Choosing whether to renovate your existing or buy a new home – essentially whether to love it or list it –is a complex decision. Stamp duty rules have changed numerous times over the past two decades and with the majority of the exponential changes involving increases for the mid to upper end of the market, homeowners are thinking carefully about whether to work with what they have or upscale to a new property.
According to Landmass Chief Executive, Alan Waxman, “A recent survey carried out by Hiscox shows that there has been a five-fold increase in the number of homeowners choosing to remain in their property. They rather carry out home improvements and renovations, as opposedto incurring the costs of moving on. Aside from the sub-£300,000 market, all property price bands have recently seen an increase in stamp duty – for a £400,000 first home stamp duty totals £5,000, compared to £153,750.00 for a £1m property.”
Adding space by renovating doesn't just add financial value to your house; it adds value to your home experience and your well-being. An easy way of adding extra space to your home are loft conversations – especially in London where space comes at a premium. The additional space and can serve as a bedroom, studio space or a small entertainment area. The costs start at £20,000, however, the average dormer loft conversion with a double bedroom and en suite is approximately between £35,000–£45,000.
Extensions can equally fulfil a number of requirements from dining rooms to guesthouses – adding up to 10% to the value of your home immediately. Creating open-plan living can add up to 6% to the value of your home. Remodelling kitchens and integrating them into a single sanctuary including a living and dining area are popular choices. The construction costs of a basic single storey extension typically is around £1,600 to £2,600 per square meter, depending on how premium the extension is. In other words, a 3 x 5 metre extension can be estimated at the price span from £24,000 up to £39,000. The upper end accounting for a two storey, more premium extension.
The survey carried out by Hiscox shows that five years ago 3% of homeowners chose to renovate their existing home as opposed to upscaling. Current trends show a dramatic increase since then, with the number of homeowners choosing renovating now at 15%. Interestingly, the trend is not just fuelled by high property prices, stamp duty costs, the property market and interest rate hikes, but Brexit uncertainty significantly contributed to the current hesitation regarding upscaling.
Loving rather than listing your home can save you costs of moving, enhance potential and increase equity held in the property, but the costs and scale need to be thoroughly understood. However, it’s essential for homeowners that the work they commission adds lasting value and they aren’t over-capitalising.
After all, money is a key reason so many of us improve rather than move.