Mitigate the risk of a refurbishment investment

The combined impact of an extra 3% Stamp Duty Land Tax and income tax changes, which will soon hit landlords’ pockets, mean that your clients are looking for more creative ways to increase their returns on a property investment.

This is leading to growing demand for alternative investments, such as HMOs (Houses in multiple occupation), holiday lets and refurbishment projects, particularly amongst landlords who have previously only been involved in traditional buy-to-let.

The most recent Bridging Trends data from short-term lender, MTF, found that funding refurbishments was the most popular reason for obtaining bridging finance in Q2 2018.

The research found that just over a third (34%) of all lending in the second quarter of 2018 was for refurbishment purposes, up from 18% during the first quarter of 2018, as borrowers sought to maximise the value of assets.

This is the second time refurbishments have been the most popular purpose since the research was launched in April 2015. The previous occasion was during the same quarter last year, which shows the growing popularity of refurbishment investments.

Moving from a traditional buy-to-let investment to investing in refurbishment projects can seem daunting to investors at first, who may have concerns about the value they can add by carrying out work or uncertain about their options for letting or selling the property once the renovations have been completed.

If you are in a position where some of your clients are looking at property refurbishment for the first time but would like more certainty before taking the leap, or even experienced property developers who want to reduce speculation to mitigate their risk, establishing a working relationship with a chartered surveyor could help your business to benefit from the growth in this market.

A surveyor will be able to not only establish an accurate value for the property in its existing condition, but also provide unbiased information on the expected capital or rental value once the renovations have been completed, and this can help your clients to consider their favoured exit, which could influence their finance options. A surveyor could help to establish the future value on light refurbishments, where no planning permission or building regulations are required, or heavy refurbishments where there are more fundamental changes to a property. On heavy refurbishments a surveyor could even carry out staged visits to the property to confirm the project is on track.

So, if you want to benefit from the growing appetite for refurbishment investments, but your clients would like a way to mitigate the risk of speculation, speak to a surveyor who could provide the peace of mind they need.



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Joe Arnold avatar

Joe Arnold

Joe is the guiding force behind Arnold & Baldwin and has overall responsibility for all commercial and residential surveys and valuations. Passionate about delivering the highest quality products at the fairest prices possible, he has been consistently searching for new and innovative client-focused services since founding the company with Jobie in 2007

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