Essential guide to property refurbishment

Kit Thompson | Director of short-term and development finance, Brightstar Financial
17th May 2019
Kit Thompson Brightstar

A growing number of property investors are realising that they can generate better returns by buying a run-down property and renovating it to achieve a higher re-sale price or retaining the property and benefitting from increased rental income. So, what are the options?

Property refurbishment falls into two main categories – light refurbishment and heavy refurbishment.

Light refurbishment is where no planning permission or building regulations are required and there is no change of use to the property. Since the introduction of new minimum EPC requirements on rental property it has become popular for light refurbishment to be used by investors to buy a property that doesn’t make the grade and make the required changes that would enable the property to be let out.

However, it is often the case a property that is considered uninhabitable and therefore unmortgageable could be made habitable with relatively straight forward light refurbishment, providing there is no structural work or planning required. Common reasons for a property not being habitable that could potentially be rectified with a light refurbishment include no kitchen or bathroom, multiple kitchens in a single property or a surveyor having inspected the property and deemed it not fit for letting.

Heavy refurbishments are more involved, involving structural changes to the property that require planning permission or building regulations. The returns on a successful heavy refurbishment project, however, can justify the effort and typical types of heavy refurbishment that we are currently seeing include converting a property to residential use, including things like commercial to residential and barn conversions, creating multiple units from single building or converting multiple units to a single building.

Refurbishment finance can be arranged on a flexible basis up to terms of 24 months, during which time an investor can purchase a property in need of renovation and carry out the work to increase its value before deciding whether to retain and refinance onto a longer-term solution or sell the property.


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