The Intermediary – May 2025 - Flipbook - Page 54
SPECIALIST FINANCE
Opinion
Refurbishment is
back on the radar
T
here was a time when
refurbishment lending
sat firmly in the
background, quietly
ticking along behind
the headline-grabbing
world of development finance. But
that’s beginning to change.
As confidence creeps back into
the market, a growing number of
landlords and investors are returning
to familiar ground. Rather than
looking for the next big acquisition,
many are turning their aention to
what they already have.
The focus, increasingly, is on
upgrading stock, improving energy
efficiency and adapting spaces to suit
shiing demand. Refurbishment,
in other words, is firmly back on
the agenda.
Non-regulated finance
The majority of these cases are not
large-scale transformations. They
are measured, manageable projects
that require structure, speed and a
clear exit.
Many of these deals fall into the
non-regulated space. They are oen
limited company purchases, with no
intention for the borrower to live in
the property. The funding needed is
short-term and time sensitive. It is
here, in this corner of the market, that
non-regulated refurbishment finance
comes into its own.
It’s a trend some lenders are
quietly leaning into. Aer a period
of focusing on regulated residential
bridging, we are among those now
actively supporting a broader set of
refurbishment cases once again.
Timing matters more now
The appeal is straightforward.
Refurbishment finance can help
unlock value in properties that are
underused or outdated. It allows
investors to reconfigure layouts,
improve Energy Performance
Certificate (EPC) ratings or bring
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The Intermediary | May 2025
semi-commercial buildings back into
residential use. For brokers, it offers
a route to keep deals moving when
mainstream products fall short.
The speed of funding is key.
According to Bridging Trends data
released in February, the average
completion time for bridging loans
decreased by 23% year-on-year,
dropping from 58 days in 2023 to 47
days in 2024.
Deals are moving faster, and so
are expectations. A client looking to
complete a purchase and begin work
within weeks cannot afford delays.
That urgency is being felt across
the sector.
Rising stakes
At the same time, project costs are
continuing to rise. Figures published
by the Building Cost Information
Service in April suggest that
construction costs are expected to
increase by 12% by 2030, with labour
costs climbing by 18%. Any delay to
a refurbishment project can quickly
start to eat into margin.
Not every deal is complex, but
most still need to move quickly.
One of our recent cases involved a
limited company whose directors
were looking to purchase a residential
property in Harrogate for £210,000.
The works were modest: a singlestorey rear extension, a roof dormer
and a full refurbishment, all to
be funded by the borrower using
permied development rights (PDR).
ROZ CAWOOD
is MD property finance
at StreamBank
The timeline was tight, with a three
to four-month window and a buyto-let remortgage already lined up as
the exit. No additional funding was
required beyond the purchase. It was
the sort of project that demonstrates
how short-term finance can support
experienced landlords without
unnecessary complications.
Worth watching
Cases like this reflect a shi in
emphasis. There is growing demand
for straightforward, non-regulated
refurbishment finance. These
deals do not always require creative
structuring. What they need is clarity
and consistency. When done well,
they work.
Some brokers will already know
this part of the market well. Others
may have stepped away from it in
recent years. But as lender appetite
returns, so too does the opportunity.
This is not about chasing higher risk
development. It is about responding
to a steady stream of demand from
clients who are looking to improve,
adapt and exit on a clear plan.
Refurbishment may not dominate
the headlines, but for many investors,
it is the foundation of their strategy,
and the kind of activity that keeps the
market moving in quieter times. ●
