A growing number of UK homeowners are choosing to renovate their existing homes rather than move, with fresh data from Pepper Money revealing a marked increase in the use of secured loans to fund home improvements.
Faced with high mortgage rates, steep relocation costs, and limited housing supply, homeowners are finding smarter ways to adapt their homes for changing needs—driving a national trend towards “improve, don’t move.” Monthly UK search demand for “Home Improvement” rose by 19% last quarter, with more than 76,000 searchesrecorded in April 2025 alone.
UK Cities Investing the Most in Home Improvements
According to Pepper Money’s customer data, it is revealed that home improvement loans now account for 9.7% of all borrowing, making them the second most popular reason for taking out a loan in the UK. The average loan value for home improvements was £33,795.
Birmingham (13.4%), Sheffield (9.5%), and Cardiff (9.1%) are leading the way in demand, as rising house prices and economic pressures push homeowners to invest in their current properties rather than relocate.
It’s no surprise that London leads the way in cost of home improvement borrowing, with an average loan size of £61,867. Higher property values in the capital mean homeowners are more willing — and often need — to invest significant sums to enhance their homes, whether through loft conversions, extensions, or major refurbishments.
Brighton (£44,548) and Manchester (£43,322) follow closely behind, reflecting the ongoing trend in high-demand urban areas where moving costs are prohibitive and improving an existing property often makes better financial sense. In these cities, where house prices have remained resilient and space is at a premium, investing in a home upgrade can offer a smarter route to long-term value growth.
| UK City | Home Improvements Loans | Average Loan Amount (£) |
| Birmingham | 13.4% | 30,147 |
| Sheffield | 9.5% | 23,190 |
| Cardiff | 9.1% | 27,875 |
| Nottingham | 8.4% | 26,892 |
| Manchester | 7.8% | 43,322 |
| Leicester | 7.6% | 30,892 |
| Newcastle upon Tyne | 7.4% | 27,006 |
| Glasgow | 6.8% | 28,562 |
| Bristol | 6.0% | 37,614 |
| Edinburgh | 5.3% | 35,808 |
| Liverpool | 5.1% | 19,667 |
| London | 4.9% | 61,867 |
| Brighton | 4.9% | 44,548 |
| Leeds | 3.8% | 35,738 |
Why More Homeowners Are Renovating in 2025
- High Mortgage Rates: Many borrowers are reluctant to give up favourable fixed rates secured in prior years.
- Rising Moving Costs: Expenses including stamp duty, agent fees, and logistics can add tens of thousands to the cost of moving.
- Limited Housing Stock: In high-demand areas, it’s often easier and more affordable to extend or convert than to find a suitable new property.
- Value-Adding Improvements: Strategic renovations such as loft conversions or energy-efficiency upgrades not only improve livability but can significantly boost resale value.
High-Value Projects Add the Most ROI
Data from Pepper Money shows that while projects like loft conversions can cost up to £75,000, they can add up to 20% to a home’s value—around £53,664, based on the UK’s average house price of £268,319. Other value-boosting projects include:
| Improvement | UK Monthly Search Demand | Average Cost | Estimated Value Added |
| Loft Conversion (with bedroom + bathroom) | 14,000 | £27,500 to £75,000 | Up to 20% |
| Single-Storey Rear Extension | 2,200 | £48,000 | 10–20% |
| Kitchen Renovation (Full) | 2,100 | £6,200 – £50,000 | 5–10% |
| Bathroom Renovation | 3,000 | £7,000 | 4–6% |
| Energy Efficiency Upgrades (e.g., insulation, heat pump, double glazing) | – | £10,000 – £15,000 | 5–10% |
| Garden Landscaping | 2,200 | £1,000 – £10,000 | 5–8% |
| Converting a Garage into Living Space | 5,700 | £10,000 – £20,000 | 10–15% |
| New Windows/Doors | 2,500 | £4,000 – £7,000 | 3–5% |
| Exterior Improvements (rendering, repainting, driveway) | – | £2,000 – £8,000 | 2–5% |
Funding Smarter: Secured Loans Offer Flexibility
Homeowners are increasingly opting for secured loans as a way to fund large-scale projects without disturbing existing mortgage terms. Unlike unsecured personal loans, secured loans allow for borrowing up to £1 million with terms of up to 30 years, helping keep monthly payments manageable.
Ryan McGrath, Director of Secured Loans at Pepper Money comments,“With mortgage rates remaining high and moving costs continuing to rise, more homeowners are choosing to stay put and invest in upgrading their current homes rather than relocating. At Pepper Money, we’re seeing a growing number of customers taking out secured loans to fund major renovation projects — from loft conversions to energy efficiency upgrades — that add both comfort and value.
Choosing how to finance a home improvement project is an important decision. The right approach can not only transform your living space but could also boost the value of your property. Whether it’s through remortgaging, taking out a loan, or using savings, it’s vital to find a solution that fits your financial goals and circumstances. Speaking with a mortgage broker or financial adviser can help you navigate the best path forward.
Depending on your situation, a secured loan may enable you to borrow anything from £5k to £1m with repayment terms of 3 to 30 years which means you can minimise your monthly repayments, with the amount available based on factors like your credit history, financial situation, and property equity.” Whereas you may find an unsecured loan is limited to £25,000 over 5 years which means you monthly repayments will be high.”
Advice for Homeowners
Pepper Money recommends homeowners consider key factors such as project cost, interest rates, repayment terms, and budget planning before deciding how to fund a renovation. Comparing options and seeking professional advice from mortgage brokers can ensure the right financial decision for individual needs.
