18th February 2016
With house prices continuing to climb more than a third of would-be homeowners are being forced to buy properties in drastic need of renovation.
According to research from Confused.com some 35% bought a property that needed work had to as it was the only way they could afford to buy a home.
But the price comparison site’s findings show that despite many homeowners finding a solution to getting a foot onto the property ladder by buying a property in need of renovation, the experience of doing it up may not be exactly what many people envisaged.
In fact, for some the dream failed to be a reality, with 8% admitting they could not afford to do the necessary work to it.
And for others, their renovation home has turned into their own version of a building site, with 10% saying they had to live “on site”, residing in an unfinished property for more than a year before they started doing any work on it.
So, buying a doer-upper is not to be seen an easy project either in terms of finance or time, however perseverance may pay off, as if done correctly, a great renovation can give the property value a boost.
Some 19% homeowners said the market value of their renovation properties now exceed the combined costs of buying and renovating it, giving them a profit of between £25,000 – £50,000.
The sale prices of properties that need renovation are normally much lower than the prevailing market price in that particular locality.
On average, homeowners who have bought a renovation property have saved themselves £44,037 by tapping into this new property buying trend. Home renovators are paying on average £152,792 for a property that needed some work done to it, compared to the average UK house price which is valued at £196, 829.
Altogether, around 38% of renovation homeowners admitted to buying a property that needed some TLC, as it saved them thousands of pounds compared to buying a home that needed no work. In addition, 40% admitted they would buy a property that needed renovation if it saved them money.
However on average, homeowners have spent £33,089 on doing up their properties. But deciding to renovate a property is a big decision – and often more expensive than first anticipated, with almost half, at 45%, of homeowners saying they spent more than intended. In fact, homeowners who renovated their property typically went £2,886 over budget. In addition, more than a quarter, at 26%, ended up going over budget by more than £5,000.
More than one in 10, at 12%, have spent more than £50,000 renovating their home, with the most common things needing renovation including:
It may then come as no surprise that 22% of these home renovators would never buy a renovation project again. Worryingly however a significant 41% who have carried out renovation work on their property have not let their insurer know.
Gareth Lane, head of home insurance at Confused.com said: “Deciding to renovate a property is a big decision – and often more expensive than first anticipated. However, of those that could afford make home improvements it’s worrying to note that so many haven’t let their insurers know. You should always tell your home insurer about major works that is being done to your property or if it is not in a good state of repair. Your home insurer also needs to know about home renovations that add value, such as a loft conversion, for example”.
“When you have a home insurance policy you must disclose any changes that are made the property, otherwise you may be at risk of invalidating your home insurance policy or undervaluing the property and not being fully insured.”