Research from Octane Capital, which used data from the EY Bridging Report, showed that a third said refurbishment was the most popular reason for using bridging finance.
Auctions were cited by 19% and mortgage delays by 16% as the most popular reasons for bridging finance.
The report said refurbishment has been falling in popularity since 2021, going from 50% at that time to around 35% in 2024.
However, this trend could reverse as the “mortgage landscape improves from an affordability standpoint”.
Octane Capital said the use of bridging finance could improve as costs go down this year, which is likely to happen in 2025 as the base rate continues to fall.
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Currently, a refurbishment loan of £200,000 would cost around £36,000, assuming the current rate of interest and various fees.
The report stated that the general expectation was that the base rate would continue to fall and the cost of bridging would decrease.
Incoming Energy Performance Certificate (EPC) legislation that would mandate that privately rented homes have an EPC C by 2030 could also be a boon for bridging, especially refurbishment.
Jonathan Samuels, Octane Capital’s CEO, said: “Bridging is a flexible form of finance, which is reflected by the popularity of its utilisation for refurbishment.
“Whilst this popularity has reduced somewhat in recent years, bridging could come into its own in the coming months, as borrowing costs fall and improving EPCs become more of a priority for UK investors.
“Not only is there the 2030 deadline for improving EPCs to C, but there is also a strong case for lowering the cost of energy bills at a time when costs have skyrocketed.”
