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More education is needed for landlords, says firm

Landlords need to be aware of the finance options available to them when it comes to refurbishments, according to InterBay Commercial.

Its report – ‘The role of refurbishment in buy to let’ – found that one in eight landlords surveyed said they were unaware what type of finance is available to them for refurbishment.

Of those who had undertaken a refurbishment recently, a third (34%) had used their personal savings and 18% had funded the refurbishment using credit card debt or an overdraft.


Additionally, those that haven’t yet refurbished a property primarily expect to rely on credit card and overdraft debt (32%) or personal loans (31%).

However, of the landlords that had used finance to fund their refurbishment in the past, remortgaging was a popular option, with 18% using a remortgage buy-to-let loan, and a further 30% expecting to use this option for future refurbishments.

Interestingly, flexibility was a key consideration for landlords who would consider finance options for their next refurbishment.

Some 31% said that they would like the ability to access smaller sums from a loan facility during their refurbishment project. This would help them maintain their cashflow and keep their risk exposure down. Some 30% of landlords, meanwhile, would choose to access a lump sum from a lender at the outset of a project.

The research also revealed that landlords will spend £12,000 per refurbishment on average. While light refurbishments were more popular, heavier-scale projects could add an average of £96,000 to a property’s value from a £40,000 outlay.

Darrell Walker, head of sales at InterBay Commercial, says that with so many landlords unaware of their finance options when undertaking a project, education is vital in order to ensure that they are no longer relying on personal funds.

He comments: “With better understanding of the options at their disposal, landlords can choose from a variety of options from remortgaging to a bridging loan- making a refurbishment much more feasible and likely. Indeed, plugging the knowledge gap will not only benefit the landlord, but also the end tenant too.”

“From our research we know that landlords value flexibility highly when it comes to choosing finance products for a renovation. This means finding the right product to fit the landlords’ circumstances.”

“Brokers can play a valuable role in ensuring that landlords do access the right finance option so it’s important that they understand the range of support and flexible products that lenders can provide to help meet their client’s needs,” he concludes.


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