UK Budget 2026 Reshapes Student Housing and Visa Rules

Key Highlights

• UK Budget 2026 restored a two-year Graduate visa for eligible graduates of “high-compliance” universities with strong labour market outcomes.
• The High Potential Individual (HPI) visa will cover applicants from the top 150 global institutions.
• The Budget confirmed the £925 international student levy, with legislation due in the Finance Bill ahead of implementation in August 2028.
• The Budget added no new maintenance support for students, while a 6% cap on Plan 2 and Plan 3 loan interest, announced in April, runs until 31st August 2027.
• Individual landlords, including many student HMO owners, will pay property income tax at 24%, 44% and 49% from April 2027.
• Bills-inclusive student accommodation operators gain from extended VAT relief on electricity and the planned abolition of gas standing charges.

The UK Autumn Budget, presented by UK Chancellor John Healey on 28th October 2026, made several changes that will shape international demand and the economics of student housing. It restored a two-year UK Graduate visa for certain universities and introduced no new maintenance support for UK students. HM Treasury, the UK’s economic and finance ministry, said the immigration system should support “a dynamic labour market”, although the Home Office has not yet defined which universities qualify. Alongside this, the government kept its international student levy on track, extended energy bill relief and raised tax on rental income.

Two-Year Graduate Visa Returns for Some Universities

The Budget offered some relief to eligible international students. The Graduate route, the UK’s post-study work visa, will return to two years for graduates of “high-compliance” universities with strong labour market outcomes. The government had announced the cut from two years to 18 months in its May 2025 immigration white paper, and the shorter duration applies to applications made from 1st January 2027. The Budget did not set a start date for the restored duration. The longer visa gives eligible graduates more time to find work and gain experience in the UK, but only at universities that meet the government’s compliance and employability tests. The Home Office has not yet published a definition of “high compliance” or a list of institutions.

The government will also expand the HPI visa to applicants with eligible qualifications from the top 150 institutions worldwide, with a proportional increase to the cap. These changes form part of a wider talent strategy: the government wants to tighten rules for low and medium-skilled workers while improving its offer to international talent.

Levy Confirmed as DfE Models Uneven Demand Hit

The Budget confirmed the international student levy. Universities will pay £925 a year for each international student above an allowance of 220 students from AY 2028-29. The Department for Education (DfE) expects the levy to raise £1.34 billion over its first three years. (Internal link)

DfE-commissioned modelling by Alma Economics, published in October, suggests the impact of the levy will be uneven. A 10% fee rise would cut international demand by about 0.7% at Oxford, Cambridge and Imperial, but by about 11.2% at the lowest-ranked tier of universities. For Purpose Built Student Accommodation (PBSA), schemes serving lower-ranked universities with price-sensitive international intakes could be most exposed.

Budget Adds No New Grants for Students

The Budget included no new maintenance grants or hardship funding for UK students. The 6% cap on interest for Plan 2 and Plan 3 student loans, which the government announced in April 2026, remains in place until 31st August 2027. The Plan 2 repayment threshold stays frozen at £29,385 until April 2030.

Other measures affect students indirectly:

• The National Living Wage rises 3.9% to £13.21 an hour on 1st April 2027, and the rate for 18 to 20-year-olds rises 3.9% to £11.27.
• Single bus fares in England outside London are capped at £2 throughout 2027.
• Separately, the UK will rejoin the Erasmus+ exchange programme from 1st January 2027, under a deal agreed with the EU in December 2025.

Apprenticeships and Graduate Employment Get Funding

The Budget provides £100 million across 2027-28 and 2028-29 to expand Mayoral Apprenticeship Brokerage Pilots from 7 to 14 Mayoral Strategic Authorities in England. This will allow all current mayors to offer tailored support to young people and employers. The government will also require at least 3% of the workforce on large government construction and infrastructure projects to be apprentices.

HM Treasury said almost 1 million young people were not in education, employment or training. The Office for Budget Responsibility (OBR) forecast unemployment to rise to 5.1% in Q2 (April-June) 2027 before falling to 4.1% by 2031.

Energy Relief Lands With Bills-Inclusive Operators

The Budget extended the 0% VAT rate on domestic electricity until July 2027. The Treasury expects this to take around £50 off the annual Ofgem price cap, which limits the unit rates and standing charges suppliers can charge households, in April 2027. The government has also asked Ofgem to abolish gas standing charges, which average £108 a year, from 2027. In halls and bills-included rentals, the operator pays the bills, so these savings accrue to landlords rather than students.

A new £2.6 billion Household Energy Payment will give £100 to households in council tax bands A-D in England from January 2027, paid through the council tax system.

Rental Income Tax Rises Again for Individual Landlords

Budget 2025 had already raised income tax rates on property income by 2 percentage points from April 2027. Budget 2026 adds a further 2 percentage points, taking the rates to 24%, 44% and 49% in England, Wales and Northern Ireland.

The rise hits individual landlords, including many owners of student houses in multiple occupation (HMOs), while corporate PBSA owners pay corporation tax. Property income distributions from Real Estate Investment Trusts (REITs) count as property income, so individual investors will pay the new property rates on them, and REITs will withhold tax at the 24% property basic rate.

For the student market, further pressure on smaller HMO landlords could tighten off-campus supply in some cities and shift more demand towards PBSA.

What to Watch Between January 2027-August 2028

• 1st January 2027: The 18-month Graduate visa applies to new applications, and UK participation in Erasmus+ begins.
• January 2027: The £2 bus fare cap applies, and the first £100 Household Energy Payments arrive.
• 6th April 2027: Property income tax rates of 24%, 44% and 49% take effect.
• July 2027: The 0% VAT rate on domestic electricity ends.
• 31st August 2027: The 6% loan interest cap ends.
• 1st August 2028: The international student levy begins.

The start date for the two-year Graduate visa and the “high compliance” definition remain unconfirmed. Prospective international students should check their university’s compliance status as Home Office guidance emerges. Universities, study abroad agencies and PBSA operators will watch the definition, the published ratings and the levy rollout closely.

(Writing by Kajol Mangtani, Editing by Shivani Singh)

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