How much should you invest in improving your home?
When considering a sizeable project in the home, there are two main factors that determine most people’s budget:
- How much have you saved to put towards the cost or how much can you borrow?
- What will be the actual value increase to the property from the works?
The first point is the primary factor in most cases. And to help with the second point most clients will speak to their local estate agent to give them an idea of how much the property will be worth after works are completed.
Questions you should ask your estate agent are:
- How much would the value of my house increase if I improve the kitchen, perhaps even creating a small side or rear extension?
- If I reconfigured my first floor layout and add another bathroom/ensuite, how much would my house sell for?
- Is it true that the value of my property may increase by 10% if I create a loft conversation?
It is important to keep in mind that although adding an extra bedroom and bathroom may increase the property value by approximately 10%, it will do so regardless of how much money you spend on the fittings and sanitary ware, tiles, under-floor heating etc. This is referred to as the ‘value ceiling’ people are prepared to pay for similar properties in the area.
Let us look at an example. If you knew your project would add £50,000 to your property value, would you spend £50,000? £40,000? Or even £35,000? No. From experience, the budget figure we recommend is about 40–75% of what the agent recommends the increase would be.
When working out this percentage it’s good practice to take the agent’s estimate and reduce it (to be conservative), so that should the market drop, you still stand to make a profit.
How can we help?
This is where we can then come in and help. Taking your existing property style and value into account, we can advise you on how much you should be spending to achieve maximum results and which improvements will give you the greatest value increase. We can even ask one of our builders to meet you to discuss this in more detail, such as looking at any ‘hidden’ costs which are not immediately noticeable – new plumbing or rewiring/replacing a boiler/new window/structural alterations – all works which may be necessary in order to achieve what you’re looking for.