Unfit for Purpose shows Residential tenancy laws designed for the private rental market are shrinking investment in new Purpose-Built Student Accommodation (PBSA) which provides almost 70,000 private beds and supports Australia’s $55 billion international education industry. Currently, two thirds of the 47,000 approved PBSA beds are yet to be commenced.
Property Council Chief Executive Mike Zorbas said governments risked worsening Australia’s housing gap by mis-applying conventional rental rules to a fundamentally different 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,” Mr Zorbas said.
“Purpose-built student apartments quickly add to new housing supply and directly soak up demand in the private rental market.
“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.
“The Albanese Government is also overdue to bring all 140,000 student accommodation beds into the national definition of housing which will make it easier to fund new PBSA.”
With Victoria’s break lease changes having passed Parliament, Mr Zorbas said attention will turn to how the changes affect investment confidence and future student housing supply.
“Victoria can ill afford to turn away precious new investment in high quality new housing at this time and yet this is exactly what this blunt legislation will now do. If there was any state that needed to encourage new private sector supply for the next few years it is Australia’s most indebted state,” Mr Zorbas said.
“Victoria hasn’t learnt from the investment and supply gap opening up in New South Wales. Students move according to academic calendars, so if a room is vacated mid-semester, it can sit empty for months because there is simply no replacement intake.”
The report says New South Wales is a cautionary example, finding break lease settings have shifted vacancy risk onto providers and undermined investment confidence in one of Australia’s most supply-constrained student housing markets.
By contrast, Western Australia is working with industry to develop a more fit-for-purpose framework for student accommodation, recognising the sector’s unique operating characteristics and role in supporting housing supply.
“Sydney needs more student housing, not policies that push investment away,” Mr Zorbas said.
“If governments make it harder to deliver student accommodation, that capital will simply go elsewhere.”
The report also identifies Queensland’s room-based rent increase rules as another tenancy setting not designed for student accommodation. While intended to protect residents, they can prevent discounted vacancy rents being reset for new residents for up to 12 months, reducing flexibility and efficient use of available housing.
The generally welcome introduction of the National Higher Education Code to Prevent and Respond to Gender-based Violence 2025 also creates direct conflict with state-based tenancy laws and could be better integrated with the student accommodation model.
The Property Council and the Student Accommodation Council are calling for a dedicated legislative framework for PBSA, including a nationally consistent definition and fit-for-purpose tenancy laws that recognise academic leasing cycles, student wellbeing obligations and the sector’s unique operating model.
“Getting these settings right will 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,” said Mr Zorbas.
