In fact, at Octane we saw a 40 per cent rise in refurb loan AIPs (agreements in principle) during Q1 compared to the same quarter last year. There are two simple reasons why: profits and the private rented sector (PRS).
The punitive tax regime landlords are now operating in means they have to manufacture value and one way to boost their margins — cue profits — is to rejuvenate and reinvent their portfolios.
So we’re seeing lots of change of use activity at the moment, with houses being turned into multi-unit conversions and bigger houses, once planning permission has been granted, being turned into houses in multiple occupation (HMOs).
HMOs in particular can offer very attractive yields and in the current environment, yield is king.
Inject more panache
And then there’s the private rented sector.
PRS, in a nutshell, is forcing professional portfolio landlords to rebrand the way they present their properties to prospective tenants and genuinely up their game.
While the retreat of amateur landlords is a positive development for landlords, as there’s less competition to buy on the ground, PRS represents a genuine and growing threat.
To remain competitive alongside the growing number of lifestyle PRS developments, which are increasingly sought after by younger tenants in the UK’s major cities, landlords are having to inject a lot more panache into their properties — and so refitting and modernisation are understandably on the up.
People who have resigned themselves to renting for life will no longer tolerate bland.
Neither will they make a go of grubby, and refurbs are landlords’ way of staying in the game and adding some all-important gloss to their units.
Oh, and clearly refurbishment work will invariably generate capital growth, too, which can be invaluable given the current flat housing market.