Legalities Report

Executive summary

Across Europe, the student housing landscape is undergoing a structural transformation. The continent’s higher-education competitiveness increasingly hinges not only on academic excellence but on whether students can find a place to live. Against a backdrop of growing enrolments, affordability crises, and international mobility targets, Purpose-Built Student Accommodation (PBSA) has emerged as both a critical infrastructure to support the Europe’s internationalisation, mobility and higher education aspirations.

Once a niche segment, PBSA is now one of Europe’s most dynamic residential investment markets. Institutional capital has recognised its resilience; characterised by high occupancy, predictable income, and long-term demographic demand. Yet, despite growing investor appetite, the sector remains constrained by fragmented regulation, complex tax structures, and inconsistent planning practices that hinder cross-border scalability.

This European PBSA Legalities Report, developed by The Class Foundation in collaboration with Loyens & Loeff, maps the legal and tax environments governing PBSA across eleven key European markets: Austria, Belgium, France, Germany, Ireland, Italy, the Netherlands, Poland, Portugal, Spain, and the United Kingdom. The report underscores both the opportunities and the systemic challenges that must be addressed for PBSA to fulfil its social and economic potential.

PBSA as critical infrastructure

Across nearly all countries studied, the shortage of student accommodation has become structural. The combined shortfall exceeds 2.5 mil beds, expected to rise to 3.1 by 2030 (JLL); particularly acute in major university hubs such as Dublin, Milan, Amsterdam, and Madrid. This shortage has propelled rent growth above inflation and intensified political attention on affordability.

In response, public-private partnerships are increasingly seen as essential to addressing this gap. Initiatives such as Italy’s National Recovery and Resilience Plan (PNRR), Germany’s Junges Wohnen programme, and Belgium’s social student housing schemes demonstrate that governments are beginning to view student housing as a pillar of national education and housing policy — though most frameworks remain embryonic.

A fragmented legal landscape

No European country has yet implemented a comprehensive PBSA-specific legal framework. Most jurisdictions regulate student housing under general residential tenancy law, hospitality rules, or commercial property regimes, none of which adequately capture the operational model of PBSA.

Germany and Austria provide two of the most favourable regulatory environments. Both exempt PBSA from general rent controls and allow short-term, all-inclusive leases that align with academic cycles. Ireland’s Residential Tenancies Acts provide the most structured student accommodation framework in Europe, defining 41-week lease caps and introducing seasonal exit rights. Conversely, the Netherlands applies extensive rent regulation through its points-based system, now extended under the Affordable Rent Act, while Spain and Portugal maintain flexible regimes that allow hybrid residential-hospitality operations.

At the local level, municipalities increasingly shape PBSA outcomes. Cities such as Amsterdam, Ghent, and Dublin have imposed restrictions on student housing density or conversions from family homes, while Italian and Portuguese cities offer greater flexibility and expedited approvals for educational uses. The result is a highly localised regulatory patchwork, with compliance and permitting varying widely not only between countries, but between cities within the same nation.

Planning, zoning, and operational complexity

Planning law continues to be one of the greatest barriers to PBSA development. While Ireland’s Large-Scale Residential Development (LRD) process and Italy’s streamlined change-of-use provisions offer promising examples, most European planning regimes remain bureaucratically heavy and inconsistent. Developers must navigate fragmented land-use classifications, local quotas, and restrictions on project scale or co-use with tourist accommodation.

Operationally, lease frameworks often conflict with PBSA’s short-term and cyclical nature. Many countries lack provisions for seasonal contracts, room rotation, or bundled rent and service charges, leading to grey areas between residential and commercial leasing. This lack of clarity generates administrative burden and increases risk for both landlords and students.

Taxation: a persistent structural hurdle

Tax treatment remains one of the most significant factors shaping PBSA feasibility.

Real Estate Transfer Tax (RETT) continues to impose a heavy upfront cost on transactions, ranging from 3.5% in Austria to 10.4% in the Netherlands. While some jurisdictions allow exemptions or lower rates through share-deal structures, these introduce complexity and limit transparency.

Corporate Income Tax (CIT) rates generally align with national standards, typically between 19% and 25%, and rarely recognise PBSA’s social function.

VAT treatment is highly inconsistent. In the UK, zero-rating for long leases to universities enables full VAT recovery, offering a benchmark for efficiency. In contrast, Belgium and Ireland’s exemptions restrict VAT recovery on development costs, while France and Spain apply partial or conditional VAT regimes depending on service provision.

Local levies, such as municipal property or “tourist” taxes, can unintentionally capture hybrid PBSA operations, adding further uncertainty.

Overall, taxation frameworks often treat PBSA like a commercial investment rather than social infrastructure, disincentivising long-term, affordable supply.

Convergence and innovation in living models

Europe’s PBSA sector is evolving beyond traditional dormitories into flexible, mixed-use living ecosystems. In Spain and Portugal, residences often double as hotels in summer months; in France, mobility leases extend housing to researchers and young professionals; and in the UK, co-living and PBSA models are increasingly intertwined. This blurring of asset classes reflects a broader shift toward flexible living, though it also challenges tax and licensing frameworks that remain siloed by use category.

Towards harmonisation and reform

The fragmented legal and fiscal environment continues to limit Europe’s ability to meet rising student housing demand. While the Legalities Report highlights strong investment appetite and policy experimentation across Europe, it also reveals that the PBSA sector still operates within frameworks designed for other asset classes.

Based on the report, four key priorities emerge for governments and sector stakeholders to unlock the sector’s full potential:

Legal clarity: Introduce PBSA-specific tenancy and planning provisions that reflect its hybrid residential–educational nature and provide legal certainty for both investors and residents.

Tax reform: Harmonise VAT treatment and real estate transfer taxes to reduce transaction costs and facilitate reinvestment across borders.

Planning integration: Position student housing as a recognised component of national housing strategies rather than an exceptional use, streamlining approvals and enabling adaptive reuse.

Public–private collaboration: Leverage partnerships with universities and local authorities, ensuring long-term affordability while attracting institutional capital to scale delivery.

With clearer regulation, fairer tax regimes, and consistent planning processes, PBSA can deliver on its dual promise: to provide affordable, high-quality homes for students while unlocking greater opportunities for long-term, stable investment.

A coordinated policy environment would not only improve affordability and supply but also enhance investor confidence, reduce entry barriers, and support portfolio scalability across borders. In doing so, PBSA can continue to evolve as both a cornerstone of Europe’s higher-education infrastructure.