Changing Face of Buy to Let report has highlighted that 19% of landlords are funding refurbishments with credit cards or short-term finance products.


Two in ten landlords are putting themselves at risk by funding refurbishments through short-term credit

Property Reporter
13th October 2021

Research that forms part of Shawbrook’s Changing Face of Buy to Let report has highlighted that 19% of landlords are funding refurbishments with credit cards or short-term finance products.

According to the findings by Shawbrook Bank, 62% of landlords have undertaken a refurbishment to one of their rental properties in the last 12 months, with 18% renovating more than one rental property. 60% utilised their personal savings or investments, and 12% used a recent inheritance or windfall. A further 12% used a second charge mortgage in order to finance the changes they wished to make to their rental properties.

Overall, landlords spent on average £13K on renovation projects over the last year, with portfolio landlords (those with four or more properties within their portfolios) spending £17K. Popular works included repainting (37%), fitting new carpets or flooring (28%), putting in a new kitchen (27%) or bathroom (27%). However, some landlords also undertook even bigger projects such as kitchen extensions (14%), a loft conversion (10%) or building a home office in the garden (8%) in order to capitalise on the current demand for more space for home-working and living.

For many landlords, the last year provided an opportunity to undertake these improvements to their properties. With more experiencing a gap between tenancies, taking the opportunity to refurbish, allowed them to improve the property without causing disruption. 14% of landlords said they chose to renovate because they had an extended period between their previous and incoming tenants. However, the majority of landlords were undertaking necessary work to their property. A third (34%) said that their property needed a renovation.

John Eastgate, MD, Property Finance at Shawbrook Bank, comments: “Ensuring that properties are up to a good standard and meet the current demands of tenants is a mark of a responsible landlord, however, it’s important that landlords are not putting themselves at risk financially in order to undertake this work. Unsecured short-term finance products like credit cards can come with high-interest rates which could leave landlords with substantial debt.

“There are other finance options available to landlords which can often be less well-known but a suitable alternative to short-term credit or using personal savings. For example, a second charge mortgage can be a good option for landlords looking to refurbish. We’d encourage any landlord considering a renovation to speak to their broker about their options before putting it on a credit card.

“Renovating your properties can help attract more tenants, secure higher rents and boost the value of the property, but don’t do so at the expense of your own financial security.”

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