The past few years have made one thing clear for Britain's landlords: expanding a portfolio has become harder, riskier and more expensive. Tax reforms, higher mortgage costs and expanding regulation have all reduced the appeal of buying additional properties, particularly second homes.
Now, more landlords are looking inward rather than outward, focusing on how to get more value from the properties they already own.
Loft conversions are a big part of that conversation. They’ve always been a practical way to add space and boost rental income, but in 2026, they’re also becoming a strategic alternative to buying another property and incurring higher stamp duty, following the increase in second home purchases announced in the 2024 Autumn Statement.
But with costs rising sharply, how these projects need to be funded is changing.
The price of building up
Loft conversions were previously seen as a manageable upgrade; this is no longer the case.
Current figures suggest that in 2026, most UK loft conversions cost between £40k and £100k+, depending on the size of the property, structural work required and location. Rising material prices, shortages of skilled trades and stricter building standards have all pushed costs up - particularly in London and the South East.
For landlords, this means loft conversions now sit among the most expensive improvements you can make to your property. While they can still add real value - both in terms of rental income and sale price - they’re no longer something most landlords can fund comfortably from savings alone.
Adding an extra bedroom can also mean accommodating an extra tenant, particularly in HMOs where rental income is typically calculated per room. In these cases, one additional lettable bedroom can directly increase monthly rent and improve overall yield.
As well as boosting income, a well-designed loft conversion can increase overall value of a property, with landlords who add a loft conversion or extension - incorporating a large double bedroom and bathroom - able to add as much as 24% to the value of a three-bedroom, one-bathroom house, for example.
In many areas, it’s a common view that additional space is more valuable than a minimal location upgrade. Tenants are looking for home office space and larger bedrooms, and properties that can offer this are often easier to let and achieve higher rents. Plus, with recent research stating that most of England’s housing stock was built before 1919, properties that aren’t updated risk becoming harder to let and more expensive to run.
So, how can landlords realistically fund these upgrades in 2026?
Many landlords often look first to the same funding options they’ve always used, including savings or remortgaging. However, anyone in the sector knows that using savings can leave them exposed in an already uncertain time. Remortgaging also brings its own challenges, by changing the terms of your current mortgage and increasing the loan-to-value this often leads to higher interest rates.
This leaves a gap, where landlords want to invest in their properties, but the traditional ways of funding improvement no longer match the investment.
Space to grow
Landlords understand well that renovation costs often don’t follow a clear schedule - quotes and timelines change, or unexpected issues appear out of nowhere.
Taking a large lump sum upfront often means paying interest on money that isn’t yet being used, or locking yourself into a structure that doesn’t match how the project actually plays out.
This is why more landlords are starting to look at flexible, equity-based finance instead. A Home Equity Line of Credit (HELOC)* allows landlords to borrow against the equity in their property as and when they need it, for up to five years and up to their agreed credit limit. Funds can be drawn down in stages, with interest only charged on what’s actually used, with monthly repayments required.
For loft conversions, this is practical as it aligns the borrowing with the build, rather than making the build fit the borrowing. Importantly, a HELOC sits alongside an existing mortgage, so landlords don’t have to refinance or lose a good rate just to access funds for improvements.
If landlords are going to build up rather than buy more, they need financing options that make this possible. With flexible equity-based solutions like HELOC now available in the UK, homeowners now have a more practical way to invest in the homes they already own.
*A HELOC is a second-charge mortgage (also known as a secured loan). Consider how it might affect your ability to secure additional borrowing in the future. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
