Newsletter 7 - Live long and prosper!
Prosper, Episode 1 – Increasing your property value
With recent uncertainty of house prices, you need to ensure you make the most of what you have got. One of the best ways of doing this is to try and increase the value of your existing property.
Here we look at the best and most cost effective ways to improve your property and add real value….
I often arrange mortgages for clients purchasing a home where they wish to add value by undertaking home improvements. I have always advised that it is better to purchase a home that doesn’t need structural change, as this can cause problems with retentions, or a lender may even refuse to lend on a property. I have always felt the ideal ‘project home’ is one with lots of cosmetic work needed; which you may well wish to undertake in any case.
New research from Halifax indicates that simple, straightforward home improvements offer the highest return on investment, in terms of monetary value added to a home and minimum cost. Fuel efficiency and energy saving measures are the top performing home improvement as the 'green factor' takes hold, perceived to add two and a half times its initial outlay cost (£1,722) to the value of a home (£4,327). Home security measures come in at second place, followed by redecorating in third place, both perceived to add twice as much to the value of the house as their initial outlay cost.
Garden improvements, the home improvement that home owners have spent the least amount of money on during the last 12 months (£857) is ranked in fourth place, whereas a loft conversion comes in fifth. The average spend on home improvements carried out over the last 12 months is £5,344. The average value perceived to be added to a property as a result of these home improvements is £6,466, with an average return on investment of 120%.
The home improvements that respondents perceived not to recoup the actual outlay cost were laminate flooring, new carpets, improvements to the central heating system, new windows and double glazing and new fitted bedrooms. In addition, although an extension or an extra room is perceived to add the most monetary value to a home at £25,590, it is also the home improvement people are willing to pay the most money for (£19,922). Therefore, it did not fall within the top five home improvements showing the best return on investment.
After an extension or extra room, a loft conversion (£24,981), kitchen (£7,666), fuel efficiency and energy saving improvements (£4,327) and home security (£3,091) are the home improvements perceived to actually add the most monetary value to a home.
What Halifax's Valuers Say Although home improvements can add monetary value to a property, the value recouped may only represent a fraction of the actual cost. Halifax's valuers have ranked out of ten how much different home improvements can add to the value of a home in the right circumstances and locations. However, they stress that every case is different and that it is wise to take professional advice if you are spending a lot of money and want to ensure that you are adding value for every pound that you spend.
Ranked 1. Loft conversions – Ten out of ten Loft conversions can add ten out of ten if the property is located in the right area. Where land and property prices are at an absolute premium a loft conversion can provide excellent value for money. Before starting on any loft conversion activity, it is essential that you gain building regulation and planning permission and, if you are a leaseholder, the Landlord's consent. You should also consider getting the advice of a Chartered Surveyor to advise on the extra value that your project will add. Remember that loft conversions done badly can detract from the value of your property.
Ranked =2. Kitchens – Eight out of ten It is important to ensure that expenditure is kept in proportion to the original value of the home. A £20,000 kitchen installed in a £150,000 home, for example, might just be a bit over the top in terms of adding value, unless you are planning on staying a long time and enjoying your dream.
Ranked =2. Painting and decorating – Eight out of ten If you are thinking of selling then fresh painting and decorating will improve a home's appeal and saleability, which means that it is great value for money in terms of lifestyle and marketability. However, it is important not to go overboard with whacky ideas that may limit your target market and to keep your costs in check. Neutral colours can be the most effective.
Ranked =4. Extensions and extra rooms – Seven out of ten The seven out of ten score can be higher depending on the property. Quality, attractive, well proportioned extensions will generally add value, but you may not always get your expenditure back, depending upon the location of your property. However, alterations must be kept in line with the style of the home, size of plot and layout of accommodation. For example, seven bedrooms and only two living rooms on a postage stamp plot is not a good design.
Ranked =4. Bathrooms – Seven out of ten Building a new bathroom adds value to a property, but does not recoup the entire cost of the home improvement activity, unless of course the existing one is simply too awful to live with.
Ranked =6. Central Heating, Loft and Cavity Insulation – Six out of ten Central heating is now considered to be a standard 'must have,' so investment in a new central heating system might not add as much to the value of a home as it did in the past. Halifax's valuers believe that loft and cavity wall insulation adds little (four out of ten) to the actual value of the home, but can save you money in running costs.
Ranked=7. Garden Makeovers – Five out of ten Certainly improvements to gardens and the provision of attractive outdoor space will improve the quality of life for the user and the appeal of a property to the buyer. In addition, reasonable expenditure may be recouped in terms of added value and will increase saleability, but acres of decking and fountains may be expensive and may not be to everyone's taste.
It is very interesting to see the differences here in those home improvements that are perceived to add value and those which actually do add value. Government funding may even be available to improve the energy efficiency of your home and it is also an interesting aside that security within the home (burglar alarm) shows up as being very highly valued.
It all goes to prove that a well maintained simple home is the type that appeals most to buyers and not necessarily the ‘flashy’ purchases. If there are any home improvements that you do wish to undertake which you feel may need funding of some sort, then please do Contact US to discuss.
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