- Due to the changes in stamp duty rules, homeowners are thinking carefully about whether to renovate or upscale
- There has been a five-fold increase in the number of homeowners choosing to remain in their property
- Hiscox survey shows that the number of homeowners choosing to renovate has increased from 3% to 15% in five years
- Brexit has contributed to the upscaling hesitation
Choosing whether to renovate your existing home or buy a new home – essentially whether to love it or list it – is a complex decision. Stamp duty rules have changed numerous times over the past two decades and with the majority of the exponential changes involving increases for the mid to upper end of the market, homeowners are thinking carefully about whether to work with what they have, or upscale to a new property.
According to Landmass Chief Executive, Alan Waxman, “A recent survey carried out by Hiscox shows that there has been a five-fold increase in the number of homeowners choosing to remain in their property. They have chosen to carry out home improvements and renovations, as opposed to incurring the costs of moving on. Aside from the sub-£300,000 market, all property price bands have recently seen an increase in stamp duty – for a £400,000 first home stamp duty totals £5,000, compared with £153,750.00 for a £1m property.”
Adding space by renovating doesn’t just add financial value to your home; it adds value to your living experience and your well-being. An easy way of adding extra space to your home are loft conversations – especially in London where space comes at a premium. The additional space can serve as a bedroom, studio space or a small entertainment area. The costs start at £20,000 however, the average dormer loft conversion with a double bedroom and en suite costs approximately £35,000–£45,000.
Extensions can equally fulfil a number of requirements from dining rooms to guest houses – adding up to 10% to the value of your home immediately. Creating open-plan living can add up to 6% to the value of your home. Remodelling kitchens and integrating them into a single sanctuary including a living and dining area are popular choices. The construction costs of a basic single storey extension typically falls between £1,600 to £2,600 per square meter, depending on how premium the extension is. In other words, a 3 x 5 metre extension can be estimated within the price span of £24,000 up to £39,000. The upper end accounting for a two storey, more premium extension.
The survey carried out by Hiscox shows that five years ago, 3% of homeowners chose to renovate their existing home as opposed to upscaling. Current trends show a dramatic increase since then, with the number of home owners choosing to renovate now sitting at 15%. Interestingly, the trend is not just fuelled by high property prices, stamp duty costs, the property market and interest rate hikes, but Brexit uncertainty significantly contributed to the current hesitation regarding upscaling.
Loving rather than listing your home can save you costs of moving, enhance potential and increase equity held in the property, but the costs and scale need to be thoroughly understood. However, it’s essential for homeowners that the work they commission adds lasting value and they aren’t over capitalising.
After all, money is a key reason so many of us improve rather than move.