Landlords withdrew almost £2.4 billion of equity from their portfolios last year to fund improvements, as remortgaging for refurbishment projects jumped by 60%.

Paragon Bank’s analysis of industry data reveals that withdrawals were across 14,817 remortgages, resulting in each loan averaging almost £43,000, compared to 9,754 remortgages in 2024 when £1.48 billion was withdrawn.

The growth in borrowing to fund property improvement correlates with the increased focus on the Renters’ Rights Act, suggesting that landlords have invested to ensure they comply with forthcoming elements of the Act such as the Decent Homes Standard, according to the lender.

The findings align with its earlier research highlighting how 44% of landlords actively target homes in need of improvement and spend an average of £8,500 per property, typically installing new boilers, fitting new bathrooms or kitchens or addressing damp or structural issues.

Figures

Louisa Sedgwick, managing director of mortgages, says the figures show how landlords are strategically structuring their buy-to-let borrowing, leveraging the considerable amounts of equity they have built across their portfolios to finance property improvements.

“The timing of the increase in equity withdrawn for property improvements suggests that the Renters’ Rights Act is a driver, but landlords will also benefit from likely increases in the value of their investments and the additional appeal to tenants,” adds Sedgwick.

Four in 10 landlords plan to refinance this year, increasing to 57% among those with four or more properties, according to research by Pegasus Insight on behalf of Paragon.

Require

Minimum Energy Efficiency Standards (MEES) regulations will require landlords to ensure their properties reach EPC C or above by 2030. Sedgwick adds: “Our earlier research revealed that almost six in 10 landlords don’t get their EPCs assessed after undertaking works to make their properties more energy efficient. Not only could this lead to ambiguity around compliance with any new MEES but could also mean that they’re missing out on preferentially priced green finance products.”

Meanwhile, more than two out of five landlords (42%) say they might reduce their property portfolios, despite rising rental yields and surging tenant demand. Aldermore’s latest Buy to Let Index points to a growing disconnect in the market as nearly half (45%) of landlords say current market conditions are preventing them from growing their portfolios.

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