The decision to lend into the sector marks the development lender’s first move outside of its core target market — UK residential property.

After eight years of operations, Avamore has lent over £600m across its four core products — development, refurbishment, part complete development, and bridging — including an £11m portfolio bridge secured against multiple sites in North Yorkshire, and its largest deal to date, a £13.3m part-built scheme in Newbury.

From looking at ways to better serve the market they found that the current student-to-bed ratio in the UK is reflecting a chronic supply and demand imbalance.

Affordability of accommodation is also a major factor for most domestic students particularly, who often utilise a maintenance loan to cover the cost.

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Avamore’s chief lending officer, Philip Gould, commented: “Going forward, the forecast slowdown in planning and delivery of new beds, combined with rising student numbers, means the broad macro trend is favourable for developers and investors.

“The issues around affordability make it clear there is a growing requirement for small-scale, low-amenity student housing targeted at domestic and price-sensitive international students.

“We have determined that this requirement can be serviced by the refurbishment of existing first-generation PBSA stock and the repurposing and retrofitting of existing office/commercial stock, which fits extremely well with our extensive experience in heavy residential refurbishments and office-to-resi PD conversions.

“We look forward to increasing our presence in the student accommodation sector and have ambitious plans to further improve how we can help developers through continued product innovation to give our brokers and borrowers the support they need.”