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Record-High Property Prices Spark Wave of House Flipping Investment Interest


One of the UK’s leading auction finance specialists has reported a significant rise in the number of investors purchasing homes to be ‘flipped’ and resold for short-term profits.

Investments

Specifically, Together said that bridging loan activity has spiked significantly over the past 12 months, echoing the average 13.2% UK property price over the same period.

“We’ve seen a noticeable rise in property investors flipping property. Whether it’s an unusual property or in disrepair or you’ve got a very tight deadline, securing a bridging loan against the property for up to 12 months might be useful,” commented Together‘s auction finance director, Scott Hendry.

“This would allow you to complete the work they need to do and exit the short-term loan by selling the property – with investors expecting returns of up to 20 per cent on the most successful renovations.”

Huge Potential for Short Term Gains

House flipping has always been popular among investors, though has seen a huge spike in activity as house prices continue to skyrocket.

“Most, if not all, property investors seek a bridging loan for up to 12 months to ensure they can snap up a property, quickly refurbish it, before turning a profit via their cash buyers,” said director of sales at Together, Sundeep Patel.

“Invariably property investors opt for specialist lenders to make this process as slick as possible. This need for quick decision-making on approvals to secure the best deals can however be a struggle for high street lenders.”

He went on to comment on how restrictive lending practices on the High Street are forcing property buyers and investors to consider the alternative options available.

“In addition, the High Street has strict lending criteria and won’t offer finance on dilapidated properties – limiting the options for potential investors,” he said.

“In comparison, specialist lenders can grant financing for more complex properties – offering property investors even more choice when thinking about properties that can be transformed into homes. These include HMOs (houses in multiple occupation), old retail parks and disused office spaces,”

“Whether we continue to see investors large and small seek quick profits – successful projects can accrue returns of up to 20 per cent – or whether this is just a minor trend in the post-pandemic market is not yet clear.”

The Importance of Experienced Broker Support

Brokers and financial advisers are urging investors to enlist the appropriate support and representation at the earliest possible stage, in order to make the most of their property-flipping projects.

“The key thing at the moment is to make sure there is a big enough contingency built in for increased material and labour costs. Although asset values have increased, the cost of material has also increased around 40 per cent in some reports we are receiving,” advised Mesa Financial director, James McGregor.

“Make sure you have enough cash or funding in place to cover this type of disruption. It’s quite hard to sell a half built asset at a profit that’s for sure. Get advice from the correct advisers from the outset and make sure you work with the correct lenders that won’t leave you in the lurch if costs do start to creep up.”

UK Bridging Loans Limited does not undertake/enter into any type of FCA regulated loans as set out in the FCA Regulated Activities Order.
Registered office: 7 Kevern Close, Wigston, Leicester, LE182GR.
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