Bridging finance for student lets

Why student lets and why now?

Lower borrowing costs and stronger demand are converging to create a sweet spot for UK student landlords and small developers. In Q2 2025, average bridging rates fell to 0.81% per month, the lowest in over a year, as lenders competed for quality cases and applications rose. Investor confidence has returned to student housing too, with £830 million committed in a single quarter and sector revenues projected to grow steadily. Against this backdrop, the market for purpose-built student accommodation is valued at roughly £50 billion, yet supply still trails demand by a wide margin.

What drives the gap is simple. More students require housing and they are staying away from home. Around 61% of full-time students live out during term time, often with parental guarantors, which supports reliable occupancy. International demand is adding further resilience, with over 430,000 sponsored study visas granted in the year to June 2025. Meanwhile, smaller university towns such as Swansea and Hull continue to post strong rental performance, particularly for HMOs where gross yields can reach the mid-teens.

For investors, this creates a practical opportunity. Bridging can finance acquisitions, refurbishments, and conversions at speed, particularly in locations near a single major university where competition is limited and yields can be compelling. Typical leverage ranges from 65% to 75% loan-to-value, with selective lenders stretching to around 80% for well-specified schemes. That flexibility can be decisive when buying at auction, completing a light refurb between terms, or refinancing out of a development loan into a longer-term product.

Understanding APR is not just a percentage exercise - it is about real monthly costs, exit timelines, and net returns after works. With the right plan, bridging helps you capture resilient demand while the window of lower pricing remains open.

Strong demand plus faster funding can turn timing into a competitive edge.

Key idea: Persistent undersupply, rising applications, and falling monthly rates make a timely case for bridging-backed student lets.

Who benefits most

If you are acquiring your first student HMO, scaling a small portfolio, or funding a light-to-medium refurbishment to lift room rates, short-term finance can bridge the gap between opportunity and completion. It also suits landlords repositioning a house into a compliant HMO, or investors converting small blocks into student studios with higher specification features students actually prioritise: fast Wi-Fi, good furnishings, and usable communal space. Developers bringing compact PBSA schemes to market in towns with fewer than 25,000 students can particularly benefit from lower competition and solid yields. If you need certainty of funds and rapid completion while you line up a refinance or sale, bridging is designed for that moment.

Your funding routes

1. Standard bridging loan - purchase or refinance with scope for minor works.

2. Refurbishment bridge - acquisition plus staged drawdowns for light-to-medium upgrades.

3. Heavy works bridge - higher contingencies for structural changes and conversions.

4. Auction finance - pre-agreed terms to meet 28-day completion timelines.

5. Development exit bridge - refinance from build finance while you let up.

6. Bridge-to-let - short-term bridge followed by agreed buy-to-let or HMO mortgage.

Numbers that matter

Can you qualify?

Lenders assess the asset, the borrower, and the exit. For student lets, they will want evidence of demand near campus, realistic rent schedules, and a credible timeline for letting or refinance. If you are buying an HMO, demonstrate compliance with licensing, fire safety, and room-size standards. If you are upgrading a single dwelling, present contractor quotes, a works schedule, and a sensible contingency. Experience helps, but is not always essential if the deal stacks and professional support is in place.

Expect typical leverage of 65% to 75% of value, potentially higher for well-specified PBSA with en-suites, high-speed Wi-Fi, and on-site management. A strong exit is crucial. That might be a buy-to-let or HMO mortgage once the property is tenanted and revalued, or a sale into an active market where comparable yields are attractive. Kandoo can introduce you to specialist lenders who evaluate on real project metrics rather than a rigid checklist, helping to navigate underwriting and timescales with fewer surprises.

From offer to completion - the steps

1. Outline the project, costs, timescales, and exit clearly.

2. Secure an agreement in principle and proof of funds.

3. Instruct valuation and legals early to compress timelines.

4. Finalise works scope, contractor quotes, and contingency.

5. Draw down funds on completion or via staged releases.

6. Deliver refurb to specification and start letting plan.

7. Revalue, refinance to term product, or sell asset.

8. Repay bridge, consolidate profits, review next deal.

Upsides and trade-offs

Points to stress-test before committing

Affordability is a rising concern for students, with a notable weekly gap between what many want to pay and what they expect to spend. That gap can be bridged by offering well-specified but sensibly priced rooms. Focus on features students prioritise, particularly reliable Wi-Fi, decent furnishings, and communal space. Keep bills predictable where possible. For HMOs, ensure compliance is budgeted from day one and factor in any local planning changes. In university towns with fewer beds relative to student numbers, you can expect resilient occupancy, but model voids conservatively and test your exit at a higher stress rate. If your plan relies on overseas demand, consider intakes across the academic year and the impact of visa cycles on letting timetables.

Alternative paths if bridging is not ideal

1. Buy-to-let or HMO mortgage with longer completion timelines.

2. Development finance for heavier works and ground-up builds.

3. Mezzanine finance to supplement equity on larger schemes.

4. Joint venture equity with profit share instead of higher gearing.

5. Cash purchase then refinance once stabilised to release equity.

Frequently asked questions

Q: How quickly can a student HMO bridge complete? A: With a clean title, responsive solicitors, and early valuations, two to four weeks is achievable. Auction timelines often require a pre-agreed facility.

Q: What LTV should I plan for on a PBSA mini-scheme? A: Many lenders cap at 65% to 75%, with select cases stretching toward 80% if the specification, demand, and exit are strong.

Q: Do lenders value student properties differently? A: Yes. HMOs are often assessed on a commercial or hybrid basis reflecting rental income and compliance. PBSA relies heavily on yield, occupancy assumptions, and management quality.

Q: What rental demand trends support my exit? A: Student numbers remain high, international visas have been robust, and supply shortages persist in many towns. Smaller cities with one main university can offer standout yields due to lower competition.

Q: How do I mitigate interest rate risk on a bridge? A: Keep the term tight, lock in competitive pricing early, build contingency into the works programme, and line up a refinance decision in principle before completion.

Q: Can I use a bridge for a light refurb only? A: Yes. Refurb bridges suit cosmetic upgrades, safety compliance, and furnishing improvements that lift room rates before refinancing to a term product.

How Kandoo helps you move first

Kandoo connects you with UK specialist lenders for student let and PBSA projects, focusing on speed, fit-for-purpose pricing, and credible exits. We help you frame the case, coordinate valuations and legals, and compare terms so you can complete quickly and refinance cleanly. If you are targeting high-yield towns or planning an HMO conversion, we can introduce options that suit your budget, timeline, and risk tolerance. Speak with us to explore your next move.

Important information

This guide is for information only and is not financial or legal advice. Finance is subject to status, valuation, and lender criteria. Your property may be at risk if you do not keep up repayments. Always seek independent advice before committing.

Next step: Request an agreement in principle and a document checklist to start your case today.