Max your house price, don’t blow your budget
“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.
How much are homeowners spending?
According to Post Office Money’s research, nearly two-thirds (64 per cent) 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. To fund renovations, three-quarters (74 per cent) of home-improvers used savings, one in six (16 per cent) used a personal loan or credit card, while one in 16 (6 per cent) used equity release or mortgages, Post Office Money found.
A separate study also suggests some costs may be increasing. Shawbrook Bank says its loan data shows the average size of a home improvement loan has increased by 16 per cent, 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 value do improvements add?
Post Office Money says analysis based on 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 per cent higher than the average.
But it’s important to bear in mind that the price a homeowner wants for their property isn’t necessarily the price 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.
Which improvements are most valuable?
Post Office Money’s research found 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 tend to be on the market for 77 per cent 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 per cent above average prices. A new kitchen was estimated to cost £7,500 (properties with this feature were being marketed for 26 per cent above the average house price).
How do you maximise your rewards?
Paul Went, managing director of the consumer division at Shawbrook Bank, for financing home improvements, suggested the following tips.
◆ Set yourself a clear budget.
◆ Take time to explore different financing options to decide which is best for you.
◆ If you’re borrowing money, shop around for the best rates.
◆ Consider seeking a professional valuation to help understand what the potential return on investment from the renovations planned.
◆ Check your insurance covers any changes in the value of your property.