"Brokers have a crucial role to play here. The best advisers - and investors for that matter - recognise that there is far more to this than simply identifying the smallest available rate."
Or it might be the potential of an individual property, which is currently a little unloved or uninspiring, but can be turned into a far more attractive proposition. The job of turning that property around can vary significantly in size of course. Some properties will only require a little bit of love, a little light refurbishment here and there to uncover the diamond underneath, while others will require far more substantial work in order to realise that potential.
This drive to turn around existing properties, to identify ways in which the housing stock we already have can be transformed into homes more suitable - and let’s face it, more in demand - from buyers and tenants alike has always been a factor in the rise of the bridging sector that we’ve seen over the last few years.
But it’s never been clearer than in the housing market at the moment. There is an undeniable appetite to buy from property investors, who have certainly not been put off by the rapid house price growth seen over the last year and a half courtesy of the stamp duty holiday.
Instead, these investors are looking even more keenly for the diamond in the rough, the underpriced property with potential which - with a little work - can be revamped into a more compelling home for a potential buyer or tenant.
And brokers have a central role to play in helping ensure these refurbishment projects are a success and deliver a real profit.
The refurbishments that add the most value
The insurer Royal London recently carried out research into the home improvement market, and more specifically the sorts of improvements that add the most value to a property.
It found that installing a modern kitchen could have the most dramatic impact, adding more than £11,000 to the value of a typical home, with introducing a modern bathroom, carrying out a loft conversion, and installing a spare bedroom all resulting in the value rising by upwards of £10,000.
Other steps highlighted by the study which can add substantial value to a property include the likes of installing a new heating system, having modern windows and doors fitted, and even having the garden landscaped.
There have been plenty of similar studies in the past that have also highlighted the big gains that can possibly be achieved by carrying out such refurbishment work, though it’s obviously important to bear in mind that the reality will vary based on a whole host of additional factors like the location and the quality of the work.
Paying for refurbishment work
Most property investors won’t have a pot of cash set aside for potential refurbishment costs, and will instead look to borrow the sums needed for that work when purchasing the property in the first place.
This is an area that has seen great innovation among bridging lenders in recent years, designing bridging products which specifically address the needs of investors in this position. This distinct form of bridging loan allows the investor not only to get the money they need in order to complete the purchase, but also provides the capital for the refurbishment work they have planned.
It means they can get on with transforming it, so that it achieves its true potential.
As a result, brokers have a crucial role to play here. The best advisers - and investors for that matter - recognise that there is far more to this than simply identifying the smallest available rate.
Instead, advisers can help steer their clients towards lenders who can be trusted to always deliver the promised funds on time, who provide a level of service consistent with what the client would expect.
It’s up to lenders to not only meet those standards, but to keep striving for new ways to ensure our products meet the very real needs of property investors. It’s only by standing out from the crowd that we can win the approval, and with it the business, of brokers and their clients.
