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PBSA mortgages
PBSA finance funds purpose-built student accommodation: blocks designed for students, not houses converted into HMOs. Lenders look at the scheme, the operator, university demand and how the rooms will be let.
Reviewed by David Sampson, Founder & Director
What is a PBSA mortgage?
PBSA finance funds purpose-built student accommodation blocks. It is separate from an HMO mortgage on a converted student house. Lenders assess university demand, the operator, scheme quality and the exit.
How does a PBSA mortgage work?
1
Scheme review
1-2 weeksA broker reviews the site or block, demand, operator, costs and the proposed exit.
2
Lender terms
1-3 weeksA specialist lender indicates facility size, term, gearing and conditions.
3
Due diligence
3-6 weeksValuation, demand evidence, planning, build cost and legal title are checked.
4
Facility
1-3 weeksThe facility agreement and security documents are agreed.
5
Drawdown
Deal-specificFunds complete an acquisition or are drawn against build milestones.
What do lenders look for on PBSA mortgages?
Borrower profile
- Experience of PBSA development, investment or operation
- A professional company structure
- Working capital for build cost, interest and voids
- A refinance, sale or long-term hold as the exit
- An operator plan, or a contract with an experienced operator
Property requirements
- A purpose-built student block, or a site with consent for one
- Location with evidenced demand from a university or college
- A room mix and specification that the local market will let
- Planning and building regulations suitable for student use
- A credible letting plan, including direct lets or a nomination agreement
What fees come with a PBSA mortgage?
Arrangement fee
Lender facility fee
Typically 1% - 2%
of the facility
Valuation
Development or investment valuation
Deal-specific
specialist student survey
Legal fees
Facility and security work
Deal-specific
higher on larger schemes
Broker fee
Arrangement of the facility
Agreed in advance
often a percentage on completion
Fees vary by lender. Advisers provide a breakdown before you proceed. Mortgage118 does not quote fees.
Resources
- FCA Register — Check a firm is authorised
- MoneyHelper — Free, impartial mortgage help
FAQs
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Related mortgage types
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