The Intermediary – February 2026 - Flipbook - Page 42
serviced accommodation, but they’re generally
can quickly undermine otherwise sound
not the primary driver of refurbishment activity.
investments. Mann cautions that the practical
EPC improvements are often a by-product of
realities of delivery now matter as much as the
wider works rather than the sole motivation,
underlying asset.
though investors are increasingly aware that
narrower margin for error. Build costs, labour,
and marketability.
and timescales all need careful planning, as
"Ultimately, investors focus on cost control and
delivering a product that maximises value.”
Rather than chasing top-end energy
delays can become expensive very quickly.
Successful deals are the ones where borrowers
are realistic, allow for overruns, and don’t rely
performance, some landlords seem to be
on everything going perfectly to make the
targeting pragmatic upgrades that align with
numbers work.”
rental returns and future saleability.
Indeed, according to Rolande, as rents
That pressure is particularly acute for landlords
attempting to scale up or enter unfamiliar sub-
continue rise, the margin for intervention
markets. Gill adds that contingency planning is
widens. He says: “Higher achievable rents can
"no longer optional," especially where resale or
justify heavier refurb budgets. That is why we are
refinance depends on local demand.
seeing more buyers willing to take on tired stock,
even if it is unmortgageable on day one.”
At the same time, EPC considerations have
moved from the margins into the core of
investment decision-making.
According to David Leary, NAVA Propertymark
He notes: “Time and cost overruns can severely
affect the profitability and viability of a project,
and it is important to allow for a sufficient
contingency to mitigate against this.
"Another huge challenge is understanding
the strength of your exit. Your exit has to be
advisory panel member, there has been “a
rock solid; we typically advise to have a primary,
noticeable increase in flats and converted
secondary and tertiary exit.”
houses being offered at auction, driven in part
In fact, the divide between successful and
by regulatory and legislative changes such as the
unsuccessful projects is often operational, rather
Renters’ Rights Act and changes to Section 21.”
than conceptual.
Mann agrees, noting that “while rents have
According to Rolande, success is afforded to
made refurbishment projects financially more
“the professionals who cost it properly and get
attractive again [...] EPC requirements are
encouraging a longer-term perspective.”
She explains: “The savvier landlords aren’t
just asking: ‘What’s the rent today?’ They’re
work completed fast.”
He adds: “The losers underestimate compliance
and timelines as well as escalating costs.”
Despite these challenges, the underlying
considering: ‘Will this property still perform in
opportunity remains compelling for investors
five or 10 years?’”
who approach fix and flip as a structured
Cappaert adds: “The real shift over the past year
has been the surge in landlords using bridging
specifically to tackle EPC-driven upgrades.”
He continues: “This dual dynamic (strong
business rather than a speculative trade.
More specialised strategies, such as multiunit conversions or targeting specific tenant
groups, can deliver strong returns, but they
rental demand and regulatory pressure) has
also introduce additional layers of complexity.
pushed refurb-focused bridging to the forefront.
Higher interest rates have made holding costs
Instead of financing cosmetic improvements,
more punitive, increasing lender scrutiny
facilities are increasingly being used for
around experience, planning, and exit viability.
deep, compliance-led upgrades that protect
As a result, professionalism has become a
long-term value, reduce running costs, and
key differentiator.
ensure portfolios remain viable in a tightening
regulatory landscape.”
Navigating the landscape
For investors embracing refurbishment-led
strategies, the opportunity is real – but so is the
execution risk.
As projects become more capital-intensive
and compliance-driven, success increasingly
hinges on discipline rather than optimism.
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She explains: “The challenges come from the
strong EPC ratings can support higher valuations
Cappaert adds: “Successful clients are the
ones who treat projects like a business: detailed
appraisals, realistic timelines, strong professional
teams, and a clear ‘Plan B’ if the preferred exit
(sale or refinance) takes longer than expected.”
Matthews reinforces the point that value
creation alone is not enough if fundamentals are
weak. Especially for newer entrants, he warns that
preparation is key.
He notes: “Projects face real risks: build-cost
The margin for error has narrowed, and small
volatility, planning constraints, and a flat sales
miscalculations around cost, timing, or exit
market can all impact profitability.
The Intermediary | February 2026
