Four in five landlords are upgrading each rental property they purchase, with many spending significant amounts of money to boost the value of their properties, according to a report from Paragon Bank. The survey of over 500 landlords found that 22% spent over £25,000 on upgrading new properties, while 18% spent between £10,000 and £20,000.

On average, landlords expected to see a 19.8% increase in the property’s value after completing upgrade work, with a 16.5% increase in expected rental income. The report found that 83% of landlords make improvements to ensure they are providing good quality homes to tenants, while 82% do so to make the property more attractive to tenants. Painting and decorating was the most common improvement made by landlords, followed by the installation of a new bathroom or kitchen and a new boiler.

The growth of buy-to-let finance has helped to drive improvements in the quality of privately rented homes over the past 15 years, with the addition of good quality homes diluting the presence of poorer stock. According to the report, 44% of homes in the sector were defined as non-decent in 2008, falling to 23% in 2021. In addition, there has been an 83% increase in the number of privately rented homes classified as decent, rising from 1.8 million in 2008 to 3.3 million in 2021.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, said: “Landlords have helped improve standards across the private rented sector over the past 15 years and the upgrading of stock they purchase is central to that. The vast majority of landlords will look to upgrade each new property to boost the capital value and the potential rental income. However, they also do this out of a genuine desire to provide a good quality home to their tenants.”

Overall, the report found that landlords are seeking capital and rental value gains through property upgrades, with a focus on improving the energy efficiency of their properties.