Home Improvements – What Is The Best Investment?

Home Improvements – What Is The Best Investment?

by Caleb James on 16 Sep, 2011

In the turbulent financial times we have experienced over the last few years, homebuyers are being tempted to stay put in their present homes and cary out home improvements. The idea is to improve their surroundings but increase their property value for the future.

If you’re anything like me, you probably do a little calculation in your head before embarking on a DIY extravaganza that goes a little like this – “ok, so laminate flooring, new skirting, wallpaper, paint, new shelves, new light fittings = £700. Will this put more than £700 on the value of my house?” If yes, do it and if no, think up another idea.

In May 2011, HSBC carried out a survey and this highlighted some of the misconceptions that householders have regarding home improvements, compared to what estate agents thought.

Here is HSBC’s top ten:

Average Property Value increase by nature of Improvement 2011

Loft conversion: £20,876

Room extension: £16,069

Conservatory: £8,233

New Kitchen: £5,617

New windows: £5,265

New bathroom: £3,351

Re-decorate: £3,229

Re-surface drive: £2,876

Re-carpet house £2,153

The survey clearly reveals that if you are looking to increase value in your property, adding a room is the most cost effective way and the top three in the survey are just that.

If you are about to sell your property, 55% of property valuers pointed towards simple tidying, de –cluttering and basic painting, wallpapering and garden tidying.

Of course, you have to be clear on why you are making improvements in the first place. If it is purely to sell up and move, then the best money maker is to add a room, if you can wait to have this done. If you intend to stay for the foreseeable future, then there is an argument to say that £10,000 on a new kitchen works for you even if it isn’t technically the most financially savvy improvement.

Other points to consider.

Location – Location will have a bearing on whether a building project is viable. If the maximum selling price of a house in an area is say £170,000, then spending £25,000 on a new kitchen won’t increase the future sale price so don’t get too carried away. However, it will make your house preferable to competitors up the road.

Garages – Building a garage or extending an existing one is increasingly desirable, especially with parking becoming more of an issue each year.

Proportion – If you have a three bedroom house, converting one bedroom to a second bathroom is a bad idea. However, if you are fortunate enough to have a five bedroom house, it may be more desirable as a four bedroom and two bathroom house. A local agent can advise you best, as they know the demand for properties in your area and what people are looking for.

Finally, unless you are extremely competent, it’s best to get professionals in, especially with kitchens and bathrooms.

About the Author

Caleb James

Caleb James is a financial advisor and journalist, who contributes regularly to financial blogs and industry publications.