Should you extend your home or sell it?
You are happy in your home, but for one reason and another, it seems to be getting smaller and smaller.
Perhaps your cute toddler has grown into a strapping teenager and acquired a younger brother or sister. Perhaps you have bought so many box sets of Game of Thrones that they take up half the living room. Or you have just decided to work from home and need a bit of office space. What do you do? Sell up and move to a bigger property? Or extend your present property until it is big enough for your needs?
It is a dilemma which confronts most homeowners at some time in their lives, and their decision, to some extent, often depends on the state of the housing market.
At a time when property prices continue to rise, it can make sense to move house and progress up the housing ladder that way.
When the market is a bit sticky – as it is at the moment in some parts of the country – extending a property can be a smart option. It is certainly one which more and more homeowners seem to be contemplating. Apart from anything else, they know that they will save money on stamp duty, and the other costs, associated with moving house.
The other big bonus of extending, of course, is that it adds value to your property. A two-bedroom house that has been upgraded into a three-bedroom house is worth significantly more. How much value is added by the various extension options – from loft conversions to conservatories, from additional bedrooms to extra loos – varies from property to property.
Nationwide figures suggest that a loft conversion could increase the value of a property by 21 per cent, while adding an extra bedroom through an extension might add 11 per cent.
Savills estimates that a conservatory might add 10 per cent in value. But other building works only show marginal gains. Many buyers now expect a second bathroom as standard, for example, if you decide to install another one, you will be catching up rather than getting ahead of the game.
There is also the cost of the building works to be taken into account. It is no good adding £20,000 to the value of your property if you have spent £25,000 in the process. Most extensions pay their way and many can yield a profit, though results vary from area to area.
A major study which analysed data from the Land Registry, the Office for National Statistics and Energy Performance Certificate figures, identifies the parts of the country where extensions are most profitable.
In central Bedfordshire, a typical extension will add £57,025 to the value of an average home costing £300,130 – or £5,459 more than it cost to build. In second place is Canterbury, where the notional ‘profit’ on an extension is £5,264. At the other end of scale are Swindon in Wiltshire and Thanet in Kent, where the net added value of an extension is just £66.
In central London, where property is at such a premium, the rules of the extension game are very different. Hamptons estimates that in Kensington and Chelsea, where the average cost of a house is more than £2 million, extending will add value of £212,706 after £45,120 of construction costs, though one of the challenges can be getting planning permission granted.
One thing is certain: the option of extending rather than moving to a bigger property is one which homeowners need to take seriously, particularly at a time of static house prices.
So, find a good architect, use your imagination, do your sums – and you may be pleasantly surprised by the results. You might have bought yourself some extra time in the property you love, too.
Content provided by OnTheMarket.com is for information purposes only. Independent and professional advice should be taken before buying, selling, letting or renting property, or buying financial products.