With record house prices making it harder to afford to move up the ladder – and the cost of moving alone now standing at a record £12,000 – many families are finding it makes financial sense to stay put and improve, rather than move.
Successful improvements can add tens of thousands to your house price at just a fraction of the cost of moving.
Not only will they make your home a more enjoyable place to live – they could also make it easier for you to move up the housing ladder in the future, as your home’s increased value will help bridge the funding gap to your next home.
With all home improvements, planning is key. One in four projects end up over-budget – so a little extra work upfront can pay dividends later on.
Beware of the 'ceiling price'
Before you spend large sums on adapting your home to suit your current needs, it’s wise to make the changes having carefully considered your chances of recouping the value of your improvements in your home’s potential future sale price.
Every home has a ‘ceiling price’ – the maximum price you can expect to achieve based on similar properties in your area.
There is likely to come a point where improvements will fail to add any extra value to your property, so it’s worth talking the options through with an estate agent to understand your home’s particular threshold. If you live in a house worth £250,000 and spend £25,000 on a new kitchen you may not be able to recoup the full value when you sell up. This would be much more possible with a kitchen more proportionate to your home.
If you use savings to fund the improvements you could find that the increase in value you achieve could be more than the interest you would have earned in a savings account, particularly while interest rates are low.
If you don’t have savings you could consider taking out a loan – or, for bigger improvements, remortgaging your property to free up some equity. Before you consider these steps, though, you will need to check whether you can afford the repayments.
Things to bear in mind
All the suggestions below will potentially add value to your home if done sympathetically. Importantly, they could also help enhance your home’s ‘live-ability’ – helping reduce the need for a costly and stressful move.
Bear in mind that the costs and potential impact on your home’s sale value indicated here are only intended as guides – the actual figures could vary significantly. In addition, for any home improvements you should take necessary precautions to help ensure the work is completed to satisfactory quality and to time and budget:
- Take the time to plan exactly what you want to achieve – consulting structural engineers and architects if necessary, and obtaining a minimum of three quotes from builders
- Agree the cost beforehand – set aside a strict budget but allow a contingency in case of overspend
- Agree on a realistic time frame upfront, but remember there may be unavoidable delays, caused by bad weather for example
- Keep up regular communication with the builders
- Have a contract in place to cover both parties and never hand over payment upfront
- Check your builder has the right insurance in place before any work begins