This year many Brits have experienced more time in their homes. With this extra time, people have turned to home improvements and refurbishment. Paresh Raja looks into this trend and offers some advice on how to obtain the funding to enable homeowners to achieve their ultimate vision.
We should not understate just how profound COVID-19’s impact has been on UK society. In one respect, the introduction of lockdown measures has caused short-term disruptions to businesses and the way investors and consumers go about their daily routine. Perhaps more importantly, however, are the different ways COVID-19 is forever changing specific industries and sectors.
Take property as an example. Even amidst a global pandemic, buyers have been flocking to residential real estate opportunities in recent months, driving up house prices and increasing demand for mainstream and alternative finance loans.
The UK property market is renowned for its competitive nature and wealth of opportunities on offer, which is why the introduction of a temporary stamp duty tax holiday applicable to all homebuyers has sparked a rise in transactional activity.
Another significant trend we are seeing is the rising interest in renovation and refurbishment projects. Adding another storey to a home or replacing old furnishings with modern appliances is a popular and cost-effective way of increasing the market value of a property. We regularly arrange bridging loans for those undertaking such projects. And interestingly, COVID-19 has resulted in more homeowners seeking loans for home improvement projects, be it for their primary residency or for a buy-to-let property.
A survey by NatWest, for instance, revealed that over three-in-five homeowners (62%) would consider remortgaging to undertake home improvement projects. This is a significant finding and naturally leads us to ask the following question – why is COVID-19 promoting an increase in demand for renovation and refurbishment projects?
COVID-19 and rising home improvement projects
To answer this question, I believe it is essential to leave the financial advantages to one side. As I mentioned above, improvement projects contribute to the capital growth of a property. Once completed, homeowners can either decide to sell the property for immediate financial gain or let the value of the asset accrue in the long-term.
However, we should not overlook how the sudden adoption of remote working by the majority of the UK workforce has changed what people want from their property. Since the introduction of lockdown measures, people have found themselves working from home.
Suddenly, it has become apparent to employers and employees that many tasks and jobs can be effectively handled without a physical presence in the office. No longer needing to worry about the time and financial costs associated with commuting, those working from home as part of the lockdown have also been able to strike an effective work/life balance.
With more people spending more time at home, the number of renovation projects is rising. According to Money.co.uk, UK homeowners have spent over £55 billion since the introduction of lockdown measures. Two-thirds of homeowners (65%) also said that spending more time at home has inspired them to renovate their properties.
A survey released by the Federation of Master Builders also shows that increasing market interest for home improvement projects has resulted in more work for SME firms based in the building industry. Just over two-fifths (42%) of SMEs told the Federation of Master Builders that they are predicting higher workloads during the Autumn months. With the UK on the brink of another strict lockdown period, this will no doubt increase.
Promoting the renovation revolution
The fact that homeowners are able and willing to take on home improvement projects amidst a global pandemic is extremely positive and something that should be promoted. After all, the construction and property development sectors are vital enablers of economic productivity and growth. Renovation and refurbishment activities will have a positive impact on the country as it seeks to recover from the initial losses incurred by COVID-19.
All that being said, my advice for those considering a home improvement project is to ensure that they have the necessary finance in place. Any construction work will involve tight deadlines which, if missed, could incur substantial financial costs. That’s why it makes sense to look beyond high street banks and also consider alternative lenders who can arrange tailored finance loans. Finding lenders with a strong track record of financing renovations and refurbishments could ultimately work to their advantage.
Regardless of how the COVID-19 crisis unfolds over the coming months, I anticipate interest in home improvement projects to rise. In turn, this will increase market demand for refurbishment loans and play a fundamental role in the UK’s post-pandemic recovery in 2020 and beyond.
Paresh Raja is the CEO of Market Financial Solutions – an independent bridging finance provider that arranges fast and flexible bridging to intermediaries and private clients.
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