The latest research from Nationwide shows that kitchen and bathroom improvements were the most popular type of renovation, at around 20%. This was followed by around 19% of landlords who did kitchen renovations and 18% whose properties underwent green improvements.
Looking at green improvements, 37% of landlords had solar panels installed, 33% had improved pipe or boiler insulation and 32% had electric car charging installed.
Nationwide said some of the improvements were likely to have been targeted at achieving Minimum Energy Efficiency Standards (MEES), which require most rental properties to have a minimum energy-efficiency rating of E in order to be let out.
Nearly a quarter of landlords said they chose to renovate their properties to ensure compliance.
The report said that looking at larger-scale projects, 17% of privately rented properties had a multi-storey extension built, while 15% had a basement conversion. Interestingly, two-thirds of landlords said some of the work undertaken was related to converting a property to a house of multiple occupation (HMO).
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Landlords shell out around £88,000 on renovations on average
Looking at renovation spend, across all landlords making renovations in the last five years, the average spend was around £88,000, but there was “significant variation” depending on the work and portfolio size.
The most popular reasons for renovating were to attract new tenants and reduce vacancy periods, at 27%, and to boost the value of the property, at 25%.
Nearly a quarter of landlords said their property or properties needed it due to general wear and tear. Meanwhile, 23% wanted to ensure they had a good reputation as a landlord by showing care for their property and tenants.
Almost a quarter of landlords chose to renovate in order to increase their rental income.
More than 80% of landlords increased the rent charged once the renovations were complete, with an average increase of 17%.
Nearly a third of landlords said they were able to increase the rent by more than 20% following completion of the work.
Rent increases will be limited at once per year following the implementation of the Renters’ Rights Act in May next year.
Over half of landlords said they regretted renovating their rental properties, which compares to 4% of owner-occupiers.
The most common gripe – cited by 35% – was loss of income when tenants had to move out while the work was undertaken.
Almost half of landlords said they carried out work when the property was vacant.
Nearly a third of landlords said the end result wasn’t what they wanted and they didn’t get the rental income they wanted, and 30% said the renovations cost too much.
Extensions and loft conversions give biggest BTL property value boost
Nationwide examined factors adding the most value to typical buy-to-let (BTL) properties, with the highest value being a 24% boost from an extension or loft conversion.
Around 13% value is added from an extra bedroom, while 8% value is added from an extra bathroom and 3% from a 10% increase in floor area.
When looking at different property types, Nationwide found that going from two to three bedrooms for terraced and semi-detached property adds 13%.
When going from a three- to a four-bedroom property, the value can be boosted by 15% for a terraced property and 8% for a semi-detached property.
Adding a double bedroom can add 12% to typical rent, equal to around £125 per month.
Meanwhile, a BTL property with a second bathroom can garner a 6% rental premium – around £60 per month.
Loft conversions can see a rental uplift of 26% – around £285 per month on the typical rental property.
A more energy-efficient BTL property rated A or B can attract a significant premium of around 10.9% compared to a similar property rated D.
