Improving your home can pay off

With the Council of Mortgage Lenders reporting record mortgage lending in the first two months of the year, many homeowners will be doing-it-themselves in the hope of adding a few extra pounds before putting their properties on the market. But be warned: some projects might detract from the value.

So, what will add the most to your property's worth and what should you avoid? Scottish DIY enthusiasts currently favour simple, straightforward home improvements, which add value and update the look of an entire house with minimal cost, effort and resources.

Redecorating is Scotland's most popular home improvement, with over two-thirds (71 per cent) of the population opting for a fresh coat of paint and new wallpaper, according to the Bank of Scotland's home improvement survey 2006.

New furnishings rank second, with more than half of respondents (52 per cent) voting this their favourite improvement. A new bathroom takes third spot (45 per cent), while a new kitchen comes a close fourth (42 per cent).

Garden improvements and new carpets take joint fifth place (36 per cent), with carpets making a return over laminate flooring, which became all the rage in 1998.

Donna Spencer, head of secured lending at the bank, says: "DIY-ers appear to favouring simple, straightforward, inexpensive home improvements, which add value and update the look of an entire house, without the need for specialised materials or tools.

"The continued desire to improve their homes shows that Scottish people are taking a responsible attitude towards their properties and enjoying making the most of them."

The annual study, carried out since 1991, reveals a marked change in home improvement trends. Over the past decade, home improvements have shifted away from the "warmth factor" - heating, double glazing and insulation.

Central heating, for example, featured within the top five home improvements each year until 1998. But, with most houses now being centrally heated, it falls to ninth position this year. Double glazing, meanwhile, was the most popular home improvement in 1992. It ranked third in 1994 and 2003 and fifth in 2004, but fails to make the top five this year.

Some 56 per cent of respondents have carried out home improvements in the past 12 months, the most popular reason being to update and modernise their home (37 per cent). Yet, despite the nation's love of DIY, Scots are more frugal than their UK neighbours when it comes to spending.

Of those who had undertaken improvements in the past year, almost half (45 per cent) spent up to 5,000, while 80 per cent forked out up to 15,000. Yet, some 84 per cent of householders in England and Wales splurged up to 20,000.

Refreshing the image of our homes is set to continue over the coming 12 months, the Bank of Scotland study shows: around 32 per cent of Scots plan to make home improvements and, of the 56 per cent who carried out improvements this year, 41 per cent have more plans.

But, whether or not you are planning to sell up soon, it is wise to consider house-hunters' wishes before getting your toolkit out.

Central heating still tops the poll of essential property features, according to 88 per cent of Scots. Double glazing comes second, with 87 per cent considering it essential, followed by a modern bathroom (74 per cent).

Energy saving and fuel efficiency has soared up the table, with 69 per cent considering this essential, compared to only 29 per cent in 1998. It ranks joint fourth with home security.

A greenhouse (87 per cent), conservatory (85 per cent), cellar conversion (84 per cent), loft conversion (83 per cent) and garden improvements (76 per cent) are considered desirable, but not essential.

However, further findings from Clydesdale Bank show that Easter DIY might put off potential buyers. Over 30 per cent of first-time buyers prefer a house that needs work, so they can add value themselves.

Steve Reid, general manager for retail banking, says: "Easter is often the time when the housing market starts to pick up and - after recent record lending figures - 2006 looks like no exception.

"It's also the time of year when many homeowners decide to carry out a few home improvements before putting their home on the market.

"However, doing some DIY this Easter may actually be a bad move; I'm sure this will be welcome news for many hoping for a quiet, long weekend - our research shows some DIY projects can actually put off prospective buyers."

Ripping out the bath in favour of a trendy wet room could be a bad move, putting off a third of buyers, the study shows. So, think carefully about the work you are planning to undertake: you could end up reducing, not adding, value to your home.

Confidence in the housing market is at a 15-month high, with almost three out of four (73 per cent) people expecting house prices to rise in the next 12 months. The number of buyers willing to offer at least 10 per cent above the offers-over price has risen too - to 55 per cent from 45 per cent in the past year.

So, now might be a better time to hold out for a bigger offer than in the recent past: "Spring is a key period for the housing market and, after a promising start to the year, buyers are growing in confidence," adds Reid. "Sellers are in a strong position to achieve the best possible price for their property."

A friendly word with the neighbours could give you an ever better chance of securing the best deal: nearly one in three potential buyers are put off by the condition of neighbours' houses or gardens, the Clydesdale says.

Before you get started on sprucing up your home, make sure you are adequately insured. Check your home contents insurance before embarking on home improvements. Consider the implications of a botched DIY job. For example, if you install a new bathroom which leaks through into your neighbour's flat below, you will be liable and have a much more costly problem.

"DIY is always a popular way to spend the Bank Holiday, but accidents can happen, whether it's spilling paint on the carpet or drilling through the water pipe," said Richard Mason, a director of insuresupermarket.com.

For as little as 22, you can insure against DIY disasters. Once you have completed the improvements, make sure you let your insurer know. Adding an alarm or British Standard-approved window locks could reduce your insurance premiums by as much as 10 per cent.

Bigger DIY improvements - for example, a new kitchen or bathroom - are also likely to increase the value of your home: make sure you are adequately insured.

Be wary, too, of expensive "point of sale" credit deals offered by many of the major retailers when scouring DIY superstores for a deal this weekend. One third of consumers admit to regularly using this form of credit - which typically levies double-digit interest rates - for major home improvements, such as double-glazing, a new kitchen or conservatory, says Alliance & Leicester (A&L).

But opting for this type of finance could mean overpaying by thousands compared to cheaper, low-rate personal loans.

"Our obsession with DIY and home improvements is obviously not waning," says Claire Alvey, personal loans manager for A&L, which offers a typical rate of 6.1 per cent APR on unsecured personal loans.

"Yet, despite the efforts we put into making our homes stylish and picking out the right colour samples, we still aren't putting the same effort into getting a good finance deal. By signing up to retailers' finance deals, consumers could find themselves painted into a corner and heavily out of pocket."

• For a copy of Clydesdale Bank's guides Successful home selling and Successful home renovating visit your local branch or log on to www.cbonline.co.uk.