Is a renovation property right for me? Your questions answered
When Rightmove decided to compile a list of the top 10 most in-demand features among buyers, it looked at more than 600,000 property listings to establish which aspects led to the highest number of enquiries. Forget a garden or being near a station (they languished at the bottom of the list), the most in-demand feature among purchasers is a renovation project – a home classed as a fixer-upper in need of work.
The portal added that the average asking price for a renovation property was £29,000 lower than the current national average asking price, perhaps explaining why homes in need of refurbishment were proving popular.
If you are tempted to take on a property that needs attention, the following answers to the most commonly-asked renovation questions might help you decide if a property project really is for you.
Q. What is a renovation property?
A. A renovation property is a dwelling that needs work to bring it up to scratch. Generally, a renovation will involve taking out old elements, such as kitchens and bathrooms, and replacing them with more modern counterparts. A renovation may also include replacing plumbing and electrical wiring, remodelling the space and fixing modest structural defects. A property for sale that is described as ‘in need of modernisation’ would make a good renovation project, and will generally be priced lower than a well-presented, issue-free equivalent.
Q. Will I get a mortgage on a renovation property?
A. Properties in the worst condition can be classed as unmortgageable and a lender can refuse to loan a buyer money. Usually the lender will require the dwelling to have a kitchen, a bathroom and running water. Problems can also arise if the property is derelict or part-derelict, has subsidence, is missing a damp proof course, is of non-standard construction, or has an issue with severe damp, rot, woodworm or a beetle invasion. If a property needs general updating and cosmetic work, obtaining a mortgage shouldn’t present an issue.
Q. How can I avoid nasty renovation surprises?
A. When you look at photographs or go on a viewing, it may become obvious what needs ripping out and replacing – carpet in the bathroom, storage heaters and single-glazed, misty windows, for example – but unless you’re a professional trade, it’s hard to determine exactly everything that needs attention from aesthetics alone. That’s why a top-level survey is wise – either a RICS Level 3 Home Survey or a RPSA Building Survey. This will give you the greatest detail about the property and any repairs needed, with the surveyor able to provide an estimate of costs – and likely timescales – for identified repairs and necessary work.
Q. How much will a renovation cost?
A. Rated People’s Home Improvement Trends report 2023 found homeowners spent an average of just over £25,000 on their renovation projects in 2022. In 2023, they are budgeting closer to £30,000 for the same work. That figure can be dwarfed though, with a loft conversion costing in the region of £60,000.
As well as the specific nature of the renovation, costs depend on the availability and expense of three things: materials, labour and VAT. You should use a surveyor’s report to book a visit from the relevant tradespeople to give you an estimate. Be aware that an estimate will have a time limit and may expire. The job may need repricing if some time has passed since you obtained the quote, and the cost may change.
Q. How can I fund the renovation work?
A. Usually, a mortgage will only cover the cost to purchase the property and not any of the work that needs completing. Therefore, you’ll need to budget separately for labour and materials. Options include using cash savings, taking out a secured loan against the property, taking out an unsecured personal loan, using an interest-free or low-interest credit card, or borrowing money from family. We recommend speaking to a financial advisor before committing to a renovation project.
Q. Will I make money from a renovation?
A. Some buyers purchase a renovation property in hope they can make improvements and sell it on for a profit – also known as flipping. This is not guaranteed. A profit very much depends on how much the property was bought for initially, the buying costs involved (stamp duty, legal fees etc), how much money was spent on the renovation, the quality of the renovation, the market at the time of a subsequent resale and the final sales price once work is complete.
If you’re keen for your next property to be a renovation project, get in touch. We can sell your current home and show you some onward purchases that are in need of a revamp.
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