Landlords seek capital and rental value gain with property upgrades: Paragon


A Paragon Bank survey found that 81% of landlords make improvements to every property they add to their portfolios with 22% spending more than £25,000 on upgrades.

The survey, which covered 500 landlords, showed that on average landlords expect to see a 19.8% increase in the property’s value after completing upgrade work, with a 16.5% increase in expected rental income.

Four in 10 landlords prefer to purchase property in need of refurbishment, with 21% opting for properties that are ready for tenants to move into.

Asked why landlords make improvements to property, 83% of landlords said they did so to ensure they are providing a good quality home to tenants, with 82% doing so to make the property more attractive to tenants.

Two thirds (66%) upgrade the property to improve rental income and 57% look to increase the capital value.

Meanwhile, 47% upgrade property for energy efficiency reasons.

Painting and decorating is the most common improvement that landlords typically make (95%) followed by the installation of a new bathroom or kitchen (78%) and boiler (also 78%).

Six in 10 (60%) also add new windows, while a third of landlords (36%) also make improvements to gardens.

Paragon Banks says the private rented sector (PRS) has experienced a significant improvement in the standard of homes over the past 15 years, correlating with the growth of buy-to-let finance.

Of homes within the PRS, 23% are today defined as non-decent according to the Government’s English Housing Survey, compared to 44% of homes in 2008.

The lender explains that the addition of good quality homes has diluted the presence of poorer stock.

In 2008, 1.8m privately rented homes were classed as decent, rising to 3.3m in 2021, representing an 83% increase.

There has also been a reduction in the number of properties classed as non-decent, falling from 1.4m to 990,000, a 29% reduction.

Paragon director of mortgages Richard Rowntree says: “Landlords have helped improve standards across the private rented sector over the past 15 years and the upgrading of stock they purchase is central to that.”

“The vast majority of landlords will look to upgrade each new property to boost the capital value and the potential rental income. However, they also do this out of a genuine desire to provide a good quality home to their tenants.”

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