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Greenwich University has become the first university to strike a deal under the Government's private finance initiative by signing a Pounds 40 million student accommodation agreement with the construction giant Wimpey.

Next September, Greenwich students will be able to move into brand new accommodation at Avery Hill Student Village, where there will be rooms and catering facilities for 664 people. The cost of building will be about Pounds 12 million, but in a transaction known as "BOOT" - build, own, operate and transfer - Wimpey will take charge of the management of the accommodation for the next 30 years, which could cost about Pounds 28 million.

The deal, which took two years to arrange and cost the university Pounds 400,000 in consultancy payments, involves a substantial sharing of risk. Greenwich will guarantee that the rooms are full and the rent is paid. In return, Wimpey, which beat off Taylor Woodrow in a final shortlisted submission, will guarantee all the maintenance and management costs. John McWilliam, Greenwich's deputy vice chancellor, said: "If the building needs repairs, if the costs go up, that is none of our concern." This was important for Greenwich, which had been burdened by an annual Pounds 500,000 deficit on the running of residential accommodation.

Another reason was that it meant that Greenwich did not need to go to the money markets to raise funds for building, which Mr McWilliam said is "not our core business" since most students live at home or off campus. He said: "We have a limited capacity to borrow money, and we wanted to keep that option for constructing new teaching buildings and new library facilities."

Wimpey are funding the deal, backed by Varsity Funding, which itself is backed by the Bankers Trust Company, the seventh largest commercial bank in the United States.

Varsity Funding's chairman is Sir Idris Pearce, chairman of the Welsh higher education funding council, and although it is expected to make a profit on the deal, Mr McWilliam acknowledged that its involvement is "slightly altruistic".