Across the UK, walls are coming down, spaces are being reimagined, and the line between old use and new purpose has never been thinner.
From simple updates to ambitious schemes
Refurbishment and conversion projects have always played a part in the investment market. In recent years, however, their character has changed. No longer dominated by modest updates or single purpose adaptations, the sector is now seeing a greater share of schemes that are more ambitious and more complex in both scope and execution.
Across the country, these projects are becoming more visible. Redundant pubs are being turned into multi unit residential buildings. Former bank branches are finding new life as serviced apartments. Mixed use redevelopments are emerging in locations where single function buildings once stood. In parallel, a number of investors are moving into supported living schemes, often in partnership with housing associations or local authorities, and sometimes with operational contracts agreed in advance.
The drivers behind the trend
This momentum is linked to several connected factors. The first is the pursuit of stronger returns. With interest rates appearing to stabilise, attention has shifted towards increasing yield, and specifically how properties can be adapted or reconfigured to achieve it. Adding units, diversifying income streams or targeting high demand niches are all part of the strategy. At the same time, certain market segments still present opportunities to buy below market value, creating headroom in budgets for more ambitious works, such as property conversions, which have been made more accessible by more generous Permitted Development Rights (PDR).
A further driver comes from rising demand for specialist housing. The National Housing Federation forecasts that an additional 167,000 supported living homes will be needed by 2040. For some investors, this represents not only a commercial opening but also a way to align projects with long term social need.
The challenge of complexity
While the opportunity set is expanding, the level of complexity is also increasing. Larger schemes require more planning, more resilience and more experience. Build costs remain unpredictable, with both labour and materials still subject to delays and price variations. Operational risk also needs to be taken into account. Transforming a public house into residential units is one challenge, creating and running a viable assisted living facility is quite another, particularly for those without prior sector experience.
Valuation expectations also need to reflect current realities. Properties that were once priced on yields achievable in the low interest rate years may not command the same valuations today. In many cases, rent growth has been more gradual while funding costs have risen and then stabilised at a higher level. I believe this is where brokers have an essential role, managing expectations and ensuring financial models are grounded in the now rather than those that applied several years ago.
Where brokers fit in
These projects present both a challenge and an opportunity. The challenge lies in matching each scheme with a lender that understands the nuances involved and is willing to assess it on its own merits. The opportunity lies in guiding clients through this process, ensuring the borrower’s track record, costings, timelines and exit plan all stand up to scrutiny. Early, detailed conversations with lenders can often mean the difference between a project that moves forward and one that struggles to get off the ground.
At Inspired Lending, we work within sensible parameters but take a flexible view where the borrower’s track record, exit plan and numbers stack up. We have completed cases where works were a greater proportion of day one value but the end result clearly justified the investment.
Outlook for the months ahead
As we move into the final quarter of 2025, developers are aiming to complete works before the winter months. For those prepared to take on the additional complexity, the potential rewards remain significant.
The rise in complex refurbishment and conversion projects reflects a market adapting to new realities rather than retreating from them. It signals a willingness among investors to think beyond standard templates, and among brokers to engage more deeply with structuring and due diligence. If there is a single lesson to take from this trend, it may be that experience, creativity and careful preparation remain the real foundations of success.
