Lack of cash tightens screws on DIY plans

THE credit crunch has transformed the home improvements season, which traditionally kicks off at Easter, from a hobby for homebuyers to a compulsory chore for sellers, according to housing experts.

Recreational DIY has largely ground to a halt. Borrowing the cash to buy a property at all is no longer easy, and getting more to "do it up" can be a nightmare.

Yet six out of ten Glaswegians are planning to visit a DIY store this Easter according to a survey by B&Q. Aberdonians are the biggest fanatics, planning to spend more than 30 hours working round the house this Easter weekend, compared with 26 hours for those in Edinburgh and 17 hours in Glasgow.

Helen Duncan, of Boyd solicitors, explains why the market has changed: "First-time and other young buyers used to be the ones who spent money on their homes in an attempt to add value and help them further up the ladder when they came to the next move.

"But now they are having to sink so much money into the property just to cover the deposit, they haven't got the cash to buy a pot of paint when they move in. There is nothing left to spend."

Flat house prices are also putting a brake on DIY activities, as the days of making a quick killing have gone. Scottish house prices did not change over the last quarter, according to the Nationwide's latest property report. However, this still leaves them up 5.6 per cent compared with last March. Prices have climbed 8 per cent over the year in Aberdeen, 6 per cent in Edinburgh but there has been no change in Glasgow.

But if new buyers are squeezed out of home improvements, other groups are having to take them seriously. Duncan adds: "When prices are volatile, it is vital to ensure your home is a good standard as the best way of maintaining its value."

Hazel Lowrie, of solicitors Stuart & Stuart, believes that the new Home Report has made home improvements for a seller not a luxury but a necessity.

She said: "In the old days, a potential buyer might overlook something like poor decoration, but now the Home Reports will point out all the flaws in full detail. As a seller, if you commission a Home Report highlighting areas which require remedial work, then you would be silly to put your home on the market without carrying out the work."

Duncan said: "The properties which are selling today are the ones in good decorative order. In this market, buyers are not prepared to overlook any signs of neglect."

According to the Halifax, some of the smaller improvements can be the most cost-effective, such as energy efficiency improvements, security, garden improvements and redecoration.

Lowrie said: "You don't need to spend thousands of pounds to get your home ready for sale. But you may need to invest a few hundred pounds in getting the decoration up to scratch. People are looking for good, clean, well cared for property. If they have that, they will forgive other shortcomings."

When it comes to selling, kerb appeal can be a deal clincher, which means well-maintained exterior decoration. The next priority is interior decoration, followed by a modern kitchen and bathroom.

Lowrie says: "The first time many potential buyers will see your home will be on the internet, so the key deciders on whether to view or not will be address, price and photo. Poor decoration can be detected in the photograph.

"Once inside they will be looking for consistent maintenance. It makes more sense to tart a kitchen up, rather than spend a fortune renewing it. If you spend a lot on a new kitchen and bathrooms, you won't get the money back overnight.

"Much better, improve what you have so the next owner can live with it for a couple of years, until they have decided precisely what they want to do."

Getting the money

If you need some short-term funding, to buy tools or decorating materials, then a Tesco Bank credit card which will not charge any interest over 12 months on purchases may be a good place to start, if you are confident you can pay the cash back at the end of the year.

For bigger projects you may have to consider a further advance on your mortgage. Unfortunately, with mortgage lending still tight, the money is unlikely to be easily available, and certainly not at the price you might like.

Edinburgh mortgage adviser John Postlethwaite, of Punter Southall, explains: "If you go back to your existing mortgage lender, they may not refuse you outright, but the fact that you are asking for more money may lead them to tweak your credit score. This means you may have to pay more and face early redemption penalties so that you may be tied in for perhaps three years."

The position may be easier for borrowers with flexible or offset loans who have paid off some of the original debt. They could ask the bank to reborrow the cash, which should be straightforward.

If you are buying, and believe you may want some extra money soon to carry out work, then plan that into the original purchase. Lenders can be very difficult about further advances in the few years after a loan is completed, and many will refuse outright during the first six months.

One option would be to go for a loan with a further reserve facility such as is available at the Woolwich or Abbey, or consider an offset mortgage. However, Postlethwaite said in some cases you should just borrow the money and invest it in Isas until you need it.

He said: "I recently went into all the various options thoroughly for a client, and we decided the cheapest alternative was to go for a very low tracker rate and borrow all the money they needed. The interest could be recouped by investing the cash until they needed to spend it."

Insurance

Easter is the peak time for insurance claims following DIY accidents. If you are regularly involved with DIY then you should make sure you have accidental damage cover.

Ian Crowder of the AA said: "Accidents happen so easily when you are engaged in DIY. We've had cases where someone has put up shelves and put all their best china on them, just before they collapsed and smashed the lot.

"People hammer nails through water pipes, or can be up in the loft and accidentally stumble. Then they grab a water pipe to stop them falling, snap it and cause a flood. Some of the biggest claims are the result of DIY plumbing."

If you are having major work done to your home then you must notify your insurer that you have builders in and the nature of the work. Provided you notify them, there shouldn't be a problem, but if you don't and something is stolen, goes wrong or there is a burglary or fire and you haven't notified them then they can legitimately refuse the claim.

Make sure your tools are also properly insured. These will be covered up to a single item value on your policy. However, not all policies cover tools kept in outbuildings or garages, or they may have a much lower single item limit, which could nullify a claim.