Many homeowners needing more space face a dilemma over whether they’d be better off moving or improving their existing home.
There’s long been a strong impetus for the latter, with Stamp Duty and moving costs often as high as the cost of an extension, especially in pricey areas such as the South East.
But the Brexit-induced stagnation in the property market is encouraging more and more people to stay put.
Recent figures from trade association The Finance & Leasing Association showed that second charge mortgages were up 24% year-on-year in February, which it attributed to people choosing to “improve, not move”.
Estate agents have reported a similar trend.
“Owners deciding to renovate a property which has been their home for many, many years and electing to then stay, rather than move, has always been a factor,” says Gary Hersham of London estate agent Beauchamp Estates.
“The great Brexit uncertainty and the remaining disproportionate burden of Stamp Duty have certainly caused more owners to adopt this approach.”
Where to start
If it’s extra space you’re after, it’s tempting to start planning an extension of some sort.
But Kunle Barker, a property developer and TV presenter who recently worked on Sarah Beeny’s Renovate Don’t Relocate programme, says people aren’t often making the most of the space they have.
“When people have problems with their home it is very easy to think that they should probably extend,” says Barker.
“But often the problem is that they don’t have the right kind of storage or the right kind of living arrangement.
"By changing those things they can have a much better home – and inevitably such works are less expensive or require less investment than a loft extension, basement or moving.”
Interestingly, a recent study by home improvement firm Anglian Home Improvements asked 100 estate agents and 1,000 adults for their views on which home improvements added the most value to a property.
While the people surveyed put extensions at the top of the list, the agents said it was actually making the living space open plan that added the most value.
Rupert Reeves, partner at Newbury estate agent Carter Jonas, says reconfiguring can be more cost-effective than extending.
“Before extending outwards or upwards, we advise clients to think creatively as to how they can adapt the accommodation they’ve already got.
“There is an ongoing appetite for large, open plan living spaces, so it’s worth considering removing the internal walls to open up the ground floor, rather than going down the pricier route of external structural work.”
If you’ve considered the above and decided you really need extra space, perhaps to accommodate a growing family, the good news is that in many cases you should be able to recoup your spending once you sell your home.
In the Anglian study, agents said a loft conversion was the second-best way homeowners could add value and many studies have estimated these can boost the value of a home by at least 20%.
Loft conversion company Econoloft says the increase in value is even higher in London.
“Much of our work is concentrated in London and the home counties where space comes at a premium price,” says Becke Tibbert, director at the company.
Ground floor extensions can also add value, particularly if incorporating an open plan kitchen/diner, but it’s not always a given you’ll recover the entire cost when you sell.
Barker has some advice for those considering extensions.
“The build cost of a loft or an extension can be anywhere around £1,200 per square metre and a basement more like £3,500 per square metre, so you have to be in an area that warrants that kind of work.”
Kitchen and bathroom upgrades
A survey of 2,000 homeowners earlier this year by financial services company Post Office Money found a new kitchen was the most common improvement carried out over the past five years.
However, Barker advises caution in this area. “You can’t say I’ve spent £20,000 on a kitchen and that will add £20,000 to the value of my home. It just doesn’t work like that.”
If you’re redoing the kitchen to live in the house forever, you may not be worried about getting your money back.
But if not, there are some much cheaper ways to refresh your kitchen. Replacing all the doors but leaving the units in place is one popular way to change the look.
Painting the doors and changing the handles is even cheaper, while a new worktop can also have a big impact.
Similarly, while a study by NAEA Propertymark, the professional estate agent body, earlier this year found a new bathroom was one of the most common projects carried out by homeowners, chief executive Mark Hayward says it’s not always necessary to rip it out and start again.
“Replacing tiles and re-grouting, eliminating all limescale and replacing taps are all options worth considering.
“Bathrooms need to be fresh and clean, so make sure the walls are a neutral shade, and ideally replace a shower curtain with a new one or a simple glass screen.”
There are various ways to fund home improvements, depending on the cost. The Post Office Money research found that 74% of people used savings, 16% a personal loan or credit card and 6% equity release or mortgages.
If you have equity in your property, your lender may agree to extend your mortgage or you could remortgage for a higher sum to a new lender.
For loft conversions this is common, says Econoloft’s Becke. “For those people with a lot of equity in their home, re-mortgaging seems the most standard option.”
As the Finance & Leasing Association figures show, second charge mortgages – where a separate loan is secured against your property – are on the rise and bridging loans may be an option if you are doing major works.
“If you are planning extensive works to your property, involving major structural changes, your mortgage lender may not agree to remortgaging to cover the costs,” comments Holly Andrews, managing director at broker KIS Finance.
“In this case you can take out a bridging loan to fund the works and then remortgage once the works are completed.
“Bridging loans have become a lot more competitive in recent years and are not as expensive as they once were.”
If the current market has swayed your household into sprucing up a property instead of moving, it’s important to consider how long you’ll stay put when choosing what works to carry out.
If you get your sums right, you could not only create a better home for now, but also increase the value when you do decide to move on.
*This article contains affiliate links, which means we may receive a commission on any sales of products or services we write about. This article was written completely independently.
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