A bigger house without moving

Daily Express, Wednesday 13th August 2008

Holly Thomas finds out how home improvements can add space and value to property

With the housing market struggling at present, many would-be sellers are thinking twice about moving and opting to improve instead.

Loft extensions, garage conversions and conservatories are all far more cost-effective ways of gaining more space compared with moving house for those who bought in the past couple of years and are seeing their property value falling.

According to research from insurer LV=, almost 1.5 million households will have an extension built, or plans drawn up, during the next 12 months rather than trying to trade up.

Lloyds TSB reported an increase in personal loans for home improvement in the first six months of 2008. The bank claims people are having to make more of an effort to add value to their homes in a market where buyers reign. A Lloyds spokesman says: "In a more buoyant property market, people taking on a development or home improvement could get away with some slapdash work, because their mistakes were covered by rising property prices."

Research shows a loft conversion boosts value by 12.5 percent, or £22,953 based on an average home worth £183.626.

According to GE Money Home Lending, creating an extra room in an extension increases value by about 11 percent, or £20,000, while adding a conservatory pushes it up by seven percent, or just over £12,000.

These three improvements combined could add £54,922 to the value of a typical three-bedroom semi. Smaller projects can also have a big impact, with a new kitchen adding almost five percent to the asking price - £8,447 - with central heating, new windows or a bathroom adding around three percent each.

When it comes to other, less costly, and dramatic improvements - such as installing a new bathroom suite or laying a patio, there are still good returns but they are lower.

Then research found that, while we may strive for an eco-friendly environment, estate agents still do not see energy-saving improvements such as installing solar panels as generating hot profits, adding just £1,500 value of a home.

Gerry Bell at GE Money Home Lending says "The current housing market means that more people are looking to improve their home. However, before embarking on any improvements, it pays to know which ones will add the most value to your property.

"Region, type of property and location are all factors which will determine which improvement is best for a particular property, with the creation of extra living space continuing to be the best-value improvement."

This type of project may be daunting for those who have no idea where to start. Depending on the type and size of the extension, you may need to apply for planning permission. For details on planning rules, visit www.planningportal.gov.uk. There is also the cost to think about, the design and how much it will add to your home's value. There is little point in home improvements if they add nothing to the value.

A new service to help homeowners with this initial planning can be found at www.betternest.co.uk. The firm can compile a report detailing how much space you can add to your home, how much it will cost and, crucially what value it will add to a property.

The report, which costs £495, includes panning searches, 3D visualisations of the development, a detail project cost and post-work property value based on the current market conditions. You will need to help by providing a floor plan and photos of the exterior of your house. Betternest will do the rest.

Simon Smith, chief executive at Betternest says:" While the credit crunch is making big mortgages tougher to secure, the falling property market is causing buying chains to collapse. It's a double whammy that makes staying put and improving your home an even more attractive option than ever.

A report will also reveal whether the property can be extended without planning permission, know as Permitted Development Rights.

This is where you do not need to apply to your local planning authority for alterations to buildings that do not affect their external appearance, or for small external works.

The attraction of staying put includes avoiding stamp duty, legal fees and moving costs but home improvements are not cheap. Even a basic loft conversion will cost about £23,000.

However, given that the housing market may take years to recover from the effects of the credit crunch, it may be time to dip into savings - or start saving.

Borrowing money is one option. It was common to get an advance from your mortgage lender and add the money to your home loan but with house prices falling this is less than desirable because if your home is worth less, the new loan may exceed the lender's loan-to-value ratio.

A secured loan is risky because, if you default on repayments, your home could be repossessed.

An unsecured loan may be a safer route - as long as you can afford it. Make sure you do your homework and get the best rate possible.

Using the internet and Best Buy tables (see page 38) you can get a shortlist of lenders offering the cheapest rates.