Property investors are increasingly using refurbishment finance to bring renovation projects to market more quickly and reduce the impact of rising refurbishment costs, according to new analysis from specialist lender Octane Capital.
The company examined the average cost of refurbishing a typical three-bedroom home and how borrowing costs have shifted over the past year. It found that full renovation expenses have increased by an estimated £2,616 since 2024, rising from £76,690 to £79,306 in 2025.
As budgets tighten, refurbishment finance is becoming more attractive to investors and landlords looking to avoid eroding their margins. This form of short-term lending, which is designed to fund renovation works, enables property owners to move faster with improvements and generate returns through either resale or rental.
While project costs have climbed, the average cost of financing a 12-month refurbishment loan has declined. Based on current average renovation costs of £79,306, Octane Capital estimates the typical loan now costs £12,612, down from £12,834 in 2024.
This reduction is attributed to a slight decrease in the Bank of England base rate, which has eased borrowing conditions. As a result, the average monthly loan rate has fallen from 0.79% last year to 0.76% in 2025.
Loan fees typically include valuation, legal, inspection, and arrangement charges, though some lenders may waive exit fees. This structure is helping more investors fund improvements in a market facing ongoing economic pressure.
“The property investment space has had to contend with considerable cost increases, from materials to labour,” said Jonathan Samuels, CEO of Octane Capital. “As a result, refurbishment finance has become an essential route to unlocking capital and progressing with projects in a timely manner.”
“The fact that funding costs are slightly lower year-on-year is positive, and with the added benefit of speed and flexibility, it’s no surprise that more investors are choosing this method to get their properties market-ready and income-generating faster than ever,” he added.
