Refurbishing a property can be one of the smartest ways to unlock its full potential. Whether you’re a landlord aiming to increase rental yields, a developer hoping to boost resale value, or a homeowner wanting to modernise your space, investing in upgrades often brings long-term rewards.
In recent years, refurbishment projects have been on the rise across London and the UK. A changing rental market, stricter energy efficiency standards, and shifting buyer expectations all play a part. For landlords, improving a property’s EPC rating isn’t just a legal obligation – it’s vital for attracting tenants and avoiding void periods. For sellers, a well-presented home is more likely to stand out in a competitive market.
However, while the potential benefits are clear, many landlords and property owners find themselves caught off guard by the true cost of refurbishments – and the time it takes to complete them. It’s easy to underestimate both, especially when working with older properties or tackling upgrades in London’s unique housing stock.
Breaking Down the Real Costs
One of the most common mistakes property owners make is assuming a refurbishment budget will stretch further than it realistically can. Let’s look at the key areas where costs can build up.
1. Labour
Labour will often be the biggest single cost in any refurbishment project. Skilled tradespeople – including builders, electricians, plumbers, carpenters and decorators – charge a premium, particularly in London where demand is high. Even small jobs such as jet washing or flat pack assembly can add up when you factor in the number of trades required. And it’s worth noting that the cheapest quote isn’t always the best option; reliable, professional work can save money in the long run by avoiding costly re-dos.
2. Materials
From kitchen cabinets to flooring, bathroom suites to tiles, material choices play a major role in your final spend. Prices can vary hugely depending on the look you’re going for – and while off-the-shelf options might seem tempting, they aren’t always suitable for London’s older or irregularly shaped properties. In these cases, services like tiling can help ensure a quality finish. Add to this supply chain fluctuations, which can affect the price of timber, steel, and imported goods.
3. Contingency
No matter how carefully you plan, most projects encounter unexpected costs. Maybe that means discovering damp behind old plaster, needing to upgrade outdated wiring, or realising that more work is needed to meet fire safety standards. A sensible contingency allowance is at least 10-15% of your main budget, but some developers go higher, especially when working with period properties.
4. Location and property type
London refurbishments often come with added complexities. Tight access, parking restrictions, and working around neighbours in terraced or flat conversions can all slow work down and add cost. And if your property is listed or in a conservation area, you may face additional planning requirements and limitations. Handy Squad’s property maintenance teams can assist with ongoing care during and after these projects to help protect your investment.
What landlords often underestimate
For landlords in particular, the cost of meeting today’s rental standards can come as a shock. It’s not just about fresh paint or a new kitchen – it could mean upgrading insulation, installing fire doors, adding smoke and heat alarms, or improving soundproofing. And all of this takes time as well as money.
Why Some Projects Need Finance
Not every refurbishment can (or should) be funded purely from savings. In fact, there are many situations where finance helps make a project more viable or helps you achieve your wider goals.
Converting to an HMO
If you’re converting a property to a House in Multiple Occupation (HMO), you’ll often need significant upgrades. These could include additional bathrooms, improved fire safety measures, and structural work to reconfigure the layout. The upfront cost can be considerable – but the long-term rental income is often worth the investment.
Light refurb before refinance or sale
Sometimes a relatively light refurb – such as updating the kitchen, modernising the bathroom, or refreshing flooring and decor – can make a property more appealing to buyers or boost its value for refinancing. Accessing short-term finance allows you to make these improvements without tying up all your available cash.
Preserving liquidity while scaling your portfolio
If you’re actively building a property portfolio, holding onto your capital can be vital for seizing new opportunities. Using finance to cover refurbishment costs lets you keep cash aside for deposits or other investments, helping you scale more quickly.
Bridging Loans and Other Options
One of the most common ways to fund a refurbishment is through a bridging loan. Put simply, a bridging loan is a short-term loan that helps cover costs until longer-term finance is in place. It’s typically secured against the property and is often used when speed is important – for example, buying at auction or funding urgent works.
The benefit of bridging finance is flexibility. You can borrow against the current value of the property, complete the refurbishment, and then refinance onto a standard mortgage at the new, higher value.
Other options include refurbishment loans, which are specifically designed for projects that enhance a property’s value, or in some cases, top-ups on an existing buy-to-let mortgage if the lender allows. The key is choosing the solution that aligns with your timeline and exit plan.
Tips for Planning Your Refurbishment and Finance
The best way to stay on budget – and avoid stress – is to plan thoroughly. Here’s what to consider:
- Get accurate quotes. Don’t rely on ballpark figures. Ask for itemised quotes from trusted contractors so you can budget properly from the start.
- Factor in all the timelines. If your project depends on a mortgage or refinance, build in time for valuations, legal work, and any lender checks.
- Engage a broker early. A good broker can help you explore finance options, compare deals, and avoid costly delays when funding is needed.
- Plan for the unexpected. Even with the best preparation, surprises can happen. A solid contingency budget is your safety net.
Final Thoughts
A property refurbishment is a fantastic opportunity to add value – but only if it’s approached with realistic budgeting and careful planning. Thinking through your costs, timelines and funding at the start puts you in a much stronger position to deliver a successful project.
If you’re planning a renovation and want to keep your cash flow flexible, Avid Finance bridging loans could be worth exploring. They offer a range of solutions to help property owners fund refurbishments with confidence.
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