Property investors are increasingly turning to refurbishment finance to accelerate renovation projects and mitigate the impact of rising refurbishment costs, according to new analysis by specialist lender Octane Capital.
The lender examined changes in average refurbishment costs for a typical three-bedroom property and found that budgets have continued to rise over the past year. In 2024, the cost of a full renovation stood at £76,690. That figure has climbed by £2,616 over the past 12 months, reaching £79,306 in 2025.
Despite this upward pressure on renovation budgets, Octane Capital says the cost of funding such works through specialist finance has eased slightly.
A 12-month refurbishment loan for the average £79,306 project now totals £12,612 in borrowing costs, compared to £12,834 a year ago. This reduction is primarily attributed to a modest drop in borrowing rates, with the estimated monthly loan rate falling from 0.79% in 2024 to 0.76% in 2025, following a cut in the Bank of England base rate.
Refurbishment finance, which typically covers valuation, legal, inspection and arrangement fees but may exclude exit charges, is designed to provide short-term funding tailored to renovation projects.
As margins tighten across the residential market, this type of facility is proving an increasingly attractive option for landlords and investors looking to bring upgraded properties to market more quickly, whether for sale or rental.
Jonathan Samuels, chief executive of Octane Capital, said: “The property investment space has had to contend with considerable cost increases, from materials to labour.
“As a result, refurbishment finance has become an essential route to unlocking capital and progressing with projects in a timely manner.
“The fact that funding costs are slightly lower year-on-year is positive, and with the added benefit of speed and flexibility, it’s no surprise that more investors are choosing this method to get their properties market-ready and income-generating faster than ever.”
Refurbishment cost data was sourced from Checkatrade, while lending figures were based on Octane Capital’s own rate analysis.
