Renovation Projects Help Buyers Move up the Property Ladder
Many home buyers who opt for a renovation project do so because it's a way of affording the size of property that they need in the area that they want to be in. New research has found that there's usually a financial reason why a buyer goes for a house that needs work as opposed to one that is already finished.
The research, conducted by online price-comparison service Confused.com, shows that 35% of buyers who took on a renovation property only did so to enable them to afford the move. However, not all buyers understand the true cost of buying a property that requires work, and some can't afford to carry out all the work or it takes longer than they'd originally anticipated. Those that do manage to complete the work to a good standard can expect to make a healthy profit from the renovation.
Taking On Too Much
8% of those buyers questioned couldn't afford to finish all the work once they'd bought the property, with the extent of the work required varying from replacing a stainless steel staircase to extending the house. Even those that do manage to get on with the work find that it can take longer than expected. The research highlighted that 10% of people have to put up with living in the property without doing any work for at least a year before they have the necessary finances in place.
The average amount spent on a renovation project was £33,089, which covered work such as installing a new stainless steel staircase, replacing the kitchen and changing the bathroom. It can cost considerably more to renovate a property than homeowners budget for, and 12% of those who took part in the research spent over £50,000. Almost half of the buyers (45%) went over their budget, and around a quarter (26%) spent over £5,000 more than they'd anticipated.
Making a Profit
Buying a renovation property, however, can pay off in the long run if you manage to finish all the work, with many buyers making a significant profit. These properties are often on the market for considerably less than comparable properties, simply because of the level of work they require. The average amount that buyers saved buying a renovation property was £44,037, which enables them to make a profit if they carry out the work within an achievable budget. 19% of the buyers made between £25,000 and £50,000 in profit once the property was successfully finished.
Renovation projects are often an appealing option for buyers with a limited budget, as they give them a way of affording a larger property. However, it's important to understand exactly what all the implications of buying such a property are and, if necessary, you should be prepared to live in the current conditions whilst you carry out the work. When a renovation project is completed successfully, it enables you to have the property you require finished in the style you want and to make a profit on the work.