Chat to a team member

Blog

Refurb loans helping landlords manufacture value

Mark Posniak Mark Posniak
Posted on May 20, 2019 | in Blog

Refurb bridges, both light and heavy, are becoming the go-to loan for portfolio landlords in the current environment.

Reflecting this, at Octane we saw a 40% rise in refurb loan AIPs (agreements in principle) during the first three months of 2019 compared to the same period last year. There are two reasons why this is happening: profits and PRS.

The stringent tax regime landlords are now facing means they have to manufacture value by whatever means possible — and one way to boost their margins is to breathe new life into, and even reinvent, their portfolios.

So, we’re seeing lots of ‘change of use’ loans at the moment, with houses being turned into multi-unit conversions and bigger houses, once planning permission has been granted, being turned into HMOs (houses in multiple occupation).

HMOs can offer particularly strong yields and in the current environment, yield is everything.

The Private Rented Sector (PRS), meanwhile, is forcing professional portfolio landlords to rejuvenate their properties and genuinely up their game.

While the retreat of amateur landlords is a positive development for portfolio landlords, as there’s less competition on the ground, PRS represents a material threat.

In order not to be left behind by the growing number of lifestyle PRS developments, increasingly favoured by millennial 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 now have much higher standards and refurbs are a way for landlords to add some all-important gloss to their units. 

And let’s not forget that refurbishment work will also generate capital growth, which can’t hurt in what is a largely flat housing market. 

 

More in this section

Mark Posniak

Four years old, flat out and having fun

Feb 24, 2021 | Blog

I can’t believe that this week we celebrated our fourth birthday,…

Mark Posniak
Mark
READ MORE

Specialist lending flies over the cuckoo’s nest

Feb 11, 2021 | Blog

If the closing stages of 2020 were crazy, the start to 2021 has…

Mark Posniak
Mark
READ MORE

Redemptions milestone amid pandemic my proudest moment yet

Jan 15, 2021 | Blog

Over the years the team here at Octane has achieved many great…

Matt Smith
Matt
READ MORE
Sections
Archive
Twitter
Follow us @octanecapital

4 days, 14 hours ago
Thanks Augusta for your kind #TrustPilot review. Octane Capital Ltd #5stars #3rdGen https://t.co/WPh2h8i4k8

5 days, 4 hours ago
Thank you Fieldfisher for a lovely evening. Feels so good being able to get together face to face again over a few… https://t.co/yg727wVpxy

5 days, 6 hours ago
Grief Encounter golf day at the Shire - or as my team renamed it - the underwater golfing challenge!! Despite the… https://t.co/dSeWAY0euE

6 days, 10 hours ago
Service is at the heart of our Octane Capital Ltd #Proposition so it is always pleasing to get a start review! We… https://t.co/e84OUKTIK6

1 week, 2 days ago
Superb effort Graham Macaulay & Liam Lawlor in ensuring Octane Capital Ltd were able to step in and make this deal… https://t.co/KX5MQKpFVX