Not only in Scotland but around the world, inflation has been pushing prices sky-high and making everyday life a little harder on our bank balances. But what does this mean for home improvements, and how will landlords maintain their properties when times are tough?
Current property market and inflation in Scotland
Last year was undeniably rough on the property market. Mortgage chaos, hugely inflated prices and a mini-budget that almost crippled the economy, created a sense that everything was up in the air.
As we enter 2023, though, things seem to be cooling down a bit. Some analysts are predicting a crash in property, whilst others expect a more mild correction. This should give both buyers and renters more confidence, helping to keep the market moving smoothly.
However, we can’t ignore the effects of inflation. Though it is beginning to fall – there was a marked drop from 10.7% in November 2022 to 10.5% in December 2022, according to the Office for National Statistics’ data – we’re by no means in the clear yet. Prices are still far higher than we’re used to, and consumer confidence (along with disposable income) is incredibly low.
Inflated prices for renovation materials
Inflation has driven almost everything up in price, including materials needed for home improvements. As we head into 2023, the biggest concern for construction workers is the price of materials, as the already high costs are expected to rise again throughout the year.
For landlords, this means two things: hiring contractors will be more expensive, and undergoing self-renovations and home maintenance will also go up in cost.
Sky-high fuel costs
Fuel costs are starting to slowly head down, but for both petrol and diesel, everyone can expect to pay a fair bit more than they did just two years ago. In terms of home improvements, this has also sent costs skyrocketing. Material delivery fees have seen significant increases, whilst contractors have to up their quotes to account for fuel used to get to and from the property. Some jobs may need large machinery to complete too, which can guzzle through a lot of fuel in not much time.
All of these costs may lead to more landlords considering doing the maintenance work themselves, but this isn’t always the best idea. Be sure you always comply with regulations and know what you’re doing before undertaking DIY.
Smart loans to finance projects
Fortunately, there are ways to work around the constraints of inflation. Landlords who want to improve their properties with more financial security are turning to loans, giving them the time to renovate without the stress of high costs and financial strain. Because home renovations are likely to boost rental prices, these loans can pay for themselves too.
With the cost of living crisis and money becoming tighter for households in Scotland, we see a rise in landlords, homeowners and the general population taking out more loans to cover their must-do tasks. In just one year, the total value of debt increased by a whopping 34% in Scotland. Whilst debt isn’t always a bad thing, you should certainly be careful you take out the right loans if you’re looking to finance home improvements and renovations.
If you need a loan to tide your project over until your next tenants move in, a bridging loan is a wise choice. This popular option allows you to loan money quickly and without hassle, but is designed to be paid back promptly too. It can be a great choice for making your rental property more appealing without worrying about the impacts of inflation. However, we recommend taking into consideration the high interest rates and current economic uncertainty when considering this type of financial commitment.
Contractor availability
Inflation has made everyone cautious, so it’s no surprise that an increasing number of homeowners are choosing to renovate rather than move. For landlords looking for contractors, though, this could be an obstacle. The more people renovating, the fewer tradespeople available, so it’s important to plan any work well ahead.
Advice for home improvements during inflation
If you’re a landlord thinking of undertaking home improvements in 2023, it’d be smart to seek out advice. Most professionals will advise to:
- always be careful undertaking DIY yourself
- only take out loans you know you can pay back
- get plenty of quotes from different contractors
- shop around for the best deals on materials
It’s also a good idea to look at small changes that can make a big difference, helping you avoid large renovations until prices return to normal. You’d be surprised what a fresh lick of paint or clean window panes can do! If you do make improvements, focus on the areas that are likely to increase value the most, such as kitchen cabinets and counters, and the bathroom.
