How a few home improvements can add to your property's value
Sprucing up your house can pay off, but take care not to go too far, warn Chiara Cavaglieri and Julian Knight
Sunday 26 September 2010
The property market, in many parts of the UK seems to be, once again, at a standstill.
A glut of properties coming on to the market after the abolition of Home Information Packs, combined with the continued reluctance of banks to lend, means there are too few buyers for the number of properties available. In short, it's becoming hard to sell up and move on so the only option for space-starved homeowners is to extend up or out.
No wonder, therefore, that according to research from Everest, a glazing firm, the average homeowner plans to spend £2,831 to give his home a facelift or make the most of the space he has over the next year.
Top of the list as the most popular home improvement and by far the easiest way to add value is decorating the inside of the property, with 67 per cent of those surveyed by Everest planning to spend an average of £1,326 on this. Many homeowners are planning more expensive renovations too, with 12 per cent planning to shell out £4,340 on a new bathroom and 9 per cent setting aside £3,713 for a new kitchen.
Although first impressions are crucial when you're trying to sell your home, improvements don't come cheaply, so the question is whether they will actually add any value.
"Prime homes in prime locations always sell well, but there is a shortage of better-quality homes on the market," says Paul Smith, the chief executive of Haart estate agents. "So any work done has got to enhance the property, make it stand out from the crowd."
If you make the wrong improvements you run the risk of being unable to recoup the cost when you make the sale, or even, in some extreme circumstances, actually reducing the value of your home.
A good place to start is at your local estate agents – ask them to value your property and assess your improvement plans to check that the cost of any improvements is in proportion to the value of your property. You can also check for the sale prices of properties in your area that have undertaken similar improvements on a website at www.houseprices.co.uk.
Generally, creating more space is good, so extra bedrooms, loft conversions and extensions are usually among the most successful improvements, but, again, you will need to think carefully when deciding when and how to extend or convert part of your property.
"The most cost-effective route is typically to convert the loft, followed by an extension, or converting the garage or even a cellar," says Michael Holmes, a spokesman for the National Home Improvement Show.
Depending on the room, the size of the house and the location of your property, you could be looking at an extra 5 to 15 per cent on the value of the property. Extensions have long been a popular way to add extra living space, and can push a selling prices up by as much as 10 per cent.
If you have enough garden space, you can take full advantage by adding the maximum space possible.
"Unlike loft or basement conversions, you can go multi-storey, and it doesn't necessarily mean double the cost. Just double the figure for a single storey and deduct approximately 20 per cent," says Mr Holmes. However, those looking to make use of their gardens must ensure that they don't eat into their outside space too much as a small garden can be a drawback.
It's easy to get carried away with home improvements, so think twice before you start knocking down walls, particularly if you're going to be losing a bedroom, as you could end up losing value instead. If you reduce the number of bedrooms experts say you could be looking at a fall in value in excess of 20 or 30 per cent.
One worthwhile thought, however, is updating your home's green credentials. Buyers are now far more aware of energy costs and will be appreciative of improvements such as insulation in the walls, floor and roof, and a modern, energy-efficient boiler. "Around a third of all heat is lost through the walls and loft space of our homes, and most homes should be able to have either their loft or cavity walls insulated for less than £250. If you are aged 70 and over, or on benefits, you could even qualify to have your home insulated for free," says Susan Jones, the energy efficiency advice manager at the Energy Saving Trust (EST).
Green homeowners could take it a step further by installing renewable energy saving technologies – the EST says that a typical £6,250 photovoltaic system would save £200 a year in electricity bills and earn £900 in cash back each year under the Government's feed-in-tariff.
Remember to check for planning permission before you undertake any major changes. Lowering the curb, for example, is a useful and relatively inexpensive way to create off-street parking but you will need permission first.
Even if you don't go on to make any changes yourself, having permission in place may add value by providing assurance to potential buyers that they can undertake the improvements and create space when they take on the property.
Beyond the big changes, you don't have to spend thousands of pounds to make a difference. There are less expensive and less invasive ways of attracting buyers; simple changes such as freshening up walls and replacing old carpets, for example, can pay off, and getting rid of clutter and carrying out basic repairs will have a big impact.
"Redecorating the outside and improving the garden will add instant curb-appeal. Light and airy properties are attractive to buyers so decorate with light neutral colours," says Mr Smith.
Similarly, although most experts agree that the kitchen and bathroom are the most important rooms, this doesn't mean you have to spend a fortune. A clean, practical space should keep buyers happy, so spending £15,000 on a new bathroom suite may prove fruitless. Likewise, top-end kitchens can cost £30,000 upwards but if they are not in keeping with the property, or not to buyers' tastes, this money will not be recouped at sale time.
All in all, if you are improving with more than one eye on resale, it's best to keep to neutral colours and remember that big outlays may not be recovered if they don't add space. Buyers like to make their own mark too, so forking out on something that may not be to everybody's liking is risky – in particular, niche additions such as a gym or swimming pool may limit the property's appeal to buyers as well as costing you thousands to install.
Michael Holmes, National Home Improvement Show
"Adding an extra bedroom is one of the most effective ways to improve the value to your property. The most cost-effective route is typically to convert the loft, followed by an extension, or converting the garage or even a cellar. Another route in larger older houses is to rework the existing layout to turn a large room into two smaller bedrooms; you could be looking at an extra 5 to 15 per cent on the value of the property."
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