A fifth of landlords are turning to short-term credit to fund refurbishments of their buy-to-let properties.
Research by Shawbrook Bank that landlords are using credit cards or other forms of short-term finance to pay for refurbishments on rental homes and are spending £13,000 on average.
The bank warns that this could mean landlords take on more risk and at higher rates than necessary when they could use a secured option such as a remortgage or second charge mortgage.
The research which forms part of Shawbrook’s Changing Face of Buy to Let report found that 62 per cent of landlords have refurbished one of their rental properties in the past 12 months, with 18 per cent renovating more than one rental property.
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Landlords also used their own finances to pay for renovations to their rental properties, with 60 per cent utilising their personal savings or investments, and 12 per cent using a recent inheritance or windfall.
A further 12 per cent used a second charge mortgage to finance the changes.
The average spend on refurbishments was £13,000, with portfolio landlords owning four or more properties spending £17,000.
“Ensuring that properties are up to a good standard and meet the current demands of tenants is a mark of a responsible landlord, however, it’s important that landlords are not putting themselves at risk financially in order to undertake this work,” John Eastgate, managing director of property finance at Shawbrook Bank, said.
“Unsecured short-term finance products like credit cards can come with high interest rates which could leave landlords with substantial debt.
“There are other finance options available to landlords which can often be less well-known but a suitable alternative to short-term credit or using personal savings.
“For example, a second charge mortgage can be a good option for landlords looking to refurbish. We’d encourage any landlord considering a renovation to speak to their broker about their options before putting it on a credit card.”