15th October 2007
Imagine this familiar scenario. You've bought a property and from the outside your new property looks the worse for wear. On the inside it's hard to see past the bright orange wallpaper and the swirly brown carpet, but it will be possible to transform the ageing dump into a sparkling palace worth more than you paid for it - won't it? Even in today's quieter market it is still possible, but many people confuse adding value with creating value.
many people confuse adding value with creating value
Which alterations will add the most value? How much should you spend? All those DIY programmes on television can be very inspiring, but when it actually comes to knocking down walls, how do you know which choices will be the most financially rewarding? Much of our housing stock was designed and built with the lifestyles of our Victorian and Edwardian ancestors in mind. These days there is a preference for more open-plan and less formal living, with fewer but bigger rooms. Opening hallways, removing doorways, shifting corridors or repositioning partition walls are simple changes that can provide a more contemporary environment, better use of space - and subsequent increases in value. Kirstie often recommends lying on the floor and looking up at the ceiling to try and gain a better perspective on a room size.
Redecorating or replacing kitchens- done correctly, they can certainly "add" value to your home
The key to appealing to the greatest number of future purchasers is not to do anything that anybody could really dislike, while at the same time avoiding the bland. Many people tell me that they don't want to do structural work but are very happy to redecorate or replace kitchens and bathrooms. Done correctly, they can certainly "add" value to your home with little disruption; however, if your motivation is in actually "creating" value, you'll need to consider more serious work.
It is cheaper to build space yourself than it is to buy it on the open market, and a useful starting point for assessing extension possibilities is to look at a building from the garden or road behind. Have other properties on the same street been extended or changed from their original structure? Might that create a precedent for planning permission? When assessing how a property could be improved bear in mind that, as far as resale is concerned, square footage in living spaces is worth more money than it is in bedrooms.
Each opportunity needs to be assessed on its own merits, but the "big four" extension possibilities are side returns, conservatories, lofts and basements. All have the potential to successfully create value.
Sensible purchases for first-time buyers looking to add value are top- floor one-bedroom flats, where it's possible to extend into the roof space for a second bedroom. Check there's sufficient head height first (the floor will need strengthening so you'll lose a good 6in) and make absolutely sure your solicitor verifies ownership of the loft space and that consent from the freeholder is available.
One of my golden rules for maximising resale value is not to just bolt space on, but blend it in and remember that buyers prefer to find large well-lit spaces, rather than specific numbers of rooms. With these concepts firmly in mind, you want to ensure that the "flow" of the space, room arrangement and balance of accommodation is actually being enhanced rather than just added to. If an extension makes the property top or bottom heavy, its potential value will be reduced.
In terms of planning your budget, the most important thing is that you don't over or under-spend for the type of property you are working on. Under-spending on an expensive property can leave you out of pocket, whereas overspending can make a home look peculiar and is also a waste of money.
A vital part of planning involves researching values for similar local properties and establishing the ceiling price for your property. No matter how much you spend on doing somewhere up, a specific size of property in a specific location can only be worth a specific amount.
It's tempting to overspend on refurbishments and all too often commercial judgment goes out of the window. When filming Location, Location, Location I remember looking round a house in Leeds, on the market for an optimistic £235,000, where the vendor had put in a beautiful £25,000 handmade kitchen. Certainly a selling feature, but had it really added more than 10% to the price? No way.
I've experienced it the other way around too: a £1m property with a bottom-of-the-range laminate wood floor. Another classic example was a house on the market recently in Croydon, which had been overextended for the ceiling price of its type. The vendors had spent £60,000 on a back extension and had it on the market for £100,000 more than their neighbour's similar - but un-extended - property. The problem was that people with a budget of £100,000 more didn't want to live on that street in that area. The vendors had overcapitalised and now had "the best house on the worst street", which is the way to blow money; the opposite is the ideal - and the best way to make a healthy profit.
© Phil Spencer
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