On the surface, 2025 was a record-breaking year for the UK Higher Education sector. Home Office data for the full calendar year shows that total student visa applications reached 426,300, a 4.5% increase from 2024. However, for Purpose-Built Student Accommodation (PBSA) operators, these headline figures mask a worrying late-cycle trend that suggests 2026 may be the year policy shifts finally have a pronounced impact.
The December dip
Home Office data highlights that while 2025 started with an impressive 32% increase in student visa applications in Q1, that momentum soon disappeared. The final quarter of 2025 saw a steady decline: October applications were down 6.7%, November applications fell 13.7%, and December applications dropped 16.8% year-on-year.
This represents the weakest December for visa applications since the pandemic and is worrying news for PBSA operators who relied on the January intake to fill mid-year voids. The “optimism” of 4.5% annual growth in applications was overshadowed by the fact that this growth was heavily front-loaded. The second half of 2025 (H2) was essentially flat (+0.4%), suggesting a structural shift in demand that is now manifesting as lower-than-expected occupancy this month.
Institutional caution
The decline reflects both shifting student perceptions and a fundamental change in university recruitment strategies. While September 2025 saw CAS issuances recover with an 8% increase, this masked a strategic pivot – universities issued CAS earlier in the cycle (20% of Enroly partners had already begun January 2026 processing by August 2025) and became significantly more selective about student nationalities and profiles to meet stricter Basic Compliance Assessment (BCA) thresholds implemented in September 2025. Under the stricter thresholds, universities face:
- Higher enrolment benchmarks: Universities are now required to achieve a 95% enrolment rate among accepted international students, an increase from the previous 90% target.
- Stricter course completion requirements: At least 90% of international students must successfully complete their courses, up from the earlier 85% minimum.
- Tighter visa refusal thresholds: Institutions may face sanctions – such as being placed on a UKVI action plan or having recruitment restricted – if more than 5% of their international student visa applications are refused, compared with the former 10% limit.
Shifting student demographics
As we move into late January 2026, there are signs of a significant shift in the international student profile. A recent BUILA survey of 69 universities found that 61% reported a decline in international postgraduate commencements for the 2025-26 academic year. According to BUILA, overall international student enrolments are down 6%, with Chinese postgraduate enrolments down by an average of 17%. Sixty-three per cent (63%) of institutions reported a 9% average drop in Indian postgraduate enrolments.
However, this decline masks important variation across the sector. While the “big two” markets – India and China – are showing signs of cooling at the aggregate level, universities are simultaneously experiencing divergent outcomes based on their BCA compliance strategies. With stricter thresholds requiring visa grant rates above 95%, institutions are now acutely focused on recruiting from countries with historically high approval rates. India, with a 96% visa grant rate, and Nepal, at 94%, remain attractive despite reported enrolment declines at some institutions. In contrast, universities have scaled back or suspended recruitment from countries with elevated refusal rates, with some institutions halting recruitment from Bangladesh and Pakistan entirely after grant rates dropped to 63% and 74%, respectively.
The graduate visa “cliff”
The most immediate deterrent for the January 2026 cohort is the looming reduction in the Graduate Visa from 24 to 18 months. Students starting one-year taught Master’s programmes in January 2026 face a critical timing squeeze – while they may complete their dissertations in late December 2026, they can only apply for the Graduate visa after their university formally confirms completion to the Home Office. With typical administrative processing times of 1-4 weeks and potential December holiday delays, many may not be able to apply until January 2027, forcing them into the reduced 18-month post-study work period rather than the current 24 months. This uncertainty has significantly weakened the ROI proposition for international students.
Looking forward
With the January 2026 intake falling short of expectations for many, the sector faces a more complex operating environment than the headline 2025 growth figures might suggest.
The traditional late-cycle surge appears to be fading, with universities now issuing CAS much earlier in the recruitment cycle. Combined with stricter BCA compliance pressures shaping where and how universities recruit, this shift in timing has implications for how occupancy materialises across the academic year.
The 2025 data tell a story of a sector that successfully rebounded from a difficult 2024 but has now encountered a regulatory inflection point. For PBSA providers, 2026 may be less about managing growth and more about adapting to a landscape shaped by institutional caution, compressed recruitment timelines, and evolving student decision-making in an environment of policy uncertainty.
