ADVANTAGE ONLINE | JULY 2024 15
We launched our Refurb-to-Let product earlier this year to help landlords seeking to upgrade their properties , including energy performance .
This product is designed for those looking to purchase or remortgage properties that need a little work before being rented out . So , how does it work ?
There are essentially two elements of the funding – a loan for the period in which the work is being carried out and then a standard buy-to-let mortgage once work has been completed .
For the first part , we offer a mortgage term of six months and we will fund up to 75 % of the property ’ s value . The landlord can also choose roll-up or serviced monthly payments and there is currently a choice of two rates , both with different fees attached .
Once the work is complete , the mortgage moves to a standard buy-to-let mortgage and the landlord can select from any product from our range .
The landlord applies for both elements of the product at the same time , reducing their administration time , as well as the broker ’ s . Both applications will be reviewed concurrently , meaning quicker processing times and the expertise of the same underwriter assessing both .
Our Refurb to Let product is ideal for properties that require modernisation but not structural changes – so where no planning permission and building regulations are needed . This option is also suitable for small HMO adaptations .
As well as the environmental element , our research shows that landlords typically look to acquire property in need of some upgrading when adding to their portfolios .
We surveyed 500 landlords last year to learn about how they upgrade property , and it revealed that four in 10 seek property that requires upgrading when expanding their portfolios . The drivers of this were to increase the capital value of the property and to achieve higher rent levels .
Nearly a quarter ( 22 %) of landlords said they spend more than £ 25,000 improving a new rental property before they let it to tenants . One in 10 ( 11 %) spends between £ 10,000 and £ 15,000 , with a similar proportion spending between £ 5,000 and £ 7,500
The most common significant improvements landlords make to a property include a new bathroom , kitchen and boiler , with damp and windows also high on the investment list . Major external upgrades included replacing external doors , replacing a roof and landscaping gardens .
The good news is that all of this work is contributing to improving standards across the private rented sector , helping to improve the image of the sector .
Our report , Raising the standards of privately rented property , shows that the proportion of ‘ non-decent ’ privately rented homes has fallen from 44 % of total stock in 2008 to 23 % today . Meanwhile , there has been an 83 % increase in decent homes over the same period to 3.3 million .
Additionally , the number of privately rented homes with an EPC rating of between A and C has risen by 165 % since 2011 , with the proportion of EPC A-C homes in the PRS is now higher than owner-occupation – 44.5 % compared to 42.9 %.
However , continuous improvement is vital for further upgrading the nation ’ s rental stock and we are looking to support through innovative products such as Refurb-to-Let .
Visit the Paragon website to find out more .