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Developments and Refurbishment | How landlords Are Using These To Drive Portfolio Growth | 2019

Developments and Refurbishment

Developments and Refurbishment


Liz Syms
Liz Syms, CEO and Founder of Connect

In an insightful discussion, Liz Syms, the CEO of Connect, explores the innovative strategies of permitted developments and refurbishment landlords employ to bolster their property portfolios 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 chasing yields, astute landlords are turning to refurbishments to add substantial capital value to their properties. A notable trend among forward-thinking landlords involves leveraging permitted development rights to undertake strategic transformations without the need for cumbersome planning applications.

Permitted development rights grant property owners the flexibility to make specific changes, encompassing improvements, extensions, and alterations in use, thereby avoiding the bureaucratic hurdles of planning applications. This approach empowers landlords to, for instance, expand the ground floor or increase the property’s capacity, leading to an augmentation not only in the property’s capital value but also in its overall yield.

Even in cases where projects necessitate planning applications, property investors are discovering lucrative opportunities to capitalise on the evolving landscape of real estate. As the market shifts, a diversified approach to property enhancement proves to be a resilient and rewarding strategy for landlords navigating the ever-changing dynamics of the real estate sector.

Developments and Refurbishment | One becomes two

A Connect client, a seasoned property investor, embarked on a unique journey showcasing the transformative power of strategic decisions in real estate. The initial move involved purchasing a buy-to-let property with the intention of renting it out. However, the landlord soon realised that the property held untapped potential.

Buy to Let Watch Episode 3Opting for a bold strategy, they sought planning permission to convert the single property into two self-contained flats, a venture that received the green light from the authorities. Seizing the opportunity, the landlord took a proactive approach, rescinding the original loan and securing a short-term loan to facilitate the property transformation.

The renovation process was meticulous, creating two separate entrances and adding a brand-new bathroom and kitchen. Remarkably, this entire metamorphosis transpired within a mere three months, resulting in a substantial boost to both potential rental income and property value.

While the landlord faced early repayment charges upon rescinding the initial buy-to-let loan, a strategic twist in the narrative unfolded. Just three months post-renovation, the landlord refinanced one of the newly-formed flats with the same lender. In an unexpected turn, the lender accommodated the refinancing and refunded the early repayment charges incurred earlier.

This case exemplifies how astute decisions, coupled with timely refinancing, can offset initial costs and yield significant financial gains in the dynamic landscape of property investment.

Developments and Refurbishment | Lenders increasing refurbishment

Lenders are expanding their services to cater to the growing demand for property refurbishment among investors. A notable example is Shawbrook, which has incorporated refurbishment options into its offerings, particularly focusing on heavy refurbishments and commercial property projects. For instance, Shawbrook provides bridge loans tailored for substantial refurbishments and term loans designed for lighter refurbishments, functioning as a retention to be released upon project completion.

Another player in the market, Precise, has recently introduced a unique offering involving dual valuations conducted on the first day of engagement. These valuations comprise the property’s current value and its anticipated post-works value. The bridge loan offer is determined based on the current value, while simultaneously, a long-term offer is extended based on the projected post-works value. This approach assures property investors of a long-term mortgage while also specifying the amount available for release from the outset. Connect For Intermediaries

Seasoned brokers specialising in this niche are invaluable in guiding clients through the intricacies of finance options and structural considerations essential for the success of such investments. By incorporating bridge products into their recommendations, brokers can enhance their expertise and capitalise on the augmented income streams of these strategic financial solutions. As the market continues to evolve, staying abreast of these innovative lending practices becomes crucial for lenders and investors.

We’ve come to the end of our discussion on “Developments and Refurbishment.”

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