Property businesses are planning to expand at a faster rate than they actually grew last year, and the gap between ambition and delivery may come down to one thing: how they use their funding.
Research into the growth and innovation behaviours of SMEs in 2025, cited by lender Funding Circle, found that around 27 per cent of all SMEs grew during the year, while a more ambitious 41 per cent plan to grow further. The property and business services sector outpaced both figures, with roughly 30 per cent of firms reporting growth and 45 per cent planning expansion. One in five had both grown and intended to grow again.
Funding Circle says the findings mirror the lending activity it is seeing in the property sector. For investors, the more useful question is where that borrowed capital works hardest. The right property business funding, deployed against the right project, is increasingly what separates portfolios that compound from those that stall.
Retrofit: the small loan with an outsized return
For smaller facilities, energy efficiency upgrades are among the clearest value plays. According to the research cited by Funding Circle, average energy-efficiency improvements increase property value by around 14 per cent, rising to as much as 38 per cent in some areas.
A full-scale retrofit can cost upwards of £69,000, a figure that will make most landlords wince. But incremental measures, a new boiler or replacement double glazing, can lift the initial rental price, cut running costs and improve efficiency ratings without the capital outlay of a deep retrofit.
That calculus matters more with mandatory EPC C upgrades now law under the Warm Homes Plan, and with Propertymark reporting that retrofit take-up is improving but still lagging what the housing stock needs.
Renovate, consolidate, or simply keep the cash flowing
Beyond energy works, borrowing to modernise, an upgraded kitchen or bathroom, or a new roof, can make a property more attractive to the rental market and support a higher rent. For landlords earlier in the journey, the fundamentals are covered in our complete guide to preparing a property to let.
There is also a portfolio-shape decision. Funding Circle suggests some investors may do better borrowing to maximise the potential of a handful of properties rather than chasing a larger development.
And funding is not only for bricks. Finance options can cover cash flow shortages, pay contractors, bridge costs while awaiting refinancing, or secure a property quickly before longer-term funding is arranged. Products such as Flexipay and Cashback Cards are available to businesses for exactly this kind of flexibility.
Where property business funding should follow the rent
For developers deciding where to deploy capital, the regional picture is stark. Office for National Statistics data shows private rents’ annual inflation in England was highest in the North East at 6.5 per cent and lowest in London at 1.7 per cent in the 12 months to March 2026.
London’s substantially higher house prices mean rents there may still balance out in cash terms. But areas with the strongest rental inflation may offer the best potential for adding and converting properties, a trend consistent with buy-to-let investors increasingly heading north in search of yield.
What this means for investors
The sector’s focus is shifting towards resilience as much as growth. Funding Circle points to lending being used to manage short-term cash flow pressures, cover unexpected repair, legal or project costs, invest in new developments or acquisitions, upgrade technology, marketing or operations, and build longer-term resilience.
For investors, the message from the 2025 data is that intent is running well ahead of delivery. The 45 per cent of property firms planning to expand will not all get there. Those that match the right funding product to the right project, small loans for retrofit gains, flexible credit for cash flow, targeted borrowing in high-rent-growth regions, are the ones most likely to close that gap in 2026.
