Hampshire Trust Bank enters Purpose Built Student Accommodation sector

By Bridging Loan Directory 7th September 2023

Hampshire Trust Bank (HTB) has announced that its Specialist Mortgages division has entered the Purpose-Built Student Accommodation (PBSA) investment lending market.

This demonstrates its strong appetite for growing lending to residential-led landlords and investors.

Entry in to the PBSA market stems from not only the current shortage of student housing across the UK, but also the existing experience that has been built by the Bank’s Development Finance team in the sector, leading to a healthy pipeline in PBSA deals, allowing HTB to support more investors through the lifecycle of an asset.

This comes off the back of a recent report by Savills, which stated that for both investors and operators, rising demand has resulted in record occupancy for PBSA with both Empiric and Unite forecasting growth of around 7% and in markets facing even more acute supply and demand pressures, rental growth will likely exceed that level.

The Bank’s entry into PBSA is supported by specialist knowledge of the sector, including the recent hire of Senior Underwriter, John Laird, who started with the bank in August and boasts over 30 years of experience in corporate finance and business banking, including extensive knowledge of the PBSA sector.

PBSA proposals will be assessed in line with standard industry considerations with a focus on high quality schemes which provide accommodation to universities with strong fundamentals. For select transactions where demand is proven, HTB will lend at up to 75% LTV and from 125% gross interest cover ratio.

HTB provides professional investors with specialist residential and semi-commercial loans up to £25m for limited companies, offshore entities, expats, and foreign nationals.

Chris Daly, managing director, Specialist Mortgages at Hampshire Trust Bank, commented:

“At HTB we have a real appetite for growing our origination capabilities and proposition by examining new ways in which we can help our property investor clients.

The PBSA market has proved to be much more resilient than other areas of the rental sector, despite being tested during the COVID-19 period, and can provide strong yields for investors.

Market demand will only increase, with Knight Frank analysis of ONS population projections, along with entry rates from UCAS, suggesting there will be a 16% increase in total full-time undergraduate numbers from now until 2030, resulting in an increase of 263,000 students.

As a result, we expect interest from larger investors looking to maximise their returns.

Today’s announcement means we are now supporting those large or complex property investors in the student accommodation market who may have a combination of HMO and PBSA assets.”