Improving a residential property’s value remains top priority for property owners and landlords across the UK. Whether the property in question is a small two-bedroom bungalow or a larger property, improving property value is always important. By increasing the value, landlords can increase their rental yields and homeowners can get a larger resale value on their property and can secure larger mortgage and remortgage amounts with the property’s value increasing.
With property prices high, those looking for a step up on the property ladder often find themselves having to invest in their current property to increase its value. This is often achieved through acquiring refurbishment loans or using one’s savings to fund the works.
Once enough additional equity, achieved through improving the property’s value (via refurbishment works or otherwise) is acquired, property owners are then able to remortgage or sell for a higher amount. Popular methods of improving the value of a residential property include loft conversions and extensions, basement conversions and excavations and general refurbishment works.
Properties can sometimes see their value increase by more than 30%, meaning that a property worth £500,000 before refurbishment can, with the right work see its value increase by more than £150,000. By improving the number of rooms, amount of space available and what a property has to offer, its appeal increases, making it a more valuable proposition for potential buyers.
Loft Conversions and Extensions
Loft conversions and extensions are very well-established ways of improving the amount of space in a property as well as overall value. Although they tend to cost upward of £20,000, loft conversions can add as much as 20% to the value of an existing property. conversions can range from smaller dormer extensions to much larger mansard conversions. Furthermore, property owners often use new conversions as ‘granny flats’ to rent out, receiving rental income, further increasing the return on the initial investment.
Loft conversions and extensions though are a popular type of building job that many companies offer. Furthermore, companies providing these projects are generally able to complete the works in around 6 weeks or less with minimal fuss and mess.
However, there are a number of important considerations that should be taken into account before and after undertaking any form of loft extension or conversion on a property:
Planning Permission - Existing loft spaces that are converted rather than extended may not need Planning Permission as most loft conversions fall into the category of being Permitted Developments. This means that the Local Planning Authority (LPA) automatically grants permission for these projects. However, larger extensions and conversions such as those that entail restructuring a property’s roof (as in the case of mansard conversions) will require Planning Permission and this should be sought prior to commencing works.
Property Character - It is important to make sure that the extension or conversion fits in with the character of the property, the surrounding properties and the area in general. Properties that are seen to be ‘out of place’ are far less desirable and will not sell for as much as those that do fit in.
Party Wall Agreements - This is an agreement between two parties whose properties are connected. For example, if the property undergoing the loft extension or conversion is either a semi-detached or a detached, a Party Wall Agreement may be sought. This agreement is a proposal by the party undertaking the works to their adjoining neighbour. Advice on Party Wall Agreements should be sought from a surveyor.
Adding a Basement
Much like loft conversions and extensions, basements can significantly increase the value of a property; sometimes by as much as 30%. However, they are often quite a bit costlier than loft conversions. Such is the potential of these works that since the start of 2017, there has been an increase of more than 100% in planning applications for basements in the UK.
This type of work covers both cellar conversions; existing cellar space that is converted into a more desirable and practical space for the property and basement excavations which cover the creation of a new basement. Refurbishment finance is often used for these types of work as they are significant investments (sometimes costing more than £100,000) but do provide large returns.
Due to the cost of constructing basements, they are more often than not, not built when it comes to new builds in order to keep costs down. Moreover, there is also a lot more work required with basements than with other home improvement work.
Things to Consider
There are various considerations with basements that should be addressed, particularly when it comes to permissions and planning applications. Falling foul to this can lead to hefty fines and penalties being imposed by the LPA.
Costs - As with any refurbishments or works to a property, it is important that all of the associated costs are understood and can be accounted for. Some form of property finance may be needed to fund the works but it is important that the borrower can repay this before any works commence.
Planning Permission - As with lofts, basements that undergo conversions from their current state fall under the remit of Permitted Developments and do not require any permissions. However, projects that require a reduction in the floor level (to make the ceilings higher) and new basement excavations do require permission.
Building Regulations - It is best practice to submit a Full Planning Application from the outset, acquiring all permissions from the start, covering Building Regulations’ requirements and standards.
Structural Impact - Some properties may not be fully suitable for a basement excavation or conversion due to the potential impact of such work on the property’s structural integrity. For example, subsidence and damage to the property’s foundations can occur if the works are not carried out properly or if the property is not totally suitable for such works.