Theoretical House Price Crash Question

Cardinal-Red

This is a non-alarmist question, but something that came up last night.

My mum's property is a nice sized house, with a huge cellar currently used for storage. Set to inherit the house soon when she shuffles off to Spain, I want to use this cellar as maybe a games room, kids area etc. Problem is, the ceiling is only 5 feet 10 inches high (not sure why!!!)

So we've had a quote for some underpinning work to reduce the floor, open out the cellar and electrify it etc etc - bit more than we expected but still reasonable.

However, if (as some people predict) house prices are ready to level off/decline slighty/crash and plummet the economy into chaos, what will be the effect on the costs of such works.

For example, you might be tempted now to spend £30,000 on an extension and conservatory because it will (in theory) add £40,000 to the value of your house. But if house prices were declining or stabilising, the same work could add less value to your home, maybe to the point where added value is less than cost. (I understand this is still a viable option for people and that they don't just do home improvements for future profits...)

But is there any evidence that house price increases has driven up the cost of building work; and so subsequentally coming off the steep upward slope would exert a downward pressure on them, with builders sat around twiddling their thumbs?

Anybody care to indulge me on this theory?

chant1l

Firstly I don't believe we are going to see a crash, however during the last crash/ recession builders became far more cometetive and amenable (ie turning up to quote, being polite etc) and prices could be very cheap and work was invariably done quicker...

Cardinal-Red

For the record I don't see a crash happening either - I expect steady if unspectacular growth.

I must stress it was purely theoretical and focussing more on the effects, rather than likelihood of a dip in prices.

Your reply is interesting though - was basically what my mum (confessed Daily Mail reader) was saying....

Guy_Montag

Well if you are planning on staying in the place, it won't make any difference to the imaginary number that the agent would put on your place anyway.

I would think that extending a cellar (providing it's dry) & turning it into a proper room would add far more value than the cost regardless of ups & downs in the property market.

Alan_M_2

There's a fine line with cellars, as they are effectively just that...a cellar.

Personally I think there will be a correction in prices, but for the purposes of this conversation that's actually irrelevant.

Cellars are more often than not classed as a non habitable room and can therefore not be included as such when selling the property, i.e your house is 4 bedrooms, you could spend a lot of money converting the cellar but it could be never called a 5th bedroom, (unless certain criteria are met, natural light, alternative fire escape routes etc). So the cellar would never be able to be classed as anything other than a cellar/storage.

A games room will add no value to the house whatsoever, but will make it more appealing when you come to sell.

How come there are all these basement flats in London then?

Well, that's because they are just that, they are purpose designed basements, usually with two entrance/exits and natural light in stair wells or atrium's, there are therefore habitable and that effects the value accordingly.

Cardinal-Red

Guy_Montag wrote:

Well if you are planning on staying in the place, it won't make any difference to the imaginary number that the agent would put on your place anyway.

I would think that extending a cellar (providing it's dry) & turning it into a proper room would add far more value than the cost regardless of ups & downs in the property market.

Guy you're very right in what you say, but maybe my original post wasn't clear. I was going more along the lines of, would it be cheaper in the future, if house prices moved downwards.

As there's no selling going on and yes we do intend to live there, the movement in house prices is, as you say, irrelevant.... but the capital cost of the work isn't.

Doozergirl

I think that if the market turned downward that people would be stuck in their houses and would have to make use of the space they had. Therefore I don't think the price of building work would fall.

I'm really not keen on cellar conversions, especially with children. Unless it has a proper escape route to outdoors and fully complied to building regs I would not even let my children in to that room. I don't think cellar conversions add as much money as other types of extension either.

Cardinal-Red

Alan_M wrote:

Cellars are more often than not classed as a non habitable room and can therefore not be included as such when selling the property, i.e your house is 4 bedrooms, you could spend a lot of money converting the cellar but it could be never called a 5th bedroom, (unless certain criteria are met, natural light, alternative fire escape routes etc). So the cellar would never be able to be classed as anything other than a cellar/storage.

A games room will add no value to the house whatsoever, but will make it more appealing when you come to sell.

Interesting that you should say that, as I had a similar discussion with my builder. I believe the room would be 'habitable' because of the layout of the house. When I say 'cellar' I say so in terms of the room exists under the floor of the ground floor, as viewed from the front of the house. However, there is a door into the cellar at ground level in the back garden - i.e. the garden is several feet lower than the house. This means the plan has included a set of french doors into the cellar and two windows down the side. Lots of natural light. Do you know what conditions have to be met for it to be considered 'habitable' then - any regulations anywhere?

I'm not sure though that I'm convinced that a room the entire size of the ground floor, fully powered and with doors opening out into the back garden would truly 'add no value' even if my particular usage as a games room would not appeal to everybody....

Doozergirl

Well, it doesn't sound much like a cellar at all!

When your builders start on digging out the floors (they will need to do this to damp proof it effectively) and do the underpinning, they will have to call out Building Control.

You can either call them beforehand for advice on what you need to class it as habitable, or you can ask them when they come to assess the underpinning. It will certainly involve doors and windows, which you have.

I'd be making something that size into the new living room or kitchen diner, not just a games room!

Cardinal-Red

Doozergirl wrote:

Well, it doesn't sound much like a cellar at all!

When your builders start on digging out the floors (they will need to do this to damp proof it effectively) and do the underpinning, they will have to call out Building Control.

You can either call them beforehand for advice on what you need to class it as habitable, or you can ask them when they come to assess the underpinning. It will certainly involve doors and windows, which you have.

I'd be making something that size into the new living room or kitchen diner, not just a games room!

Doozergirl you sound just like my good lady wife! I think games room is perhaps a narrow description - consider it a lounge area, with a snooker table.

There's definitely scope to do lots of things down there though and I'm in little doubt that when the time comes, my dreams of a quiet retreat with my snooker table, guitar/amp, games console and great big TV will be shattered and replace by something far more useful...

Sob...

Alan_M_2

From what you're describing it sounds more like a basement, with it's own entrance and natural light I'm reasonably confident it would be a habitable room, although you would need a building inspector to confirm this.

As far as value to the house, I still don't see it as an investment, unless of course by converting this room, it liberates an extra room to become a bedroom elsewhere in the house, extra bedrooms are the thing that add value.