Refurbishment and energy efficiency upgrades are expected to drive increased demand for bridging loans in 2025, according to Octane Capital’s analysis of the EY Bridging Report. Last year, refurbishment was the leading reason for bridging finance use (33%), with auctions (19%) and mortgage delays (16%) also being key drivers. While refurbishment demand has declined from 50% in 2021, Octane predicts a reversal of this trend as borrowing costs decrease.

With the Bank of England cutting the base rate to 4.5% in February and further reductions anticipated, bridging loans are expected to become more affordable. Currently, a £200,000 refurbishment loan costs approximately £26,000, but lower interest rates should drive this down.

A major factor influencing demand is Labour’s proposed requirement for all privately rented properties to achieve at least an EPC rating of C by 2030. Rising energy costs since 2022 have already underscored the need for energy-efficient upgrades.

Jonathan Samuels, CEO of Octane Capital, highlights that bridging loans offer flexibility, making them ideal for landlords seeking to upgrade their properties. With EPC compliance deadlines looming and energy costs soaring, landlords may increasingly turn to bridging finance as a solution.