Two people sat at a wooden desk, one person holding a pen over some paperwork. There is also a calculator, pen and mug on the desk

Categories: prs | buy to let mortgages

Data from a specialist lender shows that more buy to let landlords are seeking finance for the purpose of improving their properties. 

Paragon Bank, a leading provider of buy to let mortgages, analysed 2024-2025 data related to buy to let remortgaging from UK Finance. 

They found that, in 2025, almost £1.1 billion was raised for the purpose of funding property renovations, across over 6,700 refinancing cases. 

This is a significant increase compared to the first half of 2024, which saw £712 million used for property improvement across more than 4,600 remortgages. In terms of money exchanged, 2025 has seen a steep 54% increase, and a 45% rise in the total number of loans transacted. 

This high level of activity is comparable to the tremendous surge in property improvement loans that happened in the first half of 2022: over 8,000 remortgages released £1.28 billion in equity. 

The Mini-Budget Effect

The mini-budget devised by Liz Truss and Kwasi Kwarteng rocked the UK economy in September 2022. Consequently, this torpedoed many private landlords’ interests in upgrading their properties.

Evidence of this can be seen in the second half of 2022, when the total equity for property renovation remortgages nosedived down to £662 million. 

To overcome affordability challenges, many landlords in the private rental sector (PRS) were forced to switch to other products by their existing lenders.

After that period of heavy economic turmoil, the market has grown and people’s priorities have shifted. Year after year, investments in property renovations have steadily increased, culminating in the very high equity figures we see today.

The managing director of Paragon, Louisa Sedgwick, commented on the ongoing effects of the mini-budget:

As we near the three-year anniversary of the mini budget, we can look back at how it has influenced landlord behaviour in the time since. This data shows how it had a very real impact on the market, curtailing investment in improving privately rented homes. But it’s encouraging to see this recover over the past couple of years and approach the levels recorded before market turmoil. This reaffirms the resilience of the market and shows that landlords will take advantage of a comparatively favourable borrowing environment to enhance their propositions, leveraging equity to make improvements to their properties.

Why are more landlords deciding to renovate now?

Improving energy efficiency is high on the agendas of many private landlords right now. The government is planning to introduce tighter regulations on the PRS, with Minimum Energy Efficiency Standards (MEES) being raised. 

By 2030, all PRS properties will be required to have an Energy Performance Certificate (EPC) rating of C or above. Many are racing to invest in modern insulation materials and sustainable heating solutions ahead of the new rules being enforced. 

In particular, landlords with older properties may have to pay for more intensive renovations to make their properties compliant. 

Even without the legal aspect, PRS tenants may be more discerning about housing options on the market. Those with nice furnishings and high energy performance will naturally be more appealing.

The Renters’ Rights Bill will soon add new legislation into the PRS, such as Awaab’s law, that will tighten property standards further. Private landlords may also be making improvements to prepare for this.

Rehabbing and renting

Many buy to let landlords specifically seek out properties that are in dire need of renovation, and borrow to pay for refurbishments. Paragon discovered that 44% of landlords use this strategy. On average, landlords spend £8,500 per year on improvements to both newly-bought properties and their existing portfolios.

There are many benefits to the ‘rehabilitate then rent’ strategy:

  • It adds value to the property.
  • It builds equity for potential future investments.
  • It can attract more reliable, higher-income tenants, and allows landlords to charge proportionately higher rent.
  • Fixing major issues upfront can reduce the chances of costly repairs and maintenance later down the line.

This strategy is similar to flipping, which involves immediate sale of the property after renovation and usually requires a bridging loan for funding. Read our in-depth guide to flipping houses here.