Author: Mark Harrison.
Mark is the Managing Director of Breeze Capital and has over 30 years experience in bridging loans & development finance. You can check out his LinkedIn profile here.
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Property Refurbishment: Why are so many developers moving away from new build?
For years, the dream of many property developers was to find a plot of land, navigate the planning maze and build a brand-new home from the ground up. But the landscape has changed. Today, more and more strategic investors and developers are pivoting away from the arduous new-build route and embracing the power (and profits) of property refurbishment.
This isn’t just a change in taste; it’s a calculated response to the significant headwinds facing the new-build sector. So, what’s driving this strategic shift and how can bridging finance and development finance specialists like us here at Breeze Capital help you capitalise on it?
The New-Build Struggle: Planning, Pace and Profit
The vision of a new-build development is often more appealing than the reality. Developers are facing a perfect storm of challenges:
The Planning Permission Nightmare
The journey from land with planning to shovels in the ground is longer and more uncertain than ever. Local authority delays, objections and constantly changing regulations can tie up a project for months, even years. This uncertainty stalls progress and locks up capital.
This isn’t restricted to one or two local councils by the way, it is everywhere. Our two local councils, Cheshire West and Chester and Liverpool city council are amongst the worst offenders but both are easily outstripped by the councils in North and Mid-Wales.
Slow Sales and Market Flux
New house sales can take much longer than anticipated, especially in a fluctuating market. This extends the loan period, increases interest payments and puts a strain on cash flow. The legal process of selling new builds is also notoriously cumbersome, adding further delays.
Sky-High Construction Costs
The volatility in material and labour costs has made budgeting for a new build a game of chance as many developers are finding their initial projections are outdated before they even break ground, severely squeezing profit margins.
Interestingly, the days of developers getting a 25% margin on their development projects appear to be long gone, 15-18% is quite often the norm these days.
These hurdles make the traditional development model riskier and less appealing. This is where the refurbishment model shines.
The Refurbishment Advantage: Speed, certainty and the BRRR Strategy
Instead of battling planning committees and market volatility, developers are finding smarter, faster opportunities in existing properties. A key strategy here is the BRRR method:
- Buy: Acquire an existing property, often at a discount due to its poor condition.
- Refurbish: Renovate and modernise the property to a high standard.
- Rent: Secure a tenant quickly to generate immediate rental income.
- Refinance: Based on the new, higher valuation post-refurbishment, remortgage onto a traditional buy-to-let mortgage, pulling your initial capital back out to recycle into your next project. This is not a secret sauce, it’s what most savvy developers are doing these days.
The beauty of most refurbishment projects? They often fall under Permitted Development (PD) rights, meaning they don’t require full planning permission. Think kitchen and bathroom refurbs, reconfiguring internal layouts, new windows, roofing and landscaping. You can even build a new single story extension without planning permission in a lot of areas.
This bypasses the single biggest bottleneck of new builds, allowing you to move with speed and certainty.
How Breeze Capital’s Refurbishment Loan can supercharge your portfolio in England & Wales
At Breeze Capital, we understand this model intimately. Our specialist refurbishment loans are designed to give developers and landlords across England and Wales the flexible financial tool they need to succeed without the drag of long-winded planning applications.
To paraphrase the lyrics in a famous James Bond theme tune, nobody does it better.
We provide highly leveraged, cost effective,flexible bridging loans specifically for refurbishment, offering:
Up to 85% LTV towards the purchase of the property.
Up to 95% of the purchase price and up to 75% of the finished value (LTGDV).
ALL OF THE FUNDS to cover the entire refurbishment costs, from materials to labour.
This single, flexible facility means you can move fast on opportunities, complete projects in months instead of years and build your property portfolio efficiently.
We provide the development finance that acts as rocket fuel for the BRRR strategy, helping you recycle your capital and grow your assets faster than traditional development allows.
Ready to Build Smarter and Faster?
If you’re tired of the planning permission grind and want a faster, more predictable path to growing your property portfolio in England or Wales, it’s time to talk about refurbishment and specifically, how we can help you.
For more information on how Breeze Capital can help you with your property requirements, please call us on 01244 565095
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Or click here to go to our main page: www.breezecapital.co.uk