Property has been a hot topic since the announcement of stamp duty holiday last year – but the flame has continued into 2021. A record 213,120 transactions took place in June – before the taping of the stamp duty holiday. This became the largest number of transactions per month since October 1988.
The number of transactions has started to slowly recline – with mortgage approvals reducing by 6% in July from the previous month. Yet property prices are remains high as demand. The August average house price from Halifax stands at £262,954, an annual rise of 7.1%.
Yet there are ways to increase the value of your home or investment assets and property portfolios, through property refurbishment. After spending so much time indoors, renovation have been rising since the first UK lockdown. In fact, the Planning Portal in England & Wales (May 2021) received 63,497 applications. This was a 56% increase when compared to May 2020.
Source: Savills – Halifax – The Planner
Why should I refurbish?
There are many reasons why people consider refurbishing their properties:
- It holds the potential to add thousands of pounds to your property’s overall value
- Investing in refurbishment may deliver significant capital growth
- Newly refurbished properties may result in a higher source of rental income for landlords
If you’re interested in learning more about buy-to-let properties or residential loans, then check out our residential and buy-to-let page here.
What are the differences between converting, refurbishing, and renovating?
There are three key project styles when it comes to converting, refurbishing, or renovating your property. Having a deeper understanding between these difference offers a clearer insight into the type of works you are looking to use. This could therefore help you search for alternative finance options, should you require it. Short-term finance could help you take advantage of your current property and uncover hidden equity.
So, what defines these three areas of property enhancement?
Conversions
A conversion is a project that changes the use or function of a particular building or room. There are three common types of conversion projects.
1) Commercial to residential usage
During lockdowns, many lenders shied away from commercial loans due to uncertainty within the market. From here, we witnessed a rising trend of converting unused commercial buildings into residential properties. Warehouses and old industrial estates can be converted into residential dwellings such as HMOs – an attractive option for landlords looking to increase their rental yields.
2) Loft conversions
This is an economical way to increase the amount of useable floor space within your property. Converting a loft into an additional bedroom is a highly popular choice due to the added home value it provides, particularly if it includes an en-suite. This can be as much as 21%.
However, since the initial lockdown back in March 2020, potential homebuyers have been looking for larger properties. With more employees now working from home on a semi-permanent basis, the necessity for a home office has grown. Therefore, converting the space into a study or large office could be a great way to attract potential buyers.
For more information, check out our introduction to loft conversions here.
You can also download our Homebuyer Wishlist 2021, which uncovers how the pandemic has changed buyers perspective.
Source: Onthemarket.com
3) Barn conversion
When transformed into habitable properties, for both residential and commercial use, these converted farm buildings are a popularly niche area of the market. They’re known for featuring unique property aspects such as:
- Double height rooms
- Exposed beams
- Open plan living
- Impressive rural views
Refurbishment
Refurbishment enriches the overall value and quality of the property. The act of refurbishing generally relates to actions such as installing new bathrooms, kitchens, or general redecorating.
Fully refurbished assets, such as a buy-to-let, could help landlords raise their rental charge. If you’re looking to sell your property then refurbishing your home before valuing your asset, could see you rise the value of your home.
With energy efficiency becoming a growing concern for homeowners, refurbishment projects focusing on reducing emissions is a great way to increase interest. Sustainable refurbishments include the installation of energy-efficient light fittings and thermal insulation. Landlords should also be aware that by December 2025, all new tenancies will need a property that has an EPC rating of C or higher. All rented properties will need to meet the same criteria by December 2028.
Source: This is Money
Renovation
Renovation is the process of improving or modernising an old or damaged building.
Properties in need of refurbishment such as larger, older properties, are a great way to unlock potential property yield. One way to source renovation projects is through property auctions. Here, both commercial and residential properties can be bought at a reduced market price.
Understanding refurbishment finance
When taking on refurbishment projects, it is important to understand your financial options. Specialist lending can help complete renovations in a timely manner, as funds can be with you in as little as 3 days. The challenge is finding a lender with a proven track record of financing renovations, refurbishments, and conversions. It is common for property investors to buy and renovate derelict properties to increase their value. Alternative finance such as a bridging loan can provide the breathing space to buy, refurbish and refinance or re-sell the investment asset at a higher value. You can also raise finance for the works through a second charge bridging loan.
Read more about second charge lending on our product page here.
We’re experienced in refurbishment loans. We work alongside the property owner or their broker to meet their deadline and ensure the project is completed on time. For more information about our specialist finance products, get in touch with a member of our team here.