Make informed decisions with your next property move
The relationship between property refurbishment and bridging finance continues to evolve, offering important insights for homeowners, investors, and those looking to enhance property value in today's market.
Refurbishment Remains Primary Driver for Bridging Loans
According to recent analysis from Octane Capital based on the EY Bridging Report, refurbishment continues to be the most significant reason borrowers seek bridging finance.
While there has been a slight decrease in this trend, with refurbishment accounting for 33% of bridging loans last year (down from 35% the previous year and 50% in 2021), it remains the dominant purpose for such financing.
Other common uses for bridging finance include property auction purchases (19%) and addressing mortgage delays (16%), highlighting the versatility of these short term funding solutions.
Why This Matters for Property Owners
This trend reflects several important market dynamics that could affect your property decisions:
Expected Resurgence in 2025: Despite the recent decline, Octane Capital forecasts that refurbishment-driven bridging could increase again in 2025 as mortgage affordability improves. This corresponds with the recent Bank of England decision to cut the base rate from 4.75% to 4.5% in February, with indicators suggesting further reductions are likely.
Cost Considerations: Currently, a typical £200,000 refurbishment loan costs approximately £26,000 when accounting for interest rates and various fees. However, anticipated base rate cuts could make bridging finance increasingly affordable for property improvements.
Energy Efficiency Imperative: Perhaps most significantly for property owners, Labour's proposal for all privately rented homes to achieve an Energy Performance Certificate (EPC) rating of C by 2030 creates a compelling reason to consider property upgrades. As Jonathan Samuels, CEO of Octane Capital, notes: "Not only is there the 2030 deadline for improving EPCs to C, there is a strong case for lowering the cost of energy bills at a time when costs have skyrocketed."
Strategic Opportunities for Our Clients
For homeowners and investors, these trends present several strategic considerations:
Value Enhancement: Well-executed refurbishments can significantly increase property values, particularly when focused on energy efficiency improvements that reduce running costs.
Future Proofing Investments: For those with rental properties, planning ahead for the 2030 EPC requirements could avoid rushed, potentially more expensive upgrades later.
Timing Opportunities: With bridging costs expected to decrease as interest rates potentially fall, 2025 could present an opportune window for property improvements, allowing you to enhance value while optimising financing costs.
As the property market continues to evolve, the relationship between financing options and improvement strategies remains crucial for maximising returns.
Whether you're considering renovations to your current home or evaluating investment properties with refurbishment potential, understanding these financing trends can help inform your decision making.
Thinking of Buying or Selling in Wynyard?
If you’re looking for guidance on Wynyard’s property market, our team is here to help. No one can predict the future with certainty, but at Anthony Jones Properties, we’re committed to helping you make the best decisions.
For expert advice, call us today on 01740 807107.
