The Intermediary – February 2026 - Flipbook - Page 40
(EPC) compliance, for instance – refurbishment
into pricing rather than treated as deal-breakers,
loans provide a short-term solution. This strategy
creating opportunities for buyers with the
allows lenders assess the post-refurbishment
experience and funding to act decisively.
value and thus lend against the investor’s plan to
bring the property up to standard.
That shift in how value is assessed is
influencing investor behaviour.
Matthews notes this move away from simpler
strategies over the past year, as investors respond
to tighter margins and higher borrowing costs by
pursuing more ambitious projects.
He says: “Demand has shifted toward value-add
bridging finance have, as a by-product, become
the natural risk-takers in this segment of
the market.
Jonathan Rolande, founder of NAPB, says:
“We are seeing a clear shift in what buyers will
move quickest on. Anything unmortgageable,
structurally defective, or with legal quirks used
projects, with investors moving away from
to sit around because mainstream lenders would
straightforward ‘light touch’ refurbishments into
not touch it.”
more substantial schemes."
He adds: “Conversions to houses in multiple
occupation (HMOs), serviced accommodation,
He adds: “Now it often trades faster because
the cash buyer pool is ready and decisive. Cash
buyers, developers, landlords and bridging-
co-living, and commercial-to-residential projects
backed purchasers can act immediately, and they
have all increased due to stronger yields and
are actively hunting for stock where the discount
profit potential. Borrowers today tend to be more
is obvious.”
experienced and professional, reflecting the
increased complexity of the projects they pursue.”
This evolution has also altered how investors
view transactions themselves. Certainty is now
If risk is being reassessed, price is where that
judgement becomes visible. As more buyers
grow comfortable operating outside traditional
lending constraints, assets that might once have
central to deal-making, particularly where sellers
been caught in protracted renegotiation are
are motivated.
now moving straight to auction, where certainty
Matthews continues: “Sellers typically
prioritise speed, offering attractive pricing
to achieve quick transactions, and investors
increasingly understand the opportunity to
of outcome often matters more than squeezing
every last pound from the sale.
As Richard Worrall, past president of NAVA
Propertymark, notes: “Prices achieved have
add value through refurbishment rather than
been strong without being overinflated, and
relying on market appreciation alone. In this
we have seen good levels of interest across all
environment, certainty of execution matters
price ranges."
more than minor differences in rate.”
That emphasis on confidence in execution is
He adds: "Buyer sentiment appears more
positive, the certainty of sale at auction is
reflected in the types of assets being targeted.
becoming increasingly appealing to sellers, and
Mann points to the condition and composition
we are now selling far more properties to ‘end
of much of the stock currently coming to
users’ than at any point in my career.”
market, where refurbishment is not optional, but
fundamental to the investment case.
She says: “Much of this property requires work
That balance between realism and opportunity
is particularly evident in properties requiring
the most significant work. These assets often
– from layout changes and EPC improvements
trade well below their post-refurbishment value,
to full modernisation – which naturally lends
reflecting the risk and capital required to bring
itself to auction finance and refurbishment-led
them up to standard, but also leaving meaningful
funding. The focus has shifted away from volume
headroom for those able to act quickly and
and towards buying well, adding value and future-
execute effectively.
proofing assets. Loan purposes are increasingly
centred on meaningful refurbishment rather
than short-term, cosmetic upgrades.”
Rolande adds: “A run-down property is simpler,
it is priced for work, the issues are visible, and the
upside is clearer. Auctions also create urgency
The result is a market driven by investors
and certainty, which suits sellers who want a
prepared to undertake more intensive works.
clean exit and buyers who want a quick win.”
Risk rewarded
asset, but about the borrower’s ability to move at
For lenders, pricing risk is not just about the
Unmortgageable properties undoubtedly sit at
pace. Bridging finance has become a key enabler,
the sharper end of the risk spectrum. However,
allowing experienced investors to compete
that risk is no longer being avoided – it is
decisively in fast-moving situations.
being actively assessed. Issues around condition,
structure or legal complexity are now factored
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With mainstream lenders unable to participate
in this trend, cash buyers and those using
The Intermediary | February 2026
As Mann points out: “With a revolving credit
facility in place, experienced investors can often
