Building Works: add value to your property portfolio20 December 2011
Finding potential to add space and value to your property
In this difficult market in particular, and as a general rule, it is important to look for potential in your property to add or increase value. Looking for an unmodernised property is an obvious starting point, and it can offer huge scope to start with a blank canvas giving you the opportunity to create your ideal living environment. It is also possible to add value and square footage to an already modernised property.
There are a number of ways to increase the square footage of your house, and this applies to modernised and unmodernised properties alike. Essentially it can be summed up in three categories: Building UP, Building OUT or Building DOWN.
Building UP is by far the cheapest and least painful. A loft conversion or an additional floor, if your property is a suitable candidate, is a great addition. You will need to investigate if you need planning permission and party wall agreements in both cases. Some loft extensions can be built under the government guideline of permitted development, which applies to dormer extensions and to property not in a conservation area. These can be seen as lesser extensions and the full mansard extension or additional floor is by far the best way to go. This will add effective and signifiant space to any property, and can offer you the easiest return on your investment.
Use a loft specialist for the most economic and best results, shop around and get a number of quotes. Google is a wonderful tool when searching for these types of builders. It is important that you can offer some time and effort to the building works to act as project manager. If not they will potentially take advantage of you and can make key decisions on your behalf. Nine times out of ten this will be the line of least resistance and the wrong choice; however obvious the answers, always assume that they will make the incorrect decision on your behalf. So, project management is key.
Building OUT: on the whole this will offer the most useful space for everyday living. The most common type would be a rear or a side extension forming an addition to your living space. This type of extension will be used every day and is well worth the investment. These will still have planning permission implications, but the results can be stunning and are worth the effort.
The cost of these works are typically 25% more per sqft than building UP, but still offer good value. There are often more complicated structural works involved, as well as foundations and footing to consider, not to mentioning additional ground works for any drainage infrastructure. A good builder can produce these extensions with minimal fuss and disruption. Do be careful not to get caught out by any additional materials not included by the builder: always budget for kitchen, bathrooms and laundry rooms separately when planning these building works.
Building DOWN is not for the faint hearted. Basement extensions are time consuming, messy and expensive. You need to work out if the costs are worth the end value as well as the effort. If you live in Chelsea and the value per sqft of your house is in excess of £2,000 then it can be a ‘no-brainer': do it if you can afford it or even borrow in the knowledge you can double your money. If you live in the suburbs and the price per sqft of your house is sub £300, you will really have to consider whether it will be worth it in terms of value-add to the property. The space added will be handy, but it will seldom command the same value as the rest of the house. It will always be a basement, and considering this, if you can add space elsewhere do that instead.
Basement projects can easily over-run on time and budget. You will need someone on your side that knows the business well. This will potentially be your project manager or architect, and you should always see previous examples of their work and get references.
Although there is a time and a place for a good basement, this type of extension will need careful planning and consideration, as it really is not something that can be done ‘on the cheap’.
If you don’t have time or are unable to project manage any of these jobs, use a project manager, as a good one can be worth their weight in gold. You’ll learn from the experience of working with them, and there can be savings in avoiding mistakes and pitfalls alone.
Making the most of what you have
Starting from scratch can be time consuming and expensive and not everyone can afford this luxury. But it is often possible to make the most of what you have already. We may not all live in unmodernised houses, but many of us have an area of our house or flat that can be extended or improved in order to add value to our prime asset. This may come in the form of a loft conversion, kitchen extension outlined above, but also by routine maintenance as set out below.
Like any asset, if your house is treated as an investment, it will need nurturing. House prices in London have enjoyed an average growth of circa 8% per annum over the last ten years. If your house is worth £1m, then your return will have been an average £80,000 per annum. It therefore makes sense that this asset would need to be maintained to sustain these returns over the long-term.
All property requires tender loving care
Firstly, a certain minimum maintenance programme is necessary to make sure that the external condition and presentation of the property does not fall into rack and ruin. You will not need a new roof every couple of years but the infrastructure of the house is important and budgets should allow for maintenance and occasional refurbishment of such things as roofs, gutters and other external elements. A painted house for example should be re-painted every five to seven years. This is not always practical, and I know that my house has had nearly 15 years without seeing so much as a bristle of the paint brush.
The time scale for these repairs is flexible, however there will come a time when they need to be done. You should not necessarily leave them for the next owner if you wish to sell your house for top dollar; and beware that if you are in a share of freehold or leasehold situation, there are often minimum maintenance requirements that your fellow freeholders and leaseholders may have legal recourse to oblige you to adhere to.
Secondly, internal maintenance is as important as external. There are areas of your house that make them attractive to new buyers: an old estate agents’ saying is that ‘what sells houses are kitchens and bathrooms’. These do not need to be brand new, but need to be in a good state of repair. Trends change quicker than you may imagine, so don’t try to be the most in-vogue, as these will often be outdated within a matter of months. You should go for good quality products, which are at the top of the middle range. You can get away with some cheap materials, but not for a whole room. You will need to mix quality and budget, if necessary, to create the right look. Most of all you should go for something tasteful and understated.
It makes sense to spend between two and four percent of your property’s value on the maintenance of your home each year; enough to put in the occasional new bathroom, kitchen or carpet. Buyers and mortgage companies alike will appreciate the efforts you make to maintain your home, offering you the best opportunity of attaining top market prices on any sale or remortgage valuation.
Hopefully by following the above guidelines it will help you to realise the best returns from such a large and personal investment.
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