US and European investor set aside £200m to buy PBSA and HMOs for UK students

The UK PBSA market has become a mainstream institutional asset class in the past two decades, GCM Grosvenor said.

However, a combination of rising build-cost pressure and strong international demand has driven PBSA rents to a level unaffordable for most domestic students, who make up over 70% of the UK student population.

British students, after their first year of studies, tend to rent out HMOs in groups. HMOs make up around 80% of investable student housing stock in the UK and have seen strong and stable rental growth of 5% per year over the last decade, the asset manager said.

Supply of HMOs has been constrained by Article 4 of UK planning regulations, which restricts the conversion of existing family homes into shared rentals in student areas. Meanwhile, there has been stable domestic student population growth.

HMOs are predominantly owned by private landlords in fragmented portfolios, but ongoing regulatory, environmental, tax and financing pressures are turning many of them into net sellers and unlocking a rare opportunity for institutions to buy these homes at scale, GCM Grosvenor added.

Unlike PBSA, HMOs can also benefit from their ease of conversion back to traditional residential use.

The launch of Homie in 2024 was backed by Tokoro to establish an HMO-focused platform and now has over 700 beds.

Homie was founded by Tom Ferber, who previously spent over 15 years at Student Cribs, where he played a role in building the largest institutionally owned HMO portfolio in the UK.

Mr Ferber said: “We are really excited to partner with GCM Grosvenor to continue the expansion of the Homie platform.

“HMOs are the go-to housing solution for domestic students, especially in their second and third year, yet the sector remains largely untapped by institutional investors.

“This additional firepower will strengthen Homie’s early mover advantage in what we believe will be the next wave of institutional student housing investment in the UK.”

The new joint venture comes three months after US asset management giant Brookfield bought a 1,300-home portfolio of HMOs for use as student accommodation.

Private capital is turning to HMOs and domestic students amid falling demand from international students. Last year, PBSA landlord Empiric Student Property warned it may not reach its occupancy target for the academic year, citing a decline in the number of Chinese students and oversupply in three cities.