How to add value as the housing market dips
Whether you’re a homeowner or about to get your first foot on the ladder, you might wonder what’s about to happen to house prices.
A crash has been predicted for some time now, and while 2022 saw prices increase by 15.5% over the year to July, that kind of inflation is unlikely to continue.
But there’s absolutely no point in worrying about the things we can’t control.
Historically, house prices have doubled in every ten-year period (despite the recessions), so if you can ride it out, you’ll be absolutely fine in the long term, and your investment should be safe.
In the meantime, let’s look at a few ways to add value, even when faced with an economic downturn.
Your guide to the most worthwhile renovations in a housing slump
Don’t blow the budget
If you bought a few years ago when your area was still ‘up and coming’ and have been lucky enough to see your home’s value skyrocket, try not to get carried away.
It’s probably at its peak right now, and by throwing loads of cash at it, you might end up disappointed at your next valuation, especially if you’re hoping to sell.
Instead, I’d play it fairly safe in 2023 by focusing on the essentials and a few cosmetic touches that can create an amazing impact on a limited budget.
IMAGE: Making structural changes is a great way of adding vlaue to a house.
Prioritise structural issues
This is the one I’d put at the top of your list.
It might seem obvious, but if you’re hoping to sell (either now or in the future), a surveyor will pick up on any issues immediately.
Any prospective buyer will likely reduce their offer or ask you to foot the bill for the work anyway, so it’s work preparing in advance.
The key elements to make sure are in good nick are your roof, windows and doors. These are some of the renovations new homeowners don’t really fancy wrestling with (unless they’re reinstating period features like timber sash windows, which are a big investment and perhaps not the best use of your money).
Old single-glazed or draughty windows and doors won’t just devalue your property, they’ll be draining your bills too. You should consider replacing them with FENSA-fitted double glazing whether you’re moving out or not (and remember to keep hold of the paperwork as this is a guarantee of the work).
Research shows that new windows can add as much as 10% to the value of your home. You can also get some pretty decent 0% interest offers through the big brands if you don’t have the cash available upfront.
Re. your roof: even a few loose tiles or clogged guttering could be a red flag for further issues like damp or leaks so prioritise simple fixes like that which may cost a couple of hundred pounds. If you need to replace the whole thing, you’re probably looking at around £5k on average for a fully tiled roof.
Now, clearly, we all have something we’d prefer to spend £5k on (holiday, anyone?). But, there’s evidence to say that you could see up to a 63% return on that investment if you sell, which is better than any bank I know!
Upgrading your heating system is a great way to add value to your home. Photo by Julian Hochgesang on Unsplash
Install or upgrade your heating system
An average boiler these days lasts around 10-15 years. If yours is younger than that and functioning well, you shouldn’t have an issue.
As it nears its golden years, however, you might find buyers using it as a way to negotiate their price.
According to GoCompare’s Property Investment Calculator, a new boiler can add around £9,800 to your home’s value. Considering they cost between £1,300 and £3,000 to buy and install, that’s a pretty decent return.
Definitely worth considering if you’re looking to make as much money from your property as possible.
If a boiler is just the beginning and you’re still living without central heating, this is something that requires some thought.
Installing a full central heating system will cost more to install than just a boiler (and would ideally happen before any refurbishments). But a central heating system is a pretty standard requirement for houses these days and will add considerable value to your home.
The alternative (especially if your home is fully electric) is to remove any old night storage heaters and replace them with efficient electric radiators, which can be fairly economical and are much better for the environment than their gas/oil counterparts. Win-win.
Making small changes to a room can make all the difference, such as the addition of colour and nature with pot plants
Make a small fix for a big impression
I could take your hand and lead you down the house extension rabbit hole, and together explore the value to be gained by building new rooms. But, instead, I’ll skirt around the warren and explore a few simpler options.
It’s set to be a difficult year or two financially, and as we reconsider some of our bigger plans (which I’ll get to later), there’s still a lot we can do to add value on a smaller budget.
Improve your curb appeal
Whether it’s a lush windowbox, freshly painted door or neat and tidy pathway, first impressions count.
So here’s an idea: find your next free weekend and start Friday night with a bang at B&Q.
Just £100 is probably all you need for paint, plants, pots and supplies, and you’re all set for a weekend of DIY fun! Make a little list of all the little jobs to get through, and by Sunday night, you’ll have earned that takeaway knowing your home is as beautiful as can be.
If you’ve got a bit more to spend and the space to play with, adding off-street parking and an electric car charging point can be a huge selling point for any prospective buyers.
I even read that an EV charging point can increase a home’s value by 13% for a spend of just £800!
Simple additions can can turn a unwelcoming, dark garden in to an eden
Match the back to the front
Tidying up your back garden might take a little more time, but just the act of weeding and adding a sprinkling of pot plants can give your garden a new lease of life. A small deck or paved area shouldn’t cost a lot and will help you to make the most of life outdoors.
Dress it with simple furniture that you could upcycle cheaply, and you’ll have a little heavenly escape available during any future pandemics (heaven forbid!)
I think the lockdowns of 2020/21 really solidified gardens as one of the most important assets to any home. While you don’t need to spend a lot, you should show yours to its full potential, whether that’s a simple, considered courtyard or a perfectly manicured lawn.
Believe it or not, a basic garden shed is also considered by most estate agents to be the best investment you can make to your exterior. So clear another weekend and prepare to get your DIY on.
Decluttering clean surfaces which gives light a chance to bounce, reflect and brighten a room
Ditch the clutter to breathe in new life
The oldest trick in the book is also the cheapest.
It’s the process of therapeutically cleansing your space of the things you no longer need.
Not only does decluttering create the illusion of a much bigger space, but if you’re looking to sell, it shows that your home is well cared for too.
It’s worth checking out the book, The Life Changing Magic of Tidying, by Marie Kondo for a full decluttering method. Marie’s book will help declutter both house and soul, sparking joy in your home and heart. Plus, ditching the clutter will add as much as 5% to your sale price.
One thing that often motivates me to have a big spring clean like this is to earmark one key home purchase and sell off enough stuff to fund it. Set a budget of £200, and then see if you can raise the cash by selling your clutter. Ebay and Facebook are your friends here.
Painting your house can add up to 5% to it’s value. That’s an extra £15,000 to a £300,000 home
Splash on a lick of paint
After a big declutter, you’ll start to notice your space in a different way. The scuffs of seven well-lived years, sticky handprints and marks you became blind to will start to show. Even more so to prospective buyers.
So for the price of a few cans of paint and another few weekends of work, here’s a great way to add value on a budget.
Neutral tones will make your space feel bigger, brighter and more appealing to Jo Public so, unless you plan to stay for a while, this is probably the place to resist your love of bright pink and go for something simple.
If done right, painting and decorating can also add another 5% to your home’s value, so that’s a lot of bang for your B&Q buck.
Knocking through walls can help create a more open, brighter space.
Now for the big jobs
Knock down some walls
There’s no ignoring the fact that open-plan living is the modern way to go.
Most period homes separated the kitchen from the rest of the living spaces, which was fine when kitchens were just there to be functional. But nowadays we throw dinner parties and help kids do their homework at the dining table while making tea and juggling life.
Having the space to spread out, socialise and connect is most important than ever and by knocking through to another room, you could create the illusion of a bigger, lighter living space.
It also helps to give your home the wow factor, which, when paired with a timeless kitchen and seamless decor throughout is always going to boost your home’s value.
In fact, according to Go Compare’s Property Investment Calculator, it could add as much as £4,000 to your home’s value for a spend of around £1.5k.
Loft conversions often add considerable value to a house. Photo by Dmitry Ant on Unsplash
Add an extra bedroom
Based on the latest figures, the only type of extension that will return a decent profit is a loft conversion.
That said, if you already have a four-bedroom house, or anything more than that, it won’t be worth it from a financial point of view. That’s because four-bed houses are the most in-demand, and anything more than that just won’t add value at the same rate.
Go from a one to two-bed, two to three-bed, or three to four-bed, however, and you could see as much as 8.1% in return (or around a £5,000 profit on the average house price of £245,218).
Looking at your current floor plan and moving some walls around to squeeze in an extra bedroom or home office could be another way to add value. But consider the effect it’ll have on the rest of the spaces beforehand. And also the cost of the upheaval, making good, and redecorating afterwards.
Extensions often cost more than the value they add to a house. Photo by Brett Jordan on Unsplash
Extending won’t necessarily pay you back
While beautiful extensions will definitely add value, they can cost a lot more to build than they return. Especially now the cost of materials has increased so much.
If you’re planning to stay in the same home, the ‘don’t move, improve’ model is definitely worth exploring as you’ll save in the long run (ie. no stamp duty/moving fees to pay) but if you’re hoping to turn something around quickly and sell in on in the current climate, you may be in for a shock.
Planning is key if you want to increase the value of your home.
Your short and long-term plans are key
I think we’re all feeling a bit of financial uncertainty at the moment, but what can really help is an action plan:
Have you already locked in a new mortgage rate and are planning to ride out the storm?
Do you need to sell up and find something more affordable?
Are you on the fence about making those big-ticket investments?
A little bit of thought and research will go a long way.
My key piece of advice is to really crunch the numbers. Get your quotes together and think carefully about what you want to do.
Is this the home you want to splurge on for your dream kitchen?
Could you spend another year saving for that loft conversion instead of taking out a bigger loan?
How much do you really need an extra bedroom anyway?
Whatever you decide is right for you will be right for you but try not to rush the process.
Trends change, and so will your priorities, so follow your instincts and take your foot off the pedal. Your dream home will be with you before you know it.
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