The Intermediary – October 2026 - Flipbook - Page 42
BRIDGING
Opinion
Refurb continues
to be a growth
opportunity
G
rowing a portfolio
has traditionally
meant buying more
properties, but with
acquisition costs
remaining high,
continued pressure on margins
and a more challenging regulatory
environment, investors need to look at
how they can generate beer returns
from the properties they already own.
Rather than commiing significant
capital to further acquisitions,
refurbishment, improvements and the
conversion of suitable properties into
houses in multiple occupation (HMOs)
can provide an alternative route to
improving yields.
The Government’s English Private
Landlord Survey conducted two years
ago alluded to this change in investor
appetite. 23% of landlords said they
increased rents for new tenants to help
recover renovation or redecoration
costs, compared with 18% in 2021.
More broadly, 36% reported that
recovering expenditure on renovation,
redecoration, licensing and energyefficiency improvements affected their
rent-seing decisions, rising to 38%
among moderate-scale business and
investor landlords.
The focus is shiing to improving
the performance of existing holdings.
Increasing rental income
Refurbishment of existing properties
can offer a number of benefits,
particularly where a property has
become dated or no longer meets the
expectations of tenants. Replacing
kitchens and bathrooms, improving
heating systems, updating layouts or
creating additional bedrooms can all
make a property more aractive to
prospective tenants. Depending on
the local market, these improvements
may also support higher rents,
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The Intermediary | October 2026
reduce void periods and increase the
property’s value.
Of course, recovering the cost of
improvements through higher rents is
not necessarily the same as increasing
yields, as investors still need to
consider the total cost of the work,
any loss of rental income during
refurbishment period and whether
the expected increase in rent justifies
the investment. But for properties
with clear scope for improvement, the
financial benefits can be significant.
Opportunity in HMOs
One area where investors may see
opportunities is the conversion
of suitable single-let properties
into HMOs, by creating additional
bedrooms and leing properties on
a room-by-room basis, landlords
may be able to generate higher rental
income than they would through a
conventional single-let tenancy.
According to SpareRoom, average
UK room rents reached a record £769
per month in Q3 2026, while the
supply of rooms in flats and houses fell
by 4.7% year-on-year.
However, converting a property
is not simply a question of dividing
up the available space. Planning
requirements, licensing, fire safety,
building regulations and higher
management costs all need to be
considered. Investors must also be
confident that there is sufficient
local demand.
The same principles apply to more
traditional refurbishment projects.
Whether adding a bedroom, carrying
out a lo conversion or upgrading an
older property, the works must make
financial sense and deliver a return.
Funding improvements
For investors considering
refurbishment, access to suitable
ASIM SHIRWANI
is head of bridging at GB Bank
finance is an important factor in
the decision. We have recently
enhanced our bridging refurbishment
proposition to lend on up to 100%
of refurbishment costs, to support a
wider range of projects, recognising
that investors have differing
requirements depending on the nature
and scale of the refurbishment. It
covers straightforward bridging,
light refurbishment and medium
refurbishment projects, from cosmetic
improvements, the replacement of
kitchens and bathrooms, through to
lo conversions and small extensions.
There is also an important role for
intermediaries in helping investors
assess their options, understand the
total cost of borrowing and establish
a clear exit strategy, whether that
involves refinancing onto a term
product or selling the property once
the improvements are complete.
Looking beyond
There will always be investors looking
to expand their property portfolios
through additional purchases,
particularly where properties can be
acquired at aractive prices.
However, in a market where costs
remain under pressure and landlords
are becoming more selective,
refurbishment deserves consideration.
For lenders and intermediaries,
the opportunity is to help investors
identify where improvements make
commercial sense and provide the
finance needed to complete them.
Growing a property investment
business does not always have to mean
owning more properties. Sometimes,
achieving a beer return from those
already held can be just as valuable. ●
