Developments and Refurbishment | How Landlords Are Using These To Drive Portfolio Growth. Liz Syms, CEO of Connect, highlights the strategic shift among landlords who are turning to smart property development projects to strengthen their portfolios. In response to recent tax changes affecting the buy-to-let market, many landlords have experienced reduced margins. However, resourceful investors are identifying new routes to maintain profitability and long-term value.
Rather than relying solely on rental yield, savvy landlords are focusing on refurbishment and development finance solutions that enhance a property’s capital value. One rising trend involves using permitted development rights to unlock value through strategic property improvements without the delays of full planning applications.
Permitted development rights allow property owners to make key structural changes, such as ground-floor extensions or change-of-use conversions, helping to increase both rental income and capital appreciation. This approach enables landlords to scale their assets efficiently, even amid tightening market conditions.
Even when full planning approval is required, experienced investors still pursue property development projects by leveraging short-term funding, such as bridging loans and tailored development exit finance solutions. As the UK property landscape continues to evolve, a flexible, diversified approach to development helps ensure landlords remain competitive and future-focused.
Explore how we support these strategies through our development finance options, bridging loans, and development exit finance for every stage of your investment project.
Turning One Property into Two: A Smart Development Strategy
A Connect client, an experienced property investor, embarked on a strategic property development project that perfectly illustrates the power of vision and timing in real estate.
Initially, the investor purchased a buy-to-let property with the intention of renting it out. However, they soon identified untapped development potential. Rather than settle for standard rental yields, they applied for planning permission to convert the single home into two self-contained flats, a smart move in small-scale property development.
Once planning approval was granted, the client took decisive action. They cancelled the original mortgage and secured short-term funding, such as bridging loans, to finance the build, highlighting the importance of flexible capital in fast-paced projects. (Learn more about bridging loans here.)
Over three months, the property underwent a full transformation. Two private entrances were added, along with new kitchens and bathrooms, effectively doubling the rental income potential and significantly increasing capital value.
Although cancelling the initial buy-to-let mortgage triggered early-repayment charges, the investor’s foresight paid off. Just months later, they refinanced one of the new flats through the original lender. In a surprising and welcome turn, the lender refunded the earlier charges, demonstrating how timely refinancing can offset upfront costs.
This case underscores the core of successful property development finance: recognising opportunity, acting quickly with the right funding tools, and leveraging refinance options for long-term gain.
Development Finance | Lenders Expand Refurbishment Options
As demand for property development projects continues to rise, lenders are adapting with enhanced refurbishment finance solutions tailored to investors and developers.
Shawbrook has recently expanded its offering to include both heavy and light refurbishment finance options. Their products now include bridging loans for major renovations and term loans for lighter refurbishments, with funds typically released upon project completion. These options suit developers managing both commercial and residential upgrades.
Meanwhile, Precise Mortgages has introduced an innovative approach with dual valuations at the outset of the project. This includes both the current market value and the projected post-works value. Their bridging loan is based on the existing value. At the same time, a simultaneous long-term development exit finance offer is extended based on the uplifted value, giving investors clarity from day one.
Engaging with a knowledgeable development finance broker is essential. Brokers play a critical role in navigating complex property development finance structures, including short-term funding like bridging loans and exit strategy options.
By staying informed about evolving lender criteria and creative finance structures, brokers can better support clients and unlock additional income opportunities through value-added services.
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