How to do up a derelict wreck without breaking the bank

Old houses can be money pits for the prospective buyer, so make sure you know how much you are prepared to do in advance. If there's wood chip on all the walls, the chances are it will all need at least a skim of plaster throughout although this is just a cosmetic, if messy, problem. If it's about redecorating and replacing the kitchen and bathroom then be honest with yourself if that's all you can manage. If you don't mind stripping it back to the brick and spending money on windows, wiring and plumbing – stuff that you won't necessarily see – and living in a rented flat while it's being done then a wreck might be the right thing for you.

Simon Corringham, director of Faron Sutaria, says: "The advantage of buying a wreck is that you can create a home to your own specifications. But do make sure you really have the time and energy to devote to it as it is all consuming."

A couple of years ago you wouldn't get near a wreck as the developers magically seemed to get to them first before estate agents ever advertised them. But times are tougher now. It's harder to make a quick buck from turning around a renovation so there are more wrecks around.

When is a crack scary?

A survey is a must – you would be amazed how many people don't bother with that, but in addition you can get free advice from roofers, timber and damp experts and electricians who will then give you estimates for the work involved, all of which can help you work out the budget, although remember they too have an agenda. An architect can help you with this and can often save you money as you go along, so what seems like a large outlay may turn out to be a money-saver in the long run. Kieran McDonnell, an architect who works mainly on domestic projects says: "Check that doors and windows open easily – if they stick that can be a sign of structural movement. Cracks around bay windows and the corners of doors will need further investigation. Springy floors can mean rotten joists which can be costly to replace.

"Damp can be hard to spot as it may have been painted over but feel the walls to see if they are cold. Mould may not be a disaster if it is high up as it can be a ventilation issue. Lower down the walls might be a problem although a damp proof course can solve that."

Easy jobs for big impact

Moving internal walls around is messy but relatively inexpensive (if it's not a supporting wall which needs a joist) and can make a difference. The most common job in recent years has been knocking two reception rooms together to make one large one. But you might also be able to pinch a bit from a bedroom to turn a small loo into a shower or put up a stud wall in a large bedroom to create an en suite.

How to figure out a budget

Someone once likened moving house to standing under a shower in an Yves St Laurent dress ripping up £50 notes. Imagine how much more you will be chucking about for a renovation. If you don't already have a builder that you like, then get quotes from up to five others. Times are hard, so you can negotiate, but make sure you don't drive them down so much that they add it all back on again during the job. I was once charged £250 extra for filing doors to fit after a new floor had been laid that was higher than the old one. Protests that it was his job to factor that obvious problem into the original quote fell on deaf ears.

Go round the house with the builder and then go back round on your own with a very detailed eye and look for things you and he may not have noticed on first inspection. Where are the manholes? Is there an extractor fan that needs moving? Are the radiators in the right place? Then ask if he has added those details in or will that be more. Does the quote include sockets, plugs and spotlights? Will the grout for the tiles be supplied and is the cost included in the quote? What about the paint? Go round and round and round again until you feel you have covered every eventuality. Better to have a high quote that shouldn't have too many nasty surprises than a low one that goes up every week for "variations".

You won't catch everything in advance, but at least that way the contingency fund is for the surprises rather than the essentials.

The hidden costs

McDonnell says: "You should be able to negotiate a fee with your architect depending on how much you want them to do. If you have no idea how you plan to develop your property then see if they will come for an initial chat and perhaps after that a hourly rate should apply if they need to come back several times to discuss ideas. You should be able to get a set of drawings done that can be submitted to the council for around £1,000 to £1,500. It will then cost around £150 to ask for planning permission and £450 to get the property signed off by building control at the end. If you have to negotiate a party wall agreement that can cost you the fee for your own surveyor and one for your neighbour too.

"Don't forget that it costs money to move boilers and remove and install meters if you are going from flats to a house or vice versa. If you have bought flats that you want to convert back then you will have two sets of council tax and utility bills until the property can be registered as a single dwelling again which will take up to eight weeks."

The contingency find

The most basic advice is that it will take twice as long and cost twice as much as you planned/feared. A rough guide is to allow 10 to 15 per cent of the overall budget as you never know what you will find. A friend of mine undergoing extensive refurbishment was recently alerted to a cupboard full of pipes leading from her boiler that had completely flummoxed her builders. Written in black marker pen in one corner was the sinister phrase: "Installed by Comedy Plumbers PLC". She is now halfway through an extensive replumbing project that was not included in the original budget. McDonnell advises keeping the decoration budget separate from the building one so that you can take from the former if necessary. "Decorating can be done later. Moving a manhole can't."

Karen Harvey, who has nearly finished converted two adjoining Cotswolds cottages into one house, had a contingency of £30,000 on top of her £150,000 development budget. It's all gone. "The main issue was discovering that the foundations weren't deep enough and having to underpin the whole house."

Do you need permission?

These days you can do quite a lot under the rules of permitted development. So you won't always need permission and can instead apply for a certificate of lawfulness. Check with your council or on planning portal for exact details.

Your architect can also advise you on this. McDonnell recalls a job where his clients had wanted to convert the loft but told him the neighbours had been refused permission as the ceiling height was too low so there was no point. "They just mentioned this in passing and I did my own survey and found that by lowering the ceiling of the first floor we were able satisfy the council's requirements for head height and obtain planning permission which we did. "Don't necessarily reply on friends and neighbours for advice. Sometimes you do need the professionals who will also be better able to negotiate with your local council."

Harvey says: "The biggest lesson for us is that we thought it would be lovely to buy in a conservation area but the council has been so much more involved that we thought and we have been banned from doing several things," she says.

"We weren't even allowed to get rid of one front door even though it is now one house so we have had to brick up one from the inside so it's there for show on the outside.

"I also wanted to change the pitch of the roof to create more room for an en suite shower and bathroom and I wasn't allowed, so now I will have to find space somewhere else for a shower room. That aspect has been very frustrating and I would advise anyone in the same position to do thorough research before they commit."

A labour of love

Louise and Peter Kelly bought Mote Cottage in Maidstone, in 2009. But after a three-year renovation project they've run out of money for the build, and it's now back on the market.

"It was described as semi-derelict. All 40 windows were boarded up and the roof was leaking, but we knew as soon as we saw it that it was for us. Unfortunately we were in a chain which was about to collapse and we were so desperate for this house that we used a large chunk of development money to buy one of the other houses in the chain to stop the sale from falling through. We have done a lot of the work ourselves – I gave up my part-time job and we have a lot of friends who pitched in, but sadly, although it now looks stunning and is almost finished, we can't afford to do the last work. I wish we could stay here but we are definitely planning to buy another wreck and do it again. My main advice is to make sure you have enough money. Jobs can often end up being bigger than you anticipate. And crucially, try and keep a positive mental attitude – at the end of the day, it's just a house."

Mote Cottage is on the market for £800,000 with Geering and Colyer (01227 477009).