Can't sell? Make the most of what you've got

A stagnant housing market means more people are doing home improvements. But which ones add value? Chiara Cavaglieri investigates

Tantalising rumours of a recovery in the housing market have circulated in recent months, but a convincing upward shift has yet to materialise. A quarter of British homeowners are now planning to build themselves out of trouble, according to financial advice website Unbiased.co.uk. But what changes will add value to your property?

Any changes should be about adding lifestyle value. "Looking at the immediate value of a property can be misleading unless you are a developer or want to sell your property in the short term," says Hugo Tugman, founder of Architect Your Home. "If you are planning to stay in your home for the medium to longer term and your quality of life would be much improved by having an additional bedroom for your growing family, for example, it is important to look at that bigger picture, especially if there is limited opportunity to move house."

However, if your plan is to "improve to move", any changes must be thought of as an investment and personal taste should be set aside to maximise the chance of appealing to a wide range of buyers. Homeowners should also steer clear of anything that could be considered high maintenance. Saunas and swimming pools are very unlikely to add value and the running costs may even put off potential buyers.

The average price of properties in the local area will have a sizeable impact on the maximum price achievable, whether successful improvements are made or not. Researching the selling price of similar properties nearby will give you a good idea of the maximum price your property is likely to achieve, Mr Tugman suggests.

Any long-term improvements should focus on creating more space. "If you do need to add space, the next best option is to extend upwards – converting a loft is one of the most cost-effective ways to add space," says Mr Tugman. "The next option is to extend outwards with a single or double-storey extension." Once you have exhausted these possibilities, he suggests expanding downwards, with a basement conversion, although this is generally the most expensive way to add space.

For more extensive improvements, the difficulty lies in trying to add more value to your property than you paid out – a tall order in a subdued market. Extensive upgrade work is unlikely to add to your sale price if you're looking for an imminent move.

If your plans are longer-term, loft conversions can add both space and value, but homeowners must check with the planning office before making a start. They will also have to get building regulations approval and conform to fire regulations and there is no guarantee that owners will recoup all of their costs. A recent survey of property valuation experts by HSBC found that some of the more traditional home improvements fail to affect the property's value at all. Recarpeting came in top of the list, followed by redecorating, with about half the polled experts saying they made no difference to the overall price of the property.

Instead, valuation experts stressed the importance of simple, but effective ways to create additional space.

Decluttering was considered to be the best way to increase a property's chance of selling at a good price, with 61 per cent of the valuation experts making it their top choice. Simple, inexpensive measures such as reorganising the layout of existing rooms and adding extra storage will appeal to buyers. The research also highlighted the importance of keeping the garden in shape.

The message seems clear: home improvements don't have to be expensive to add value to your property. In fact, some small, relatively inexpensive changes can offer better returns than more ambitious projects. Basic improvement work such as replacing old countertops, repairing broken fixtures and other minor repairs will make a difference. "Kitchens and bathrooms are good rooms to spend a little money on, but don't go mad and spend thousands on fixtures and fittings," says Martin Roberts, property expert from website Makingmoneyfromproperty.tv. There is no need to rip out old fittings and fork out for new units, he suggests.

Instead, simply replacing doors and work surfaces is an inexpensive way to update an old kitchen or bathroom and a lick of paint will freshen up tired walls. As labour is usually the most expensive part of any renovation project, taking on some of the work yourself would reduce costs.

Installing double glazing and other energy-efficient forms of insulation is another way to entice prospective buyers. Many people will be on the lookout for homes that are cheaper to run. There are even energy grants up for grabs for loft and cavity wall insulation, which together could save about £365 per year, according to the Energy Saving Trust.

Elsewhere, any changes that reduce space should be avoided. Resist the temptation to knock through walls upstairs, as reducing the number of bedrooms often has a direct impact on the value of a property. Equally, turning a garage into a workshop can have a negative impact if it compromises the parking facility.

As for financing home improvements, there are several options but the starting point should be your existing mortgage lender. "There's no great appetite among lenders to accommodate added borrowing although your existing mortgage provider may be slightly more receptive to such requests," says Mr Roberts.

"Remortgaging elsewhere is potentially another option," says David Black, principal consultant from financial research company Defaqto. "Or a second charge secured loan may be worth exploring if that doesn't work." However, for smaller borrowing amounts it may be cheaper to use a credit card. The Barclaycard Simplicity Visa charges a typical APR of 6.8 per cent and Marks & Spencer's Money MasterCard, offers 0 per cent on purchases for 10 months.

It is also vital that homeowners planning to make substantial improvements contact their home and buildings insurance provider to check that they are covered by the policy if there are any DIY disasters. There may be a need to amend the level of cover temporarily and the policy may become void if the insurers are not informed that work is being carried out.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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