Landlords are increasingly turning to equity release as a strategy to enhance their rental properties. A recent analysis reveals a significant rise in remortgaging activity aimed at funding property improvements, indicating a proactive approach among landlords to maintain and upgrade their assets.
TL;DR: Last year saw a notable increase in remortgaging by landlords to release substantial funds for property upgrades; this trend is important for maintaining rental standards and meeting upcoming energy efficiency regulations.
What Does the Data Show?
According to Paragon Bank’s analysis, landlords withdrew a total of funds for property improvements through remortgaging in the previous year, a sharp increase compared to the year before. This activity encompassed a significant number of remortgages, with an average withdrawal per loan. The increase in remortgaging activity reflects a growing trend among landlords to invest in their properties, with many targeting homes that require enhancements.
How Are Landlords Investing in Their Properties?
Research indicates that a considerable percentage of landlords actively seek properties in need of improvement, with an average investment per property. Common upgrades include installing new boilers, renovating bathrooms and kitchens, and addressing damp or structural issues. These enhancements not only improve the living conditions for tenants but also potentially increase the property’s value and rental appeal.
What This Means for Landlords
The trend of using equity release for property improvements is particularly relevant as new Minimum Energy Efficiency Standards (MEES) regulations come into effect. By the end of the decade, landlords will need to ensure their properties achieve an Energy Performance Certificate (EPC) rating of C or above. With a significant portion of landlords planning to refinance this year, there are clear opportunities for brokers to assist landlords in navigating these changes and securing the necessary funding for upgrades.
Frequently asked questions
What are the benefits of equity release for landlords?
Equity release allows landlords to access funds for property improvements, which can enhance rental income and property value, ensuring compliance with upcoming regulations.
How can landlords prepare for new energy efficiency regulations?
Landlords should assess their properties’ current EPC ratings and plan necessary upgrades to meet the MEES requirements, potentially using equity release to finance these improvements.