Atom bank has provided a £2.7m commercial mortgage to support the purchase of a former Leicester pub, now converted into purpose built student accommodation (PBSA).
The 55-unit development, which now houses students in studio apartments, marks a strategic pivot for the borrower, a seasoned landlord with more than 50 residential properties, who is diversifying into commercial and student accommodation.
The deal was brokered by Shannon Harwood of Premier Commercial Lending, who praised Atom bank for its straightforward approach, saying the lender stood out for its clear terms and appetite to back the borrower from the outset. While other funders had shown interest, Harwood said Atom’s lack of caveats and speed of execution made the difference.
The five-year fixed-rate loan was agreed at an interest rate of 8.1%, with a loan-to-value of 62%.
Atom bank recently enhanced its PBSA offering to compete more directly with other sectors such as HMOs. The bank will now consider lending up to £5 million at 75% LTV and up to £10 million at 70% LTV, subject to credit assessment.
The move comes as demand for PBSA continues to rise. Research by CBRE reports record-high occupancy levels across the UK, while figures from the Office for National Statistics show a 9.5% decline in the number of HMOs since 2018 – a trend that may further fuel demand for professionally managed student accommodation.
Neil Findlay, regional business development manager at Atom bank, said: “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.”
Shannon Harwood, head of bridging and commercial at Premier Commercial Lending, highlighted the bank’s efficiency, particularly the underwriting process and valuation turnaround, which was completed within 24 hours.
“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,” she said.
Harwood added that more investors are now exploring the PBSA sector, and expects to work with Atom bank on similar transactions over the coming year.
