Earlier this year, Octopus launched a competitive refurbishment loan product - available via brokers - to improve the quality of the UK’s housing stock, with a focus on energy efficiency and an interest rate discount for energy efficiency improvements achieving an EPC of C or higher. 

This product is available through brokers for borrowers who are experienced in refurbishment projects (for example, they have completed at least one in the past year).

In addition to landlords, the product is also available to property investors who plan to sell their investment once refurbishments have been completed.

The discount is 0.15% monthly, and with a typical loan term being 12 months, the average interest rate discount is 1.8%.

The loan was redeemed earlier this month, and the borrower benefitted from an interest rate discount of 1.8% on a pro-rata basis.
 
The mid-terrace Victorian property near the coast had an EPC rating of D (58 points).

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The facility enabled the borrower to convert the property into four flats, three with EPC ratings of B (81 points each), and one with a high C rating (78 points).

The energy efficiency was improved via thermal insulation, new boilers, upgrading single glazed windows to high-performance glazing, and the addition of energy efficient lighting.

The flats were all completed to a very high standard throughout, with the energy improvement upgrades costing around £18,000. 

Not only did the borrower meet the required EPC improvements - therefore qualifying for the discount, which resulted in a saving of £3,300 - the first flat sold to a cash buyer significantly over the GDV. 

The broker who handled the case was David Hue at Embassy Finance.

Suparn Sapatnekar, head of residential bridging credit at Octopus Real Estate, commented: “Our refurbishment loan product is proving popular with borrowers keen to retrofit older homes with newer, greener technologies.

“A short-term refurbishment loan offers the freedom and ability to not only improve properties, but to enhance the value.

“Our interest rate discount is, of course, also a huge draw in the current climate.”