Top Grades, Tight Supply: Why Student Housing Demand Is Set to Surge

The recent A-level results are a welcome reminder that there’s always potential on the horizon, even when we’re facing challenges now. For the public at large, it’s encouraging to see that our young people are increasingly educated and hardworking. For property investors, it might just set the strategic cogs in their minds turning.

Top A-level grades reached a record high this year, with pupils across the UK seeing an uptick in A*s and As. We saw the share of top grades climb to 28.3% – up from 27.8% in 2024. This will inevitably lead to an uptick in university applications.

Cash-strapped universities are keen to fill as many seats as possible, so strong results will be welcome news. In fact, UCAS revealed that a record number of applicants have been accepted onto their first-choice degree this year, up 3.1% compared to last year.

Many of these students will need a place to stay. Yet, property investors seem to be shying away from the opportunity here. Handelsbanken’s latest property investor report revealed that 34% of investors intend to exit student housing and HMO holdings entirely in 2025, up from 22% in 2024. Meanwhile, a further 20% plan to significantly reduce exposure.

This is despite the fact there is a clear lack of student housing in the UK. Cushman & Wakefield's UK Student Accommodation Report showed that across the UK, there are 1,489,110 students in need of student accommodation. Nearly all (96.4%) students seek housing during their academic years, yet the net increase in beds for the 2023/24 academic year was just 8,760.

We’re in a position where there is clear market demand, a lack of supply, and only a limited amount of time to act before the next academic year begins. This could all come together to create a perfect storm for specialist lenders – who can deliver purchasing finance within mere days to allow borrowers to jump on opportunities.

And there are opportunities. According to the Quacquarelli Symonds World University Rankings, London takes the top spot for being the most student-friendly city. It’s out-ranked other major cities by some margin, including Sydney, Toronto, and New York.

Focusing solely on the UK, Uni Compare analysed UK university cities on a range of factors including affordability, safety, university quality and public transport. In its rankings, Newcastle upon Tyne took the top spot, while Cambridge, Manchester, and Leeds also ranked highly.

Also, even if there is hesitancy among property investors where the residential market is concerned, there may be alternative routes to target the student world. Many within the new generations of students are shunning the drinking culture of those who came before.

Yoga and wellness activities are quickly replacing late nights and expensive parties. Perhaps, it could prove fruitful to invest in yoga studios or meditation hubs in certain university towns!

Regardless of how, or where borrowers plan to invest in this market, we have a range of tools at our disposal to facilitate action. For instance, we can consider unlimited bed HMOS with our residential BTL products, even where the landlord involved may be struggling with certain adverse credit issues. Moreover, with our commercial range, we may be able to assist with purpose-built student accommodation investments, an area many high street lenders shy away from.  

The 2025/26 academic year is quickly approaching, and it could be one for the books. Property investors need to take note, and start doing their homework. Fortunately, we can help with this at Market Financial Solutions. We have a range of educational pieces on the property market, including a CPD course on student accommodation. Moreover, we have a comprehensive guide on HMO properties, blogs on student-related opportunities, and more.   

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