The BTR boom: a wake-up call for PBSA

The student housing market is in the midst of a big shift. With the Build-to-Rent (BTR) boom, PBSA (Purpose-Built Student Accommodation) operators are likely feeling the pressure in the competitive student rental market. BTRs are attracting a broad range of tenants – even beyond students, offering a premium experience with the latest tech, modern amenities, and a focus on premium living. They’re also gaining significant investor attention as an expansion strategy, thanks to their newer builds and tendency to deliver rental yields similar to PBSAs.

For PBSA operators, the challenge is clear: How do you grow revenue but stay affordable, all whilst delivering a premium experience to compete with BTR’s offerings?

The solution is simpler than it seems but harder to execute: PBSA needs to evolve. Digital tools, automation, and staying ahead of compliance—especially regarding safety and sustainability—are essential to keeping up and staying competitive.

Managing CapEx challenges with legacy buildings and new regulations

Managing CapEx and returns in PBSA is always a delicate balancing act. Juggling revenue growth, tenant satisfaction, and property quality is a constant challenge for operators, especially when older buildings require ongoing upgrades to remain competitive and compliant.

What does CapEx mean for PBSA? 💰
Essentially, CapEx (capital expenditure) in PBSA is the spending that directly impacts the property’s condition, value, and long-term operational efficiency, which can drive higher rents, tenant satisfaction, and investment appeal.

It differs from operational expenses (OpEx), which are day-to-day running costs like staff salaries, utility bills, and routine maintenance. CapEx, on the other hand, is focused on bigger investments with long-term returns.

The complexity increases with the growing pressure to meet new regulations, such as ESG standards and fire safety requirements. Under the Building Safety Act (BSA), new building approvals require extra safety checks, often adding up to six months to delivery timelines. For older properties, meeting these standards can delay renovations and raise costs—impacting your CapEx budget and potentially reducing property value and investor appeal if not managed carefully.

What does the Building Safety Act mean for my PBSA properties?

One of the biggest but most significant unknowns impacting PBSA right now is the Building Safety Act. Although the Building Safety Act was introduced in 2022, its full impact is still being understood. Both the industry and regulators are still navigating its real-world implications and how it will shape property management and development moving forward.

The Building Safety Act introduces stricter fire safety regulations and oversight, creating more hoops to jump through for property owners and developers. With the introduction of the Golden Thread requirement in the Building Safety Act (BSA), all building records must be centralised, up-to-date, and easily accessible for regulatory inspections.

For PBSA operators, this raises the question: Are your building documents ready for this level of scrutiny? Ensuring your records are easily retrievable and well-organised can save significant time and avoid the risk of costly delays or fines when regulators come knocking.

With many PBSA operators managing older buildings, this can add significant delays to renovation and refurbishment projects.

The good news is that while these regulations add complexity, they also drive long-term value. The more up-to-date your property is with safety measures, the more attractive it becomes to investors looking for secure, long-term investments. The flip side is that if you’re not planning for these upgrades now, you risk facing increased costs and delays in the future.

Delaying these essential upgrades may prompt investors to shift their focus to BTRs, which feature newer builds already compliant with regulations. Ongoing delays and rising costs in PBSA can make your property less attractive, potentially diminishing investor interest. Adopting a proactive approach to the BSA and other regulations means understanding what needs to be done ahead of time—so you can manage your CapEx efficiently and avoid any nasty surprises.

Where should I focus my CapEx to drive the best results?

Prioritise compliance-critical upgrades

Focus on upgrades that meet regulatory standards like ESG and fire safety, while keeping your properties competitive. Energy-efficient systems, sustainable upgrades, and modernised facilities ensure compliance and enhance the tenant experience, attracting both tenants and investors. These investments protect property value and reduce operating costs.

Make win-win upgrades

Finding the balance between affordability and premium offerings is key. Students are price-sensitive, comparing PBSA to HMOs, while some can afford to explore BTRs. Smart CapEx investments, like upgrading to more sustainable energy systems, not only meet ESG requirements but reduce utility costs. Scalable, tech-driven amenities like study pods or app-based services provide a premium experience without inflating costs. The goal is to add value to both tenants and your property.

Let (the latest) digital tools do the heavy lifting

The real estate industry has traditionally been slow to digitalise, but with growing numbers of AI-powered solutions, there's now an opportunity for the industry to catch up and get a head-start with more advanced technologies. Unlike traditional industries that still rely on older, clunkier CAFM or ERP systems, PBSA can gain a competitive edge by adopting the latest AI tools—without the significant costs typically associated with transitioning to new tech.

Digital tools like payment platforms, maintenance request apps, and automated booking systems improve the tenant experience while cutting admin time and operational costs. By reducing these costs—not just in terms of money but also time and effort—you can allocate more resources to high-impact upgrades that directly impact property value.

Beyond just tenant solutions, back-end digital solutions can also be helpful for PBSA. For instance, advanced analytics platforms can provide real-time insights into building performance and tenant behaviour, helping you make smarter CapEx decisions. Tools for energy monitoring can optimise utility usage, and AI-driven platforms can predict maintenance needs to prevent costly surprises.

Documentation management is now crucial in the highly regulated residential real estate sector, particularly within PBSA. Adopting digital tools here makes it easier to store and access building records, ensuring preparedness ahead of regulations like the Building Safety Act. Often with the addition of AI, many tools can now automate documentation retrieval, flag potential missing documentation, and keep you better prepared for inspections or upgrades. By adopting a suite of digital tools, you’re not only keeping pace with industry standards but also future-proofing your portfolio against ever-evolving regulations.

Okay, but how do digital tools help?

Get the most out of your CapEx spend:

BTRs invest heavily in tech and infrastructure, and it’s paying off. PBSA can do the same by using digital tools to stretch your CapEx further. For example, with real-time data on maintenance and tenant needs, you can focus on upgrades that deliver the most value. Automating tasks like rent collection and maintenance requests also frees up more resources for big-impact projects. And with digitalised documentation management, you stay compliant and have a clear picture of your past and future investments.

Automate the tedious stuff: 

Automation isn’t just a buzzword—it’s a smart way to reduce costs. Initiatives like automating rent collection or tracking maintenance requests in real-time cuts down on manual work, freeing up resources for more strategic projects. These digital tools also help you track the success of your investments, so you can keep adjusting and improving your CapEx strategy.

Use data to make smarter decisions:

Data is one of the most valuable tools at your disposal. By gathering insights from tenant feedback, building performance, and operational metrics, you can make better decisions about where to invest your CapEx. For example, if tenants are more likely to stay in properties with upgraded heating or cooling systems, that’s where you can focus your renovation budget for the greatest return.

Maximising PBSA value in a BTR World

The BTR boom isn’t going away, and it’s putting pressure on the PBSA industry to evolve.

By focusing on strategic investments and adopting digital tools, you can cut costs, improve tenant experiences, and make your properties more appealing to investors. The steps outlined above can increase your property’s value over time, helping you stay competitive with BTRs while meeting the shifting demands of both tenants and the market.

The key is balancing your CapEx spend to create long-term value—prioritising essential upgrades, meeting regulatory demands, and exploring digital tools that can improve both tenant experience and operational efficiency.

The future of PBSA is digital, data-driven, and safety-focused. Embrace these shifts now, and you’ll not only survive the BTR boom, you’ll thrive in it.