Whether you’re looking to renovate your home or are looking to renovate one with the aim of selling it on, it can be a tricky job to navigate. The cost of your project will always vary based on the age, location, condition and size of the property, but without the right expertise, some seemingly exciting opportunities can turn into nightmares. In this article, we’re going to break down the pros and cons of property renovation to help you understand when it’s the right option for you and when is it something to avoid.
Why renovate a property
There are a few different reasons why a homeowner might choose to renovate their property rather than move house entirely. Oftentimes, homeowners choose to renovate their home to add new features, change the layout and stamp their individuality on the property. Although the main purpose of the renovation may not be financial, modern reworkings of existing houses can usually have a positive effect on the property’s future resale value.
Alternatively, some property owners may have bought the home specifically with the intention of renovating and then selling for profit. Particularly with the introduction of stamp duty holidays and reduced rates, buying properties for resale has become an attractive way for many people to earn a good revenue.
But when is the right time to renovate a property? Big investments such as this never come without some risk, so how do you know when it’s worth it?
When to renovate a property
Whatever the reason you’re choosing to renovate a property, there are some key things to keep an eye out for. Some properties may be more suitable for development than others, so you should bear in mind the current condition of the property, its location, parking availability, the neighbourhood and any other restrictions. Such factors can play a big role in determining whether a property is a good option for renovation.
For instance, if a property’s location is less appealing to your target resale market, investing thousands of pounds into the house may not necessarily see you recoup your money. If the building is listed or you have to jump through major legal loopholes when it comes to completing the renovation, it is also most likely not a good option for such a project.
How much do property renovations cost?
The costs of renovating a property can vary depending on many of the factors listed above. But when it comes to costings, some properties can have major pitfalls that, if not detected, can prove to be very costly further down the road.
Often, structural damage to a property is what can send costs spiralling. Structural damage will need to be fixed before any kind of renovation begins and this process can be expensive. Again, depending on the size and location of the property in question, it may be a good idea to carry out a full structural survey. These can cost up to £1,500 but will reveal any severe underlying problems, giving you a better overall idea of what sort of budgeting you’ll need to prepare.
What are the signs of a property money pit?
When budgeting for future renovations, it is a good idea to set aside at least 10% of your budget for unexpected costs. This money will come in useful should your property show any signs of structural damage. When repaired quickly and accurately, these problems will cause less financial stress in the long run. But should structural damage go unaddressed for a long time, you may find yourself with a money pit on your hands.
Damp and subsidence are two of the most significant reasons why properties can end up being financial pitfalls. They both concern a building’s construction and can pose major problems. In some worst-case scenarios, you may even need to make alterations to the property’s underlying structure. Prices will vary, but such structural work can sometimes cost as much as £50,000, although it should be noted that not all cases of subsidence will be worst-case scenarios.
When it comes to surveying a property, it is a good idea to assess the underlying structure of the building as, once renovations have started, any problems identified might incur significant additional costs and the investment required in the project may become much larger than anticipated. If you need help with budgeting for such circumstances, it is a good idea to speak to a dedicated financial adviser.
What are the other costs of renovating a property?
Besides the structural costs of updating a property, you’ll also need to consider other costs that could potentially snowball, such as your labour costs. As ever when preparing your budgets, you’ll need to have set aside some money for contingencies in case you need to manage some unexpected challenges with the renovation. You may need to hire additional tradespeople or extend the work of your current tradespeople. Depending on the services you need, daily costs for some tradespeople can be anywhere from £150 to as much as £400.
If you live in the property that is undergoing renovation, you might also need to look for temporary accommodation, meaning that you’ll probably need to allocate another portion of your budget towards paying rent somewhere else.
You may also need to factor in some legal costs. Although at the time of writing, stamp duty land tax is operating at reduced rates, this tax should be anothstamper financial consideration. Depending on the age or location of the property, you may also need to apply for planning permission. The final cost of a planning application will depend on whereabouts in the UK the property is situated, as well as the scale of the renovation, so it is always a good idea to consult a financial adviser or a solicitor with expertise in planning and application costs.
Deciding to renovate a property can be a rewarding and often cost-effective way of improving a house. But, as with all big investments, there can be hidden costs meaning that when it comes to budgeting, it pays to allow for contingencies. Seeking expert advice from a financial adviser or a solicitor before starting your project – whether it’s remortgaging or budgeting an existing amount – will give you a realistic overview and help you keep costs under control.
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