21st September 2026
The collapse of a student accommodation business in Dundee has left almost 70 students scrambling to find somewhere to live just as the new academic year gets under way.
But the story is about more than one failed property company. It raises questions about the rapidly expanding student accommodation industry across Britain, particularly at a time when universities themselves are facing financial difficulties and the number of international students coming to the UK has fallen.
Marketgait Apartments in Dundee had 116 rooms and was marketed as modern student accommodation close to both Dundee and Abertay universities. Yet in July its owner went into administration after failing to repay a £5.7 million loan.
The building had only 68 rooms let. Falling demand had contributed to financial losses, while the owners were also unable to fund essential fire-safety remedial work. The building remains closed while the new owner carries out the necessary work. Students who had expected to remain there for the new academic year suddenly had to find alternative accommodation.
It is an uncomfortable situation for a sector which for many years appeared to offer an almost straightforward property investment story. Universities were expanding, student numbers were rising and purpose-built student accommodation was being built in university cities across the country.
But the market has changed.
The number of people coming to Britain on sponsored study visas has fallen substantially from its peak. In the year to June 2026, 383,455 sponsored study visas were granted, 11% fewer than a year earlier and 41% below the peak reached in the year to June 2023.
The change is particularly important because international students have been an important part of the economics of purpose-built accommodation. Modern student blocks are often considerably more expensive than traditional university halls or rooms in privately rented houses. Students who can afford the higher rents, including some overseas students, have therefore been an important market.
At the same time, domestic students are facing their own affordability problems. Some are increasingly choosing to live at home and commute rather than pay for accommodation in the university city.
That creates a rather strange situation. A university city can have plenty of students but still have difficulty filling expensive purpose-built accommodation.
And the Dundee experience is not entirely isolated. Other student accommodation businesses have run into financial difficulties, while some properties have been considered for conversion to accommodate non-students. The Guardian's investigation into the Dundee collapse found examples in Birmingham, Belfast and Coventry, while also pointing to oversupply in some university cities and shortages in others.
Yet Edinburgh is still building
This is where the story becomes particularly interesting.
Walk around parts of Edinburgh and it is difficult to escape the impression that student accommodation remains a major growth industry.
One of the most striking developments is Mantle Yard in Leith, a 604-bed purpose-built student accommodation scheme which is now approaching completion and is due to open for the 2027/28 academic year.
Another 191-bed student residence began construction at Jock's Lodge near London Road in Edinburgh in March this year, with completion also planned for 2027/28.
So it would be wrong to look at Dundee and conclude that nobody wants to invest in student accommodation any more.
Edinburgh is clearly a different market. The city has several major universities and continues to attract large numbers of students. The developers behind the new accommodation argue that there is strong unmet demand for good-quality purpose-built accommodation.
Edinburgh City Council itself recognises the particular nature of student accommodation. Its planning guidance says that purpose-built student accommodation is a form of commercial development rather than mainstream housing, and it has developed specific guidance for where and how such accommodation should be provided.
The difference between Dundee and Edinburgh therefore illustrates an important point.
Student accommodation is not one market.
Location, university strength, student numbers, rents, the local housing market and the financial structure of each development all matter.
Dundee University has problems of its own
There is another part of the Dundee story which cannot be ignored.
The University of Dundee has been undertaking a major financial recovery programme. The university says Scottish Government support helped prevent insolvency but that it still needs significant recurring savings to become financially sustainable.
Its original proposals involved reducing staffing by around 190 posts. Following consultation, that figure was reduced to 154 full-time equivalent posts, although 38 new roles are also being created. The university says further staff departures will be necessary as the restructuring continues.
This is not simply a Dundee problem.
A report published jointly by the Scottish Government and Universities Scotland in August estimated that Scotland's 18 universities faced a funding gap of around £200 million in 2023/24 between their income and the full economic cost of their activities.
The report also estimated a £288 million gap in the cost of teaching Scottish students and a £580 million research funding gap. Universities were also carrying an estates maintenance backlog of more than £1.1 billion.
The Scottish Funding Council's 2026/27 allocation provides £798.6 million of university resource funding, together with an additional £20 million specifically for Dundee.
So Dundee's accommodation problem is occurring alongside a much bigger financial adjustment in higher education.
The international student effect
International students have become particularly important to university finances, which makes the reduction in numbers significant.
Official UK figures show that sponsored study visa grants peaked at more than 650,000 in the year to June 2023. By the year to June 2026 they had fallen to 383,455.
The fall has been influenced heavily by the restrictions introduced in 2024 on most taught-course students bringing dependants, but the number of main student applicants has also been falling.
For universities, this matters because international students generally pay much higher tuition fees than Scottish-domiciled students.
For the cities in which those universities operate, it matters for another reason. International students need somewhere to live and spend money on food, transport, entertainment and other services.
That means the consequences can spread well beyond the university campus.
A property boom meets a changing market
The Dundee collapse therefore raises a broader question.
For years, student accommodation could look like a relatively safe form of property investment because the number of students was rising and universities were expanding. But a property investment can become much less secure when the assumptions behind it change.
A heavily borrowed building needs enough tenants paying enough rent to cover its financing, maintenance and operating costs.
If occupancy falls, borrowing costs remain high, rents cannot rise sufficiently, or expensive repairs are required, the economics can change very quickly.
That appears to be part of what happened at Marketgait.
Meanwhile, major developers are still putting hundreds of millions of pounds into new student accommodation in cities such as Edinburgh.
There is no contradiction in that. Investors may be deciding that particular cities and particular university markets remain attractive even though other locations are becoming much more difficult.
The Dundee experience is therefore less a story about the end of student accommodation and more a warning that the student housing boom cannot be treated as a single national market.
For students, there is another irony.
Britain can have a shortage of affordable student accommodation at the same time as some expensive purpose-built blocks struggle to fill their rooms. Building more rooms does not necessarily solve the affordability problem if the new accommodation is beyond the budgets of many domestic students.
And that may be the most important lesson from Dundee.
Student accommodation is ultimately dependent on students. Universities are dependent on students. And many university towns have become dependent on the economic activity generated by those students.
When student numbers, the mix of domestic and overseas students, rents and university finances all start changing at the same time, the consequences can spread much further than the university gates.
Dundee has provided a very visible warning. The next few years will show whether it was an isolated failure or an early indication that the economics of Britain's student accommodation boom are changing.