Student accommodation development finance is a short-term loan used to build or convert a PBSA scheme, drawn against build cost and repaid on completion or stabilisation. Lenders typically advance up to about 65 to 70 percent of total cost, capped at around 60 to 65 percent of gross development value, released in stages against monitored progress. Interest is usually rolled up rather than serviced, and the facility runs for around 18 to 36 months before being repaid by a sale or by refinancing onto a long-term investment loan once the scheme is open and let. This is finance to build student accommodation as an investment, not a student maintenance loan.
- Loan to costUp to about 65 to 70%
- Loan to GDVAbout 60 to 65% of stabilised value
- Term18 to 36 months
- InterestUsually rolled up
- DrawdownStaged, against a monitoring surveyor
- ExitSale or refinance to an investment loan
What student accommodation development finance is
How the facility is sized
| Measure | Indicative level |
|---|---|
| Loan to cost (LTC) | Up to about 65 to 70% |
| Loan to GDV | About 60 to 65% |
| Term | 18 to 36 months |
| Interest | Usually rolled up rather than serviced |
Who it is for
Drawdown, rolled interest and the exit
- Agree the facility against loan to cost and loan to GDV.
- Draw down in stages as the build progresses, certified by a monitoring surveyor.
- Roll up the interest rather than servicing it monthly.
- Reach practical completion and open for the academic year.
- Lease up toward stabilised occupancy, often bridged by a stabilisation facility.
- Exit by selling the scheme or refinancing onto an investment term loan.
A new scheme does not fill to stabilised occupancy on day one, and student lettings are seasonal around the academic year. Term lenders usually want to see a let, stabilised income before they refinance, so the funding plan often carries a stabilisation facility between practical completion and the investment loan.
Why the demand backdrop is strong
- HESA: 2,863,180 UK HE enrolments in 2024/25, down 1%, with international students down 6%
- Knight Frank: about 19,600 new PBSA beds delivered across 64 schemes in 2025
- Knight Frank: around 19,000 beds under construction for 2026/27, against a ten-year average of about 21,000 a year (Q2 2026)
- Knight Frank: average rental growth of 2% in 2025/26, down from 8.3% at the peak
Lenders for development
