Number of homeowners carrying out home improvements rather than moving increases five-fold, study finds

How to make sure your renovation is worth it

Don't move, improve: but be sure your efforts are worth it (Getty)

It’s almost Easter. The chocolate eggs are firmly entrenched on supermarket shelves, the tourist season is gearing up, and DIY stores up and down the land are bracing themselves for the onslaught that heralds the four-day break.

This year, they’ll have their work cut out for them, because we are officially becoming a nation of homeowners that stay put and alter.

In fact, in the last four years, there has been a five-fold increase in the number of homeowners choosing to remain in their property and carry out home improvements rather than moving on.

A survey carried out by Hiscox shows that back in 2013, just 3 per cent of homeowners decided to improve their existing home instead of moving. That figure now stands at 15 per cent. Among millennials it’s more than one in four.

But this trend isn’t just fuelled by high property prices, stamp duty costs, the sluggish property market and concerns that interest rates might rise. Just under 10 per cent said that worries about Brexit uncertainty made them worried about moving.

Phil Thorn, home insurance spokesperson at Hiscox, says: “The decision to improve instead of move is a new normal for homeowners whose lifestyles are evolving. People are looking at ways to adapt their existing homes to meet their changing needs, whether that’s a growing family or the beginnings of a new home business.

“Many view home renovations as an easier or more economical alternative to moving, but our report highlights that these projects are often underestimated in both cost and scale.”

Staying and improving seems to make a lot of sense; it can save the costs of moving, it can enhance a home’s potential and it can add to the equity they hold in the property.

However, it’s vital homeowners fund it in the most affordable and realistic way – and make sure that any costly work they undertake adds genuine and lasting value.

After all, money is a key reason so many of us improve rather than move. A quarter of homeowners questioned by Hiscox said that the cost of property is a driver for remaining and improving rather than moving.

That concern is backed up by a report from Lloyds Bank, which surveyed would-be second steppers and found that the gap between the sale of their current property and the cost of their perfect home – usually a detached property – is now £135,985.

What’s more, many would-be movers say there are no suitable properties to move to. Research from the Royal Institution of Chartered Surveyors (Rics) shows that the number of properties on estate agents’ books has plunged to a record low.

So improving over moving can make sense for your lifestyle as well as your finances.

The improvements that help...

Although some work can very often add value to a property, it is also vital to consider the price cap of where you live.

For example, in Kensington, where properties routinely sell for millions, it can make real sense to excavate a basement and add rooms that way. In Durham, where the average price is less than £160,000, it almost certainly does not.

If you’re confident that upgrading your property would add value then the Homeowners’ Alliance recommends a loft conversation can be an easy way to add an extra bedroom and bathroom.

Increasing the living space with a conservatory or extension will often add real value, while new bathrooms and kitchens can add wow factor, as long as they don’t go beyond the home’s price ceiling.

“You’re unlikely to see returns on a £25,000 kitchen in a £250,000 home,” warns the association.

...and the improvements that don’t

Some updates and upgrades risk knocking thousands off the property’s value and that may not always be obvious to an enthusiastic home improver.

NAEA Propertymark, the professional body for estate agency personnel, warns that some improvements don’t just fail to add value, they actually damage it. For example, installing a swimming pool adds expense and effort to a home and uses up a lot of space. Many people can’t be bothered to deal with that.

And solar panels may save money on energy bills but they often don’t add value to the property. Some buyers consider them an eyesore, while others may worry about the cost of upgrading the technology.

Perhaps a more common issue for home improvers is making sure their admin is in order. If you have work done then it is essential you obtain any planning permission and building regulations documents and keep them safe.

Otherwise, when you come to move in the future it could put off would-be buyers or even disrupt your sale.

Katie Griffin, NAEA Propertymark president, said: “The house-moving process is undoubtedly stressful, so it’s important to know what adds value to your home and what might detract or put off potential buyers.

“Sometimes the improvements you have made might not appeal to buyers, so even though you’ve spent money on them, they might not necessarily add any value.”

How to pay for your improvements

There are a few different options for funding and it’s important to give this as much thought as the improvements themselves.

Matt Sanders, money spokesperson at comparison site GoCompare, recommends: “If you need to borrow money to fund your renovation plans, it’s essential to do your homework and weigh up the pros and cons of each option against your personal circumstances.”

It’s possible to borrow up to £25,000 via a personal loan, which would not be secured against the property or assets. However, interest rates can often be higher than on a mortgage or secured loan.

A secured loan is a popular choice for home improvements and are usually for longer periods, such as 5-25 years, and larger sums, typically over £15,000.

With both loan options, the rate and terms will depend on your personal circumstances. Sanders adds: “The amount you pay in interest will have a big impact on the overall cost of any loan – so, it’s important to shop around to make sure you’re getting a good deal.

“But beware of low advertised interest rates. Legally, these only need to be given to 51 per cent of successful applicants so, the deal you’re offered may not be as good as it first appeared. Whatever type of loan you’re interested in, use a smart search tool to make a soft search.

“A soft search will show you the deals you’re likely to be accepted for without impacting on your credit rating.”

One of the common ways to fund home improvements is by remortgaging and taking equity out of the property to pay for the work. That can be a good choice if you’re confident the project will add the same value to the home as it means your stake in the property won’t fall.

Both secured loans and remortgages leave you at risk of losing your home if you can’t keep up with the repayments, so it’s vital you make sure any work is affordable both now and in the long term.

Building and Brexit

And the improving-over-moving trend is certainly continuing. Barbour’s ABI Home Improvers Report 2017 revealed there had been a 6 per cent rise over the previous year in home improvements requiring planning permission.

Yet whether that continues remains to be seen; the report states that the prospects for the home improvement boom to continue seem good – until Brexit is factored in.

“But with Brexit comes growing concerns over the availability of skilled construction labour and a hike in imported building materials resulting from the dip in the value of the pound,” the report warns.

“How all the many factors that determine the health of the home improvement market play out in terms of upward or downward investment is almost impossible to assess, certainly without even knowing the terms of the UK’s exit deal.”

Would-be home improvers may decide they need to move fast to get their work done before any additional Brexit uncertainty hits.