With all that has happened so far this year, it’s been good to see UK property continuing to bloom. In July, house prices spiked to an 11-year high, with the average household coming in at £254,688. The price change is largely influenced by the balance between supply and demand and last month alone saw a rise of 5.8%! With the stamp duty holiday still set to end in March, people are looking to get the most of their money and invest in a larger home.
Yet, there are other ways of adding value to an asset. With lockdown 2.0 now underway, this might be the perfect time to consider enhancing your property.
Why should I refurbish?
Refurbishment projects are popular in the UK for many reasons:
- They hold the potential to add tens of thousands of pounds to the overall value.
- Property investment can deliver significant capital growth – particularly newly refurbished properties.
- They also provide a higher source of rental income for buy-to-let and HMO properties.
What are the differences between converting, refurbishing, and renovating?
There are three key project styles when it comes to revamping your property. Understanding these will help provide a clearer insight as to the type of work they may require. We’ll also explain how a short-term bridging loan can help improve your property investments.
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
In light of the pandemic, many lenders are shying away from commercial finance due to the uncertainty and potential fall in value. However, converting unused commercial buildings into residential properties, is starting to emerge as an up-and-coming trend. Particularly in London, it’s common for warehouses and old industrial estates to be converted into apartments. Meaning that abandoned commercial properties can be turned in 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. Converting a loft into an additional bedroom is a highly popular choice due to the added home value it provides, particularly one including an en-suite. This can be as much as 21%.
Since the initial lockdown back in March 2020, potential homebuyers are looking for larger properties. Thousands of workers could possibly be looking to work from home on a permanent or semi-permanent basis, so the necessity for a home office is growing. Therefore, converting the space into a study or large office is a great way to attract potential buyers.
For more information, check out our introduction to loft conversions here.
3) Barn conversion
These converted farm buildings are popularly transformed into habitable properties for both residential and commercial use. They commonly feature certain aspects such as:
There has been a steady rise in country-based homes over recent months. The Guardian stated there’s a record-breaking demand for country properties, as their value hits a 4-year high.
This was initiated by the rise in Covid-19 cases, throughout the more densely populated areas within the capital. This resulted in many city homeowners packing up to embrace the urban lifestyle. Converting countryside barns, particularly those with impressive countryside views, could see a rise in demand from property investors.
Refurbishment enriches the overall value and quality of the property. It usually relates to actions such as installing new bathrooms, kitchens, or general redecorating.
Refurbishing properties – particularly those bought at auction for a reduced market price – is a great way to increase property yield by meeting the ever-changing needs of the market. Larger, older properties are often transformed into flats or are fully refurbished to a higher standard and sold for an increased profit.
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.
Covid-19: Trends to consider
COVID-19 is set to increase the number of refurbishments and conversions taking place. People are spending more time in their homes during the pandemic. As such, extra space has become highly valued. This can be for dedicated work areas or to provide more comfortable living quarters. The 2020 Renovation Nation Report shows that two-thirds (65%) of homeowners have been inspired to invest in renovations.
For property investors, it is common to buy and renovate derelict properties to increase their value. Our bespoke bridging finance allows investors to complete renovations in a timely manner, to ensure the property is back on the market at a higher price.
When taking on such projects, it is important to understand your financial options. Bridging loans are an ideal funding choice. The challenge is finding a lender with a proven track record of financing renovations, refurbishments and conversions.
We’re experienced in refurbishment finance. Working with the property owner, we ensure deadlines are met and the project is completed on time. For more information about our specialist finance products, get in touch with a member of our team here.