing them (as the dark blue column above the x axis). All of these projects have involved an increase in the number of beds, and two-thirds of them have at least doubled the number of beds. They are shown in order of this proportionate increase. There is likely to be a clear bias in the data, as the decision to rebuild will likely have been influenced significantly by the ability to intensify density on each site. Some of the redevelopments on the left of the chart, that yielded smaller (but still significant) increases of 20% - 60%, had existing poor condition (in a good location) as a stronger driver. Meanwhile, for developments on the right of the chart, the number of beds more than tripled. Each site will have been very different but the common theme across all of these examples was the ability to increase density through redevelopment. Of course, the process of option appraisal leading to development will have naturally selected projects that do this, but the point is that for universities with a strong need to increase the number of beds available to students, redevelopment will often have an advantage over refurbishment. This has also been an important consideration for universities that are focused on consolidating their estates. SFG has been advising two universities in different city centre locations that have been considering significant redevelopment of existing sites, in order to maximise land value and also facilitate sale of other parts of their freehold residential estates that are approaching the end of their economic life. In both cases, these redevelopments will provide more beds than each institution actually needs for its own students, and the idea is to offer the surplus beds to the private sector or to other institutions, in order to maximise density and land use, and improve economies of scale. One project is probably not currently viable, but the other (London) one is. Chart i.1 : Selected large on-campus PBSA redevelopments: number of beds demolished and rebuilt on same site -1,000 -562 -458 -1,250 -850 -170 -1,000 -1,275 -770 -598 -350 -600 1,200 783 649 2,0001,900 420 2,500 3,361 2,300 1,944 1,164 2,113 -1,500 -1,000 -500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Beds (demolished) Beds (new build) A Student First Group research report | April 2026 | Page 45

Methodology for estimating the amount universities need to invest to improve the quality of their residential estates Note ii (to page 20) To quantify the overall investment requirement, we must make some assumptions. The quality classification itself is a broad measure, as each quality band represents a spectrum in itself. The investment requirement in any particular residence is also influenced by other factors that may not be immediately apparent. Some sites need little cosmetic work to compete with higher-quality contemporary accommodation, yet have underlying issues (often relating to fire safety or infrastructure) that require significant investment. Nevertheless, we can make some assumptions in order to reach a reasonable estimate of the likely required capital investment, on the basis that those sites requiring higher or lower levels of investment will balance each other out. For this analysis we have made the following broad assumptions: • Residences of Quality A or B require no investment at all, beyond standard maintenance and ongoing lifecycle spend, which is not captured here. • Residences of Quality C require a reasonably comprehensive refurbishment to demonstrably lift the perceived standard of the accommodation and address any underlying issues with building condition. This cost could vary significantly. Using data from comparable projects we have modelled an average cost of £45,000 per bed (or £52,500 in London). • For residences of Quality D the high level of refurbishment needed to bring them in line with contemporary accommodation, and the limitations of the resultant product, is such that demolition and complete rebuild is likely to be more viable. We have modelled a cost of £150,000 per bed (£175,000 in London). • These figures are outturn development costs rather than construction costs so allow for fees and irrecoverable VAT on refurbishment. • Naturally there will be many exceptions to this that could only be determined by full feasibility studies, for example where Quality C beds are justified in being redeveloped, or Quality D beds are capable of satisfactory refurbishment. • We also assume that refurbishment and/or redevelopment to the level required is actually possible, whereas in reality many sites will have constraints around planning and heritage, particularly in large historic institutions. • While it is usually possible to increase the number of beds on a site when completely redeveloping, to simplify this analysis we have assumed that beds are replaced like-for-like with no net increase. Page 46 | SFG | Meeting demand for modernised university-owned accommodation

From experience, and rental growth analysis, 1.9 : 1 students per bed is a useful proxy calibration for a ‘balanced’ market Note iii (to page 23) There are many student housing markets in the UK: some we would consider under-supplied, some balanced, and some saturated. There are two potential measures we can use to gauge where each sits: one is a student-to-bed ratio, and the other is rental growth. It is interesting to compare the two to see their correlation, and also highlight the limitations of each, particularly given that the ’shocks to the market’ in 2025 were prone to make the dials go crazy on whichever tool of measurement one tried to use. Graph iii.1 uses Student Crowd data to plot student housing markets (i.e. towns and cities) as an individual dot, according to these two measures: along the y-axis, a student-to-bed ratio using 2024/25 HESA data, using the ‘demand pool’ of students (i.e. excluding those in their own or parents’ homes), and existing PBSA beds in 2025/26 (both university and private); and along the x-axis, an average annual rental growth between September 2023 and September 2025, for private sector PBSA only (as university rental increases are often dictated by policy rather than market forces), and focused on en-suite rooms (as a typical product excluding expensive studios and more affordable schemes with shared bathrooms). We have only included those room types that can be directly traced across the two-year interval. The graph is scaled for ease of reading to exclude a few outliers, as we are primarily interested in the correlation for the majority of markets. There is a visible correlation shown by the white dotted trend line in Graph iii.1, although there is a great deal of variance either side of this. In general, the greater the student-to-bed ratio, the harder it is for a student to find a bed, and so the greater the average rental increase. The large variance is mainly caused by each of these markets having, to a greater or lesser degree, alternative accommodation options for students that are invisible to this analysis (e.g. HMOs, other private sector options, and commutable satellite dormitory destinations). Thus, there are markets with high student-to-bed ratios but modest rental growth, because so many students are finding HMOs rather than competing for limited PBSA, and markets where the reverse is happening. As a proxy for determining whether a market is under- or over-supplied, we compare these rental growths to CPIH for the same period, a yearly average of 3.33%, shown by the vertical red dotted line. The majority of markets with a student-to-bed ratio of at least 1.9 : 1 experienced rental growth above CPIH. This accords with analysis that SFG has undertaken for individual universities and markets as part of more detailed demand and supply studies. This student-to-bed ratio is a useful proxy for considering the UK as a whole, where we might expect at least some of the variances between markets to cancel each other out, but this is not a hard and fast rule, and too blunt a tool for analysing individual markets. A Student First Group research report | April 2026 | Page 47

Graph iii.1 : Student-to-bed ratio vs rental growth in UK PBSA markets 0.90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 1.90 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70 2.80 2.90 3.00 -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% City-wide student-to-bed ratio (demand pool, all PBSA) City average rent CAGR for en-suite bed 2023/24 - 2025/26 trendline CPIH for same period (3.33%) Page 48 | SFG | Meeting demand for modernised university-owned accommodation

Methodology for estimating the size of the student accommodation shortfall in the UK Note iv (to page 24) First, we considered how many beds are required purely for latent demand, i.e. ignoring forecast growth. Excluding London (which is so large and peculiar as to warrant being considered separately), this generates a need for a further c. 49,000 beds. There are c. 646,000 existing operational beds outside of London so this would represent a 7.6% increase. To illustrate the sensitivity of this analysis (because 1.9 : 1 is only an assumption), a target ratio of 2.0 : 1 reduces this figure to 37,000, and a ratio of 1.8 : 1 increases it to 66,000. A more precise estimate for London would be an intricate and challenging piece of work in its own right. Using the methodology above, the student-to- bed ratio for London is 1.8 : 1, which seems fairly balanced compared to other markets, but this would be to ignore the scale of the city, the large numbers of Londoners that commute to London universities, and the disproportionate attraction the capital has for international students. For the purposes of this analysis, we have adopted the Greater London Authority’s estimate (made in 2018) that London needs 3,500 new beds per year, to reach 170,000 in total by 2041/42. Working backwards, this would require 114,000 beds in 2025: London currently has c. 105,500, which generates a total current need for a further c. 8,500. This may be conservative, but it has the benefit of aligning with policy. Note v (to page 25) The Office for National Statistics (ONS) forecasts a 4.3% increase in 15-19-year-olds between 2025/26 and 2029/30. To apply this to our analysis requires some significant assumptions about future trends: • the proportion of 18-year-olds that go to university remains constant; • the trend of commuter students does not increase beyond its 2025/26 level; • international students coming to the UK remain flat over that period; • 90% of international students are in the demand pool, with the remaining 10% living with friends or extended family; and • the Renters’ Rights Act 2025 does not significantly alter the balance of supply between PBSA and HMOs. It seems unlikely that all of these factors will stay still, but if they do, or if their effects cancel each other out, then the impact of the ‘demographic bulge’ could generate demand for a further c. 18,500 beds. Our estimate includes another four years of London growth (14,000 beds), plus nearly 5,000 beds in the rest of the UK. We assume that the non-London growth is spread evenly across the whole of the UK, so that the currently under-supplied markets need to grow further, while the saturated markets can absorb this growth without further development. There is, of course, a possibility that the saturated markets (by having the edge on affordability) will be able to absorb more growth than the currently under- supplied markets, but this is another ‘unknown’ that cannot be predicted. A Student First Group research report | April 2026 | Page 49

Note vi (to page 26) The Office for National Statistics (ONS) forecasts a 9.1% increase in 15-19-year-olds between 2023/24 and 2029/30. To apply this to our analysis requires some significant assumptions about future trends: We consider these to be conservative, cautious figures. Nevertheless, if viability challenges persist, even these targets may not be met. That aside, we would expect any combination of these unpredictable factors to increase demand beyond these figures: • the proportion of 18-year-olds that go to university increases; • international students increase; or • the Renters’ Rights Act 2025 significantly reduces the supply of HMOs available to students. At the same time, other unpredictable factors may act to reduce the demand: • alternative accommodation options for students (e.g. private rented, co-living) continue to grow; • the trend of increasing commuter students continues and more remain with their parents, friends or extended family; or • university delivery models emerge that require a different attendance pattern (e.g. three intensive weeks on campus per semester and the rest distance learning). Page 50 | SFG | Meeting demand for modernised university-owned accommodation

MEETING DEMAND FOR MODERNISED UNIVERSITY-OWNED ACCOMMODATION A Student First Group research report April 2026 Registered office: 1 Newton Road Little Shelford Cambridge CB22 5HL w: sfg.ltd Registered office: Number One, Welcome Building, Bristol BS2 0PS w: unitegroup.com