DON’T BUST THE BUDGET
VICKY SHAW explains how to add value to your home, without going over your budget
As the housing market has slowed down in some parts of the UK, many homeowners are choosing to improve their existing property, rather than move – and new research from Post Office Money suggests you can potentially add significant value by doing so. “Over the past few years, house price growth has slowed, so homeowners have turned to other options to add value to their homes – with renovations being a clear opportunity,” says Chrysanthy Pispinis from Post Office Money. Before you get started though, it’s important to carefully weigh up all the costs involved – which could outweigh any value that may be added. Here’s a look at how people are funding home improvements, the value they may potentially add, and how to stop costs ballooning out of control...
How much are homeowners spending?
According to Post Office Money’s research, nearly two-thirds (64%) of homeowners have made improvements to their properties over the past five years, spending £14,015 on average. The costs can stack up differently depending on whether you’re using savings or borrowing cash, which could mean significant interest charges. In order to fund renovations, three-quarters (74%) of homeimprovers used their savings, one in six (16%) used a personal loan or credit card, while one in 16 (6%) used equity release or mortgages, Post Office Money found. A separate study also suggests some costs may be increasing. Shawbrook Bank says analysis of its loan data shows the average size of a home improvement loan has increased by 16%, when comparing the first quarter of 2019 with the same period for 2018. The bank suggests this could be partly due to fluctuations in sterling and increases in the cost of imported goods and raw materials.
How much can improvements add to the value of a home?
Post Office Money says analysis based upon the average price tag on a three-bed semi-detached home in the UK (£286,000) found properties with certain home improvements were on the market for around 19% higher than the average asking price. Though, it’s important to bear in mind that the price someone wants for their property isn’t necessarily what they’re going to get – and what may be a desirable renovation for buyers in one part of the UK, may be less attractive elsewhere. If you’re renovating with eventually selling in mind, estate agents may be able to give pointers on what features buyers are looking for in your area.
How much could different home improvements help boost value by?
Post Office Money’s research searched properties on Zoopla, as well as home renovation websites, to estimate the cost of a typical home improvement.
It found, for example, that properties boasting a landscaped garden were particularly likely to have much higher price tags than average. The estimated cost of garden landscaping was £2,750, although this could vary hugely depending on the extent of the renovation. It also found that properties with a landscaped garden – as well as other attractive features which would potentially push up a home’s value – tend to be on the market for 77% above average house prices. Meanwhile, the cost of an extension was put at £80,000, and homes with this feature were typically listed for sale for 37% above average prices. A new kitchen was estimated to cost £7,500 (properties with this feature were being marketed for 26% above the average house price).
Making home improvements is often the best way to the house of your dreams