Why improving your home could put buyers off

Additions like bars and wet rooms could put buyers off rather than add value, says Stephen Pritchard
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The Independent Online

The UK market for DIY is worth £11bn a year, according to the Halifax. But the improvements home-owners are willing to undertake today go beyond a coat of paint or even a new kitchen; Cahoot, the online bank, found that 53 per cent wanted to add a gym or home cinema, 39 per cent a wine cellar, and 30 per cent a bar.

According to Cahoot's survey, 72 per cent of home owners are interested in improving their properties for their own benefit. But anyone planning home improvements should note that projects can actually reduce the value of a home.

Walk-in showers, for example, are not big selling points. "Wet rooms may be the in-thing," says Gary Lumby, head of retail at Yorkshire Bank. "However, our research shows that ripping out the bath may actually put buyers off."

What home improvements will help to sell properties?

Estate agents and surveyors say, time and again, that kitchens and bathrooms are strong selling-points. Updating a bathroom with a new, white suite - and it must be white - can add value to a home. And a modern kitchen, especially one large enough for a breakfast table, is a real plus.

According to Halifax, a new bathroom is the fourth most popular improvement. A new kitchen is the fifth. But home-owners surveyed by the bank said that a new kitchen was the improvement they thought most likely to add value. The lender's own surveyors, however, found that loft conversions provided the best uplift in a property's value relative to cost.

And buyers still put great store by a property having the basics. Halifax found that 80 per cent of buyers consider central heating to be essential, against 53 per cent for a new bathroom.

Gardens and outdoor space ranked high with both buyers and sellers.

And those that won't?

Some "improvements" will actually cost home-owners money. Swimming pools are notorious for cutting the value of a home. Jacuzzis, snooker rooms and bars may also do so.

Experts caution that improvements out of keeping with a property's period or style can cut its value. Double glazing is the worst offender, especially UPVC windows fitted to period homes. Pebbledash or an inappropriate conservatory will put some buyers off.

Jon Sykes, head of mainstream mortgage products at Halifax, says: "With any home improvement project, planning is the key. Changes purely down to personal preference and a desire for the latest 'must have' features can strip value from your property when selling."

If I do improve, what's the best way to finance it?

In almost all cases, if you don't have cash to hand, the best way to pay for home improvements is through a mortgage, either remortgaging or a further advance.

If a home-owner is tied to a current lender, typically because they have a fixed or discounted mortgage deal, a further advance will be the practical option.

Some lenders will ask about the purpose of a further advance, although not all do; almost all are in any case happy to provide funds if the money is being used to improve the property.

But further advances are by no means the cheapest way. Most banks and building societies charge their standard variable rate, currently abut 6.5 per cent - significantly dearer than the best new mortgages on the market. So more home-owners opt to remortgage, raise a larger sum and use it to fund improvements.

"It's fair to say that a good chunk of remortgage business is motivated by a desire to release funds for home improvements," says David Hollingworth, director at mortgage brokers London & Country. "Increasingly, home-owners are considering the merits of improving their home against the costs of moving."

He cautions against secured loans, even though they are widely advertised as a way to fund improvements. "There are few scenarios when a secured loan would be the first port of call. They may come into play if the borrower's credit record has deteriorated and they need more specialist funding without giving up the rate on the existing mortgage." But someone who can prove their income and has a clean credit record can almost certainly find cheaper finance via a mortgage.