A new report from Urbis and the Property Council of Australia warns that tenancy laws designed for the private rental market are undermining investment in purpose-built student accommodation (PBSA), a supply type the report says takes significant pressure off the broader rental market.
PBSA currently provides almost 70,000 private beds nationally and underpins Australia's $55 billion international education sector. Despite that, around 65% of the nation's 47,630-bed development pipeline is yet to commence construction, a gap the report links directly to tenancy settings in Queensland, New South Wales, and Victoria.
The report estimates these settings are contributing to $106.2 million in annual lost revenue across major PBSA markets. The losses are heavily concentrated in Sydney, which accounts for 39% of total losses (-$41.9 million) despite representing only 22% of impacted beds. Melbourne (-$35.1 million), Brisbane (-$21.9 million) and Adelaide (-$7.3 million) round out the report's city-level breakdown.
That gap, said Property Council chief executive Mike Zorbas (pictured), stems from a fundamental mismatch between conventional rental rules and the student housing model.
"Without proper targeting, these laws are chilling new investment interest in this higher quality accommodation that can drive the cost of renting down for everyone," Zorbas said.
Zorbas described the dynamic as self-reinforcing: "Blanket state and capital city tenancy laws create a policy spiral. Governments make student housing harder to operate. This makes student housing less attractive to invest in. The result is fewer projects built, fewer rooms for rent, and greater competition for existing rental housing."
New South Wales is cited as a cautionary precedent, with break lease settings there having shifted vacancy risk onto providers. The report finds the median monthly rate of leases broken per 100 rooms is markedly higher in capped-compensation Sydney (2.69) than in loss-based-compensation Melbourne (1.91), with peak monthly break rates in Sydney rising from 0.93 per 100 rooms in 2019 to 14.53 following the rule changes. Queensland's room-based rent increase rules were also flagged, delaying the resetting of discounted vacancy rents for up to 12 months. By contrast, Western Australia was highlighted as taking a more collaborative approach with industry.
Beyond the investment impact, the report flags a separate legal tension: existing tenancy laws conflict with the National Higher Education Code to Prevent and Respond to Gender-based Violence 2025. Providers required to act urgently on a disclosure under that code may find themselves in breach of standard tenancy rules that don't recognise such disclosures as valid grounds for relocation or termination.
For mortgage brokers and their property investor clients, the report's core argument is that constrained PBSA investment flows through to competition in the private rental market more broadly.
The Property Council's Student Accommodation Council is calling for either a dedicated national legislative framework for PBSA or, failing that, targeted carve-outs from existing state tenancy laws, arguing that resolving these settings would "unlock investment, support housing supply, and ensure more students are living in purpose-built accommodation instead of competing for homes in an already stretched rental market," Zorbas said.
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
