Shifting student demand reshapes the market for nominations agreements

Historically, the appetite for nominations agreements in this sector has varied depending on local demand characteristics, policy and the quality and quantity of a university’s own stock.

Where demand has been high, purpose-built student accommodation (PBSA) operators have seldom needed to broker nominations agreements with universities. Instead, these operators have relied on retaining a strong negotiating position as the universities grappled with the challenge of trying to secure beds in low supply areas to remain competitive and grow their student numbers.

The relatively recent exception to this has been in London, where the London Plan effectively requires developers of new schemes to have a nominations agreement commitment in place as part of the planning process. This, in turn, has pushed PBSA developers to secure these agreements and provide a degree of affordable beds, with most universities being happy to snap up additional affordable beds to help them meet rising demand.

Last year the number of international students declined at UK universities for the second year in a row, according to data from the Higher Education Statistics Agency. A record 262,820 UK applicants accepted university places in August 2026, indicating that domestic appetite for going to university remains very strong.

However, cost-of-living pressures have driven an increasing number of students to choose to live at home and commute in for lectures, according to data gathered by the Universities and Colleges Admissions Service (Ucas). This data suggests that the picture across the UK is becoming much more variable. Some cities are now being over-supplied with student accommodation while others are still struggling to meet demand. At the same time, universities are struggling with high building costs and some with backlog maintenance. The upshot is that refurbishing or replacing their own stock may not be an option.

Changing appetite

The appetite for nominations agreements is expected to change quite markedly as a result of these social trends.

In cities that were previously under-supplied, PBSA operators may now be much more interested in securing income – even if it is at a lower rent – from the local university, which in turn, may be willing to enter into an agreement to provide accommodation for returners – which can be a real issue in certain cities – or perhaps where their own accommodation is in desperate need of refurbishment.

Equally, cities which continue to be under-supplied may remain a seller’s market. Universities are fighting to remain competitive and to grow where possible, and need to be able to provide sufficient beds. The position regarding providing beds for returners appears to be getting more difficult in some locations where fewer houses in multiple occupation (HMOs) are now available to students.

Certain locations have witnessed a lot of PBSA being consented in recent years, which are now under construction in locations where demand may not be as strong as it once was. Nominations agreements may provide a mutually beneficial solution to both parties.

From an investor perspective, selling on assets with nominations agreements may make them more attractive in over-supplied locations.

Parties entering into such agreements need to be careful to cover issues such as the nature of the agreement; how rents will be adjusted; the level of risk taken by the university in terms of void rooms and unpaid rents; and safeguarding and even provision of alternative accommodation when things go wrong. 

Types of agreement

There are various forms of agreement in the market that offer different solutions. The most common forms are:

• AfNA (Agreement for Nominations Agreement) – these are used when the parties are transacting before the accommodation is built and will append a form of nominations agreement to be entered into at practical completion;
• ‘hard’ noms agreements – where the university commits to nominate a fixed or minimum number of rooms each year;
• ‘soft’ noms agreements – where the university has the right but not the obligation to nominate rooms each year; and
• referral agreements – where the university will market rooms and typically take a commission for any students it refers to the provider. The university will not typically take any risk on the student leaving or failing to pay.

Different parties may have differing opinions as to what each type of agreement actually means in terms of risks and responsibilities, in particular credit risk – such as non-payment by students – and void risk, where, for example, a student fails to take occupation or their tenancy is terminated during the academic year. 

There is also the potential for a mix of hard and soft noms, such as in London, where there can often be a hard noms over the affordable rooms and soft noms over some or all of the market rooms.

Getting a clear understanding early on as to what each party intends when they refer to these terms is critical to avoid future misunderstandings.

The Renters’ Rights Act

It is worth noting that university-owned student accommodation in England remains outside the scope of the Housing Act 1988 and will continue to be exempt under the Renters’ Rights Act.  PBSA benefits from a similar exemption.

However, the legislation will have an impact on how student housing in the HMO sector is managed since the broad reforms will alter the status of some tenancies, as well as the grounds under which landlords can recover possession of the underlying properties. For providers of HMO student accommodation, the reforms will also affect rent increases, payments and bidding wars, and influence relevant marketing practices.

Overall, we expect this will mean there are fewer small-scale, local landlords with stock for returning students. In both the short and long term, this will likely create growing demand from returning students, with PBSA and nominations agreements providing one potential solution for that demand pool.