What Are the Most Profitable Home Improvements?
With more homeowners choosing to stay in their current property and adapt it to their needs rather than moving, new research has highlighted which areas to focus on. Some types of home improvements are extremely cost-effective when you take into account the degree to which they increase a property’s value. However, others could be costing you more than you’ll actually get back when you come to sell your home.
The research was carried out by Zopa, a peer-to-peer lending company. They questioned homeowners who had used loans to finance their work, and asked them how much their property has increased in value. They found that, on average, home improvements would increase the value by 10%. However, this amount can vary substantially depending on the type of work you carry out.
The most cost-effective building work to carry out was adding a conservatory. This generated a return on investment of 108%, with an average cost of £5,300. Following this, carrying out improvement work in the garden and the exterior of your property, such as fitting metal staircases, could add to the value. Depending on the scale of the work, these could achieve a return on investment of 88% and 75% respectively.
Many homeowners focus on adding space to their existing property, believing that this will increase the price and make the house more marketable. Extensions and loft conversions are popular as they provide this much-needed extra room. However, the initial cost of this work means that the return on investment is not high. For example, an extension costs on average £19,750 and brings in a 71% return, and a loft can be priced as high as £25,000 but provides only a 50% return.
Why Do Homeowners Carry Out Work?
The vast majority of those who participated in the survey (88%) had no intention of selling in the near future, even though they’d completed the work. Many homeowners are not prepared to sell in the current climate, as there are risks associated with house prices and interest rates. Instead they’re choosing to change their current home to meet their needs. This is made possible due to the low interest rates on many of the loan products.
Before you commit to having any work, it’s important to consider the implications. You should look at what you want to achieve from the work and the scale of the returns you’d be happy with.