Developments and Refurbishment | Landlords Portfolio Growth

Liz Syms, CEO of Connect, explores innovative strategies landlords use to bolster their property portfolios. These strategies help amidst the challenges posed by tax changes on buy-to-let properties. While some landlords have seen a dip in income, resourceful professionals are finding alternative avenues to enhance profitability.

Rather than solely focusing on yields, astute landlords turn to refurbishments. This adds substantial capital value to their properties. A notable trend among forward-thinking landlords involves leveraging permitted development rights. This enables strategic transformations without the need for cumbersome planning applications.

Permitted development rights grant property owners the flexibility to make specific changes, including improvements, extensions, and alterations in use. This approach avoids the bureaucratic hurdles of planning applications. It empowers landlords to expand the ground floor or increase the property’s capacity, which subsequently increases the property’s capital value and overall yield.

Even when projects require planning applications, property investors find lucrative opportunities. They capitalise on the evolving real estate landscape. As the market shifts, a diversified approach to property enhancement proves resilient. This strategy rewards landlords navigating the ever-changing dynamics of the real estate sector.

Developments and Refurbishment | One becomes two

A Connect client, an experienced property investor, began a journey highlighting the power of strategic decisions in real estate. The first move involved buying a buy-to-let property to rent it out. However, the landlord soon realised the property had untapped potential.

Opting for a bold strategy, they sought planning permission to convert the single property into two self-contained flats. The authorities approved this venture. Seizing the opportunity, the landlord cancelled the original loan and secured a short-term loan to facilitate the transformation.

The renovation process was meticulous. It included creating two separate entrances and adding a new bathroom and kitchen. This entire transformation occurred within three months, boosting potential rental income and property value.

While the landlord faced early repayment charges upon cancelling the initial buy-to-let loan, a strategic twist emerged. Three months after the renovation, the landlord refinanced one of the new flats with the same lender. Unexpectedly, the lender refunded the early repayment charges.

This case exemplifies how astute decisions and timely refinancing can offset initial costs. It demonstrates significant financial gains in the dynamic property investment landscape.

Developments Loan | Lenders increasing refurbishment

Lenders are expanding their services to meet the growing demand for property refurbishment among investors. Shawbrook, for example, has added refurbishment options to its offerings, focusing on heavy refurbishments and commercial property projects. They provide bridge loans for substantial refurbishments and term loans for lighter refurbishments, releasing funds upon project completion.

Another market player, Precise, has recently introduced a unique offering. They conduct dual valuations on the first day of engagement. These valuations include the property’s current value and its anticipated post-works value. The bridge loan offer is based on the current value. Simultaneously, a long-term offer is extended based on the projected post-works value. This approach assures property investors of a long-term mortgage and specifies the available release amount from the outset.

Expert mortgage brokers specialising in this niche are invaluable. They guide clients through finance options and structural considerations essential for successful investments. By incorporating bridge products into their recommendations, brokers can enhance their expertise. They can also capitalise on the increased income streams from these financial solutions. Staying abreast of innovative lending practices becomes crucial for lenders and investors as the market evolves.

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