The Intermediary –- May 2026 - Flipbook - Page 68
SPECIALIST FINANCE
Opinion
Rethinking ren
T
he UK housing crisis
is stubbornly difficult
to solve. Different
policies – introduced
by Governments of all
stripes – and supplyside reforms have aempted to close
the gap between demand and supply.
But despite these top-down
interventions, we still aren’t building
enough homes. In October 2023, as
part of his election manifesto, Keir
Starmer promised to build 1.5 million
new homes by August 2029. So far,
only 340,000 have been delivered
Potential cost of
renovating the UK’s
vacant property stock:
£34bn
Source: BuildLoan analysis
– and recently the delivery of new
housing has actually slowed.
Despite the Government’s vocal
commitment to delivering new
homes, quarterly housing starts have
dropped significantly since late 2023
and remain below historic levels.
The number of Energy Performance
Certificates (EPCs) for new-build
homes, a leading indicator for
net additions, shows the delivery
currently stuck at around 200,000
a year, with a shortfall of more
than 120,000 homes against the
Government’s target already built up
since the election. Without additional
action, the housebuilding target will
be missed by some margin.
The limited volume of stock
constrains affordability for
borrowers – especially young couples
and families.
Vacant opportunity
There is a scalable opportunity out
there, though, and it sits within the
UK’s existing housing stock.
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The Intermediary | May 2026
Vacant properties represent a
meaningful – and underutilised – pool
of potential homes.
Many of these require relatively
modest work to become habitable.
Average cost of renovating
an uninhabitable property:
£70,000
Source: BuildLoan analysis
Others need more extensive
refurbishment, but still fall short of
the effort involved in full ground-up
development. The key point is that
these are assets already embedded
within communities, oen in
locations where demand is strongest.
The opportunity that renovation
represents is also significant. To give
you an idea of scale, in England there
are currently more than 300,000
vacant properties. BuildLoan’s analysis
suggests there are approximately
360,000 in the UK as a whole, and
this supply is not constrained by land
release. If unlocked at scale, it has
the potential to make a worthwhile
contribution to usable housing stock.
Historically, however, financing has
been a barrier to geing vacant homes
back into circulation.
Developing certainty
For plenty of advisers, the default
solution for renovation cases was
bridging finance. But the dominance
of bridging loans does not reflect
that this sort of loan is a perfect fit
for borrowers – bridging dominates
because there’s a lack of alternatives.
For clients undertaking light to
moderate renovation, bridging can
introduce structural risks that are not
always fully understood at the start of
the process.
One of the most significant issues is
uncertainty over cashflow. Bridging
loans oen rely on valuation-led
drawdowns. Funds are released
CHRIS MARTIN
is head of product
development and lender
relationships at BuildLoan
following inspections, meaning the
borrower does not have full visibility
over when capital will arrive at
each stage.
In a live build environment, this
maers. Contractors expect to be paid
on time. Delays in funding can stall
progress, increase costs and strain
relationships. This is precisely the
type of foreseeable harm that sits
within the scope of Consumer Duty.
There is also a deadline mismatch.
A nominal 12-month bridging loan
may appear generous, but once
you allocate time for initial works,
certification and arranging an exit
Number of long-term
vacant properties in the UK:
361,000
Source: BuildLoan analysis
onto longer-term finance, the effective
build window can be compressed
quite significantly.
This creates pressure on delivery,
oen forcing borrowers into
suboptimal decisions to meet
deadlines. Layer in higher interest
rates and fees, and the margin for
error narrows further.
A defining element of our new
renovation range is the use of
guaranteed stage payments.
