UK PBSA: Lower Transactional Volumes, But Why?

The UK Purpose Built Student Accommodation (PBSA) sector has seen a notable drop in transactional volumes over the past 18-24 months. This may appear surprising against a backdrop of continued investor appetite, healthy sector fundamentals and an undersupply of quality assets. But when we examine the evolving due diligence and compliance landscape, particularly around fire safety, the slowdown becomes easier to understand.

The Rising Bar of Fire Safety Compliance

A look back at historic sales packs reveals how recently fire safety documentation has risen to the top of investors' checklists. The External Wall Survey (EWS1) was introduced by the RICS in 2019 as a tool for valuers, but the earliest we encountered one in a PBSA sales pack was in 2022. A year later, in 2023, we saw the introduction of the Fire Risk Appraisal of External Walls (FRAEW) - now a near-standard requirement for a successful transaction

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Today, it’s virtually impossible to progress a deal without a valid EWS1 rating or FRAEW. These are among the first questions asked by buyers and failure to provide them usually means you cannot expect to move past go.

In fact, well-prepared vendors now compile comprehensive compliance matrices as part of their sales documentation. These typically include:

• FRAEW assessment
• Internal Fire Risk Assessments
• Compartmentation surveys
• Fire door inspections

Whether or not the asset is deemed a High-Risk Building (HRB) by the Building Safety Regulator (BSR), or even shows visible signs of cladding, fire safety scrutiny applies. The market has learned, often the hard way, that risk is not always visible. Combustible insulation, missing cavity barriers and ineffective fire-stopping measures can be hidden behind seemingly compliant facades. As a result, wall build-up is now a crucial part of due diligence, irrespective of building height.

Legacy Acquisitions, New Risk Landscape

Many PBSA owners acquired their assets before this wave of fire safety reform. Their due diligence was appropriate for the time, but today that same building may be flagged for remediation due to evolving guidance and regulation.

If you’ve avoided the cost of remediation, it’s more likely due to luck than foresight.

No one disputes the need for enhanced safety, especially post-Grenfell, and the sector supports these developments. But their impact on transactional certainty has been significant.

We estimate over £1 billion worth of agreed PBSA deals have collapsed in the last 18 months due to fire safety compliance and remediation challenges. If those deals had completed, market sentiment would look far more optimistic.

The Problem Isn't Risk, It's Interpretation

The issue is not the presence of fire-related defects, these have always been part of property transactions. The real challenge is how the sector identifies, assesses and responds to them.

The British Standards Institution’s PAS9980 methodology, used to prepare a FRAEW, relies heavily on professional judgement. Two experienced Fire Engineers can assess the same building and arrive at very different conclusions. One might adopt a conservative stance; the other, a more pragmatic view based on risk tolerance.

This subjectivity becomes a deal breaker when buyer and seller rely on different consultants. Without consensus, or a clear path forward for remediation, many deals stall or fall away completely.

Even where both parties agree remediation is needed, the absence of an agreed specification of works or confirmed costs adds further uncertainty. Without moving toward PCSA (Pre-Construction Services Agreement) and contractor pricing, a transaction cannot proceed with confidence.

The EWS1 Trap

A word of caution: the sector is placing too much emphasis on the EWS1 certificate. These forms were developed primarily to support mortgage lending decisions in the residential leasehold market, not complex operational assets like PBSA.

A FRAEW is far more appropriate. It considers building-specific fire safety holistically and places findings on a risk-based spectrum, not a binary pass / fail. For example, it is possible to have a building with a low overall fire risk that still holds a B1 EWS1 rating.

If we continue to rely on EWS1 forms as shorthand for building safety in PBSA, we risk oversimplifying nuanced risk assessments and delaying progress.

Investor Sentiment Is Strong. So What’s Holding Us Back?

Investor interest remains robust. Sensibly priced assets attract multiple bids and new entrants are actively seeking opportunities. The problem isn’t demand, it’s the time it takes to get deals over the line.

Sellers are adapting. More are conducting comprehensive vendor technical due diligence before going to market, which inevitably extends lead times. Buyers, on the other hand, are understandably cautious about future liquidity and remediation risk.

It’s a sector in transition. And while that means fewer deals in the short term, it doesn’t reflect a lack of confidence. It reflects a maturing understanding of what it takes to transact responsibly and sustainably in today’s environment.

A More Informed Path Forward

We cannot expect legacy stock to align perfectly with modern standards. What we can expect is a more consistent, risk-informed approach to building safety. That means moving beyond the binary EWS1 mindset and adopting a broader, more practical interpretation of risk through tools like the FRAEW.

Until market participants align on what “acceptable risk” looks like, transactional volumes will remain suppressed. But with greater transparency, improved due diligence and continued dialogue, the sector is on the right trajectory.

And that’s exactly where it needs to be.