Student accommodation provider Unite Group is seeing a squeeze on occupancy and rental growth as it continues to shift its focus to higher tariff universities.
The company posted rental growth of 4% for the 2025/26 academic year, down from 8.2% in the previous 12 months, and occupancy fell to 95.2% from 97.5%.
It expects to deliver occupancy and rental growth towards the lower end of its guidance ranges of 93-96% and 2-3% respectively for the 2026/27 academic year. This translates to like-for-like income growth of 0-2% (previously 0-4%).
Unite said property operating costs increased by 10% in 2025 (2024: 8%), principally driven by higher staff costs, increased marketing activity and additional central and other costs.
At the end of the year, it cut its central team costs by approximately 20%, responding to lower income for the 2025/26 academic year.
“We will maintain an appropriate cost base to reflect the operational performance of the business,” it said.
The company said the highest quality universities continue to see healthy accommodation demand as the “enduring appeal” of the UK’s top universities attracts students from around the world.
At lower-tariff providers, an increasing proportion of students are choosing to live at home as an alternative to the traditional residential experience. At these universities, around half of students now choose to live at home to reduce the overall cost of university, compared to only 15% at high-tariff providers.
Supply of purposed built student accommodation (PBSA) grew by around 10,000 beds in 2025, net of beds leaving the market, equivalent to 1.5% growth in PBSA supply (Source: Cushman and Wakefield).
This remains significantly below levels of new supply in the period prior to the pandemic. Weekly rents of around £230 are now required to make development viable outside London, above market rents in 85% of our regional cities.
In response to increasing costs, new supply is increasingly focused on higher price studio accommodation and is targeting a different market segment to Unite’s predominantly cluster-flat portfolio.
“Positively, we saw build cost inflation moderate during the year, although the availability of skilled labour remains tight, and build costs remain around 50% higher than five years ago.”
Adjusted earnings increased by 9% to £232.3 million, driven by rental growth and investment activity.
However, IFRS profit attributable to owners fell by 78% to £97.6m, primarily due to a property portfolio valuation decrease.
The company proposes a dividend per share of 37.7p, a 1% increase, and is undertaking a £100m share buyback programme.
It has announced the disposal of St Pancras Way in London to USAF for £186m (Unite share: £126m), which forms part of the group’s target to accelerate disposals to £300-400m a year.
The acquisition of Empiric, which completed in January 2026, brings a high-quality 7,700-bed PBSA portfolio and enables the company to better meet the needs of the attractive returner student segment.
During the year, Unite delivered more than 1,000 additional beds for 2025/26 academic year, with 623 at Avon Point in Bristol and 402 at Burnet Point in Edinburgh.
For 2026, Unite Students anticipates lower income due to weaker Empiric performance and occupancy.
UCAS undergraduate data for the 2026/27 academic year shows 5% growth in UK 18-year-old applicants.
Joe Lister, chief executive of Unite Students, commented: “Unite Students delivered a robust performance in 2025, with strong trading across the majority of our portfolio offset by weaker demand in a small number of cities for the 2025/26 academic year.
“Growing domestic demand for higher education, improving international mobility and constrained housing supply underpin the long-term prospects for the sector. Students continue to place high value on the residential university experience.
“We have started to deliver on the strategic plan set out at the end of 2025, focusing on closer alignment to the strongest universities, building on our university partnerships and taking decisive action on costs.
“We have also demonstrated our disciplined approach to capital, having commenced a £100m share buyback in January and this morning announcing the sale of St Pancras Way to USAF.
“While there is much to do, we are making early progress and building momentum. Delivering the benefits from our plan, together with the Empiric acquisition, provides a strong platform for 2027 and beyond.”
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