“This case demonstrates our determination to support those active in this space, and by improving our proposition we will be able to work with a broader number of both owner-occupiers and property investors in the PBSA market”
– Neil Findlay – Atom bank
Atom Bank has announced that it has provided a £2.7m loan to finance the purchase of a former pub in Leicester that has been converted into purpose-built student accommodation (PBSA). The site now offers 55 dedicated student units.
The borrower, described as an experienced property investor with a portfolio of over 50 residential properties, is now diversifying into commercial and student accommodation. With a background in supported housing, the borrower was well-positioned to enter the PBSA sector.
While the project attracted interest from multiple lenders, Shannon Harwood, head of bridging and commercial at Premier Commercial Lending, said the digital bank stood out. “The way Atom bank issues terms is incredibly professional compared to other lenders in this space, which really helps provide the client with confidence ahead of receiving a formal offer,” Harwood explained. “My previous positive experience with Atom bank meant I was confident they would be able to support this borrower, and they did not disappoint.”
Harwood also highlighted the responsiveness of the team. “The BDM team, in particular Emma Vardy, were incredibly supportive and quick to respond to issues, while the underwriters were very proactive, ensuring progress did not slow down post-offer. Assessing the valuation can sometimes drag on for weeks, yet Atom bank reviewed it within 24 hours, which is unheard of.”
Atom bank agreed to fund the acquisition at a 62% loan-to-value ratio, offering a fixed rate of 8.1% over five years.
The lender has recently adjusted its PBSA lending criteria to offer more competitive terms than are typically available for houses in multiple occupation (HMOs). Depending on credit quality, Atom bank now provides loans of up to £5 million at 75% LTV and up to £10 million at 70% LTV. The revised proposition is aimed at supporting both owner-operators and professional investors active in the student housing sector.
Neil Findlay, regional business development manager at Atom bank, commented: “PBSA is becoming more attractive as an asset class, with higher returns than many other forms of commercial property as well as a clear need from the nation’s student population. This case demonstrates our determination to support those active in this space, and by improving our proposition we will be able to work with a broader number of both owner-occupiers and property investors in the PBSA market.”
The case comes at a time of rising demand for dedicated student accommodation. According to research from CBRE, occupancy rates for PBSA are at record highs, while data from the Office for National Statistics shows a 9.5% decline in the number of HMOs since 2018.
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