Never has there been a more important time to get as many empty and unused properties back on the market in the UK. With the country’s housing crisis set to continue accelerating indefinitely, every derelict home sitting unoccupied is a tragic waste.
Not to mention, an untapped (and strictly time-limited) investment opportunity.
Flipping Derelict Homes
Increasingly, investors are setting their sights on the kinds of non-standard properties that normally go overlooked. In England alone, estimates suggest there are at least 216,000 homes that have sat unoccupied for more than six months.
A sizeable proportion, of which are either derelict or uninhabitable, requiring extensive renovations to be brought back up to an acceptable standard.
Investors with experience in flipping derelict homes are staring down the barrel of a potential goldmine. As it stands, just 30% of Brits believe that they will own their own homes at some point in the future. Furthermore, fewer than 15% envisage the housing crisis being resolved within their lifetimes.
Even so, the desire to get on the property ladder is shared by the overwhelming majority of UK residents. Demand for affordable homes is at an all-time high, yet records suggest that there are at least 600,000 residential properties currently sitting vacant across the country.
Flipping derelict homes for profit has traditionally proved challenging, due to the lack of specialist funding solutions available on the High Street. Most major banks and lenders are unwilling to lend against ‘unmortgageable’ homes – a classification that extends to almost any uninhabitable or non-standard property.
As these are exactly the types of properties house-flipping investors have on their radars, a more flexible and accommodating option is called for.
Bridging Finance for Property Purchases and Renovations
This is where bridging finance can help – a short-term facility designed for these specific types of applications.
A bridging loan is a specialist type of secured loan, which unlike a mortgage can be taken out against any type of property. This includes run-down and derelict buildings in need of repair, along with all types of commercial and semi-commercial premises.
Investors interested in flipping derelict homes can use bridging finance to cover both the purchase of the property and the subsequent refurbishment costs. Bridging loans are typically issued over a period of six to 18 months, with interest rates as low as 0.5% per month.
Repaid promptly, a bridging loan can be exponentially more affordable than any standard residential or commercial mortgage. Loans with an LTV of up to 80% (sometimes more) can be provided, giving investors the opportunity to keep their own capital as liquid as possible.
Best of all, a bridging loan (arranged by an experienced broker) can be authorised and accessed within a matter of days. This makes it the ideal facility for investors looking to take advantage of time-critical purchase opportunities, such as picking up bargain properties at auction.
For established investors and newcomers alike, the benefits of bridging finance often far outweigh those of anything available on the High Street.
