Funding co-living schemes
Co-living is a managed rental model in which residents take a private studio or en-suite room and share generous amenity, lounges, kitchens, gyms, coworking and events, under a single inclusive licence or tenancy. It overlaps heavily with PBSA in design and operation but typically serves young professionals and recent graduates as well as, or instead of, students.
A hybrid scheme runs student and co-living, or student and build-to-rent, product in one building, flexing the resident mix across the year. That flexibility can smooth income but it complicates underwriting, because the asset is neither pure PBSA nor pure build-to-rent and lenders must price the blend.
Co-living and hybrid finance, as we use the term, is the development, stabilisation or investment facility used to build, lease up or hold a co-living or hybrid scheme as an operational asset. The credit case turns on the operator, the amenity offer, the loan to cost or GDV and, above all, the operational underwriting of an income model that depends on management and occupancy rather than a fixed lease.
We present the scheme, the operator and the operational assumptions so lenders can price loan to cost and the exit, and we run the market across development, stabilisation and investment debt, layering mezzanine or equity where the capital stack needs it.
What we fund
- Dedicated co-living schemes for young professionals
- Student and co-living hybrid buildings
- Co-living adjacent to a build-to-rent scheme
- Amenity-led urban co-living towers
- Schemes flexing between student and professional lets
- Standing co-living assets being refinanced
Financing co-living and hybrid developments
We arrange co-living and hybrid finance around the build, the lease-up and the operating model. For construction we place development finance to around 60 to 70% of loan to cost, or roughly 60 to 65% of GDV, drawn against a monitoring surveyor, with the GDV underpinned by the operational income model rather than a fixed lease. Once built, short-dated stabilisation finance carries the scheme through lease-up, then we place an investment term loan to around 60 to 65% of value once occupancy and income are proven. Because co-living income depends on management and amenity rather than a covenant, lenders apply firmer operational underwriting, so where senior debt stops short of the capital need we layer in mezzanine or equity. We frame every figure as indicative and never as an offer.
What lenders assess in a co-living scheme and operator
Lenders underwrite co-living and hybrid schemes on the operator, the amenity offer and the durability of the operational income, then size loan to cost and GDV. They scrutinise the management model harder than a leased asset because the income turns on occupancy and service charge rather than a fixed rent, and on a hybrid they want to understand how the building flexes between student and professional demand. Puma Property Finance, Shawbrook and Secure Trust Bank are active across co-living and build-to-rent-adjacent development, with the institutional funders that back build-to-rent increasingly comfortable with the operational model. Naming a lender describes the market; it does not mean we have a relationship with it. As an arranger with no exclusive tie, we test the scheme and its operator against the lenders genuinely at home with co-living risk.
Co-living versus PBSA and build-to-rent
Co-living sits between PBSA and build-to-rent and borrows demand drivers from both. It draws on the same shortage of good-quality rented rooms that supports PBSA, while serving the wider young-professional rental demand that underpins build-to-rent. The investment market for operational residential is deep, with £4.3bn invested in UK PBSA alone in 2025 (Knight Frank) and prime direct-let yields of around 4.75% in London and 5.50 to 5.75% regionally (Knight Frank, Q2 2026); co-living typically prices a little softer to reflect its shorter track record and operational intensity. For lenders, a well-located, well-operated co-living or hybrid scheme has a clear refinance or sale exit into a maturing institutional market.
Finance that suits co-living schemes
- Development financeFunds construction of a co-living or hybrid scheme, drawn against cost.
- Stabilisation financeCarries the scheme through lease-up to a term exit.
- Mezzanine and equityTops up the capital stack where senior debt stops short.
- Investment term loansLong-term debt on a stabilised co-living asset.
What drives a co-living or hybrid scheme's numbers
Co-living income depends on management, amenity and occupancy rather than a fixed lease, so the economics turn on the operating model. The decisive factors are the operator, the strength and cost of the amenity offer, and the operational underwriting of an inclusive, service-led income stream that flexes with demand. A hybrid scheme adds the question of how the building moves between student and young-professional lets across the year. Co-living draws on the same shortage of good-quality rented rooms that supports PBSA, as well as the wider build-to-rent demand base, which gives a hybrid scheme two pools of demand to let into. We model the net operational income after management and amenity cost, because lenders underwrite the operating model, not a covenant.
Indicative co-living and hybrid leverage and rates
Indicatively we arrange co-living development finance to around 60 to 70% of loan to cost, or roughly 60 to 65% of GDV, drawn against a monitoring surveyor, with the GDV underpinned by the operational income model. Stabilisation finance carries the scheme through lease-up, then an investment term loan sits at around 60 to 65% of value once occupancy is proven, a touch firmer than pure PBSA to reflect the operational intensity and shorter track record. Where senior debt stops short, mezzanine or equity tops up the stack. Co-living typically prices a little softer than prime PBSA, where direct-let yields sit around 4.75% in London and 5.50 to 5.75% regionally (Knight Frank, Q2 2026). These are market-typical, indicative figures and never an offer; the terms depend on the operator and the operating model.
