WWYD: renovation outpricing house value

Grimbal

Hubby & I are agonising over whether we overspend on renovating our home, and would appreciate some impartial views

House is 10 years old, in a very poor state & needs a full refurbishment regardless. Even this would probably take us over the ceiling price for the road. We would also like to do a small extension, that would add on about another 20k ish to costs.

On a 350k purchase, for a full refurb & extension (ie everything we'd like done), we're looking at around 80-85k.

My heart says to get it done. It's the house we can stay in for a good while, and it will make it exactly as we'd like it to be. My head is telling me not to be so daft as, by spending that much on it, we're so far through the price ceiling that we're practically in orbit !

So, WWYD: head or heart ?


ETA: there are no comparables. The nearby houses are like ours only ten years old, so we'd be the first in the area to refurb & extend.

Southend1

Is it a home or a financial investment?

My answer to your question would be different depending on the answer to the above.

Grimbal

Southend1 wrote: »

Is it a home or a financial investment?

My answer to your question would be different depending on the answer to the above.

that's the problem exactly, I don't know! If I knew which it was, I wouldn't be in such a tizz We've been very fortunate to always have made money out of our homes, which is why my head is telling me to play it conservatively. However, this is the house we can easily afford to stay in for the next few decades, which is making me think go the "heart" route

gazfocus

Grimbal wrote: »

that's the problem exactly, I don't know! If I knew which it was, I wouldn't be in such a tizz We've been very fortunate to always have made money out of our homes, which is why my head is telling me to play it conservatively. However, this is the house we can easily afford to stay in for the next few decades, which is making me think go the "heart" route

If you're thinking along the lines of staying in the house for 'decades', I would definitely get the refurb and extension done and be happy in your newly extended home

Kynthia

If you're staying for a decade or more then it's a home and make it such.

moneyistooshorttomention

I wouldn't do it personally...not unless its a Forever Home and it does sound like you are possibly likely to move on at some point. If you were intending to stay, then that's a different matter.

I spent what would come to over £10,000 on my starter house in today's money. In fact I think it came to over £10,000 at that time even and was very conscious of every penny spent because I knew from the outset I wouldn't be keeping the house.

In the event I had to keep the house for many more years than I had decided to:(, but it had reached a stage where it needed quite a bit of money spent on it again and fast and I dug my heels in and refused and it was one of the reasons I sold the house on (as I simply wasn't prepared to spend literally another penny on the house). It wasn't that far off the ceiling price for that road anyway, so I would have been wasting my money.

I envisage staying in the house I have recently moved to and therefore the Sky is the Limit and its only lack of money that is holding me back from spending whatever I want to on the house. I've spent over £20,000 to date on it and will certainly be spending over £50,000 on it before I am through. I don't have anything like enough money to hand to spend what I have decided to on it...but, whenever I do have that money, then I will spend it. Though I don't actually know if the house will then go over the ceiling price for this road with that. It may or may not. I suspect that, at the least, it wouldn't go far over the road's ceiling price.

alexanderalexander

There seem to be two separate issues -- the refurb and the extension.

Re the refurb, this isn't making any sense. Given that your house is only 10 years old I am not sure how it can possibly be currently "in a very poor state" -- barring some disaster such as fire or flood, surely the basics (roof/plumbing/electrics/plastering/windows etc.) are all still fine in which case a purely cosmetic refurb shouldn't come in at anything like as much as £60k to £65k.

If, however, £350k was a fair price for the house in the "very poor state" in which you bought it and it does need £60k to £65k of work done on it to bring it back up to acceptable standards, I don't understand what's making you think that the amount you spend on renovations won't be reflected in increased value of the property (as any hypothetical buyer of the property would need to do the same refurb which you're doing).

Regarding the extension, hard to advise whether that's a good use of £20k from an equity-building point of view without knowing the exact circumstances e.g. current size of house, how much of the garden the extension will use up, etc. etc.

Grimbal

alexanderalexander wrote: »

There seem to be two separate issues -- the refurb and the extension.

Re the refurb, this isn't making any sense. Given that your house is only 10 years old I am not sure how it can possibly be currently "in a very poor state" -- barring some disaster such as fire or flood, surely the basics (roof/plumbing/electrics/plastering/windows etc.) are all still fine in which case a purely cosmetic refurb shouldn't come in at anything like as much as £60k to £65k.

If, however, £350k was a fair price for the house in the "very poor state" in which you bought it and it does need £60k to £65k of work done on it to bring it back up to acceptable standards, I don't understand what's making you think that the amount you spend on renovations won't be reflected in increased value of the property (as any hypothetical buyer of the property would need to do the same refurb which you're doing).

Regarding the extension, hard to advise whether that's a good use of £20k from an equity-building point of view without knowing the exact circumstances e.g. current size of house, how much of the garden the extension will use up, etc. etc.

An identical house, but in a "well kept" condition sold a year & a bit ago for £350k. We bought this current house on an arguably better location in the estate for the same price. We consider that we overspent by around 15k- 20k. Our house was previously let to tenants who did not take any care of the house or its contents. Thus, everything needs replacing. I am not exaggerating: we had a cleaning firm in the day before completion who told us that in 5 years of cleaning, she had never seen anywhere as bad. So:kitchen, creating a completely new family bathroom, ensuite bathroom, downstairs loo, flooring throughout, new rads to all rooms, new skirting to all rooms, some plastering, redecoration throughout, some wiring, garage door, fencing & garden etc.

We have a choice now to do a simple replacement of internal fittings, or a full refurb involving internal walls etc. The higher figure reflects the full refurb & extension - to get it to a house that would work for us. Our builder, whom we have used before & have a great relationship with, has estimated that to do the full refurb & extension will be "mid forties", with us purchasing the contents on top of that



So, 350k house. No comparables on pushing the ceiling price as we'd be the first to do it.

40k gets us a house where we simply replace like for like. 80k gets us internal renovation & alteration, and extension

alexanderalexander

Grimbal wrote: »

An identical house, but in a "well kept" condition sold a year & a bit ago for £350k. We bought this current house on an arguably better location in the estate for the same price. We consider that we overspent by around 15k- 20k. Our house was previously let to tenants who did not take any care of the house or its contents. Thus, everything needs replacing. I am not exaggerating: we had a cleaning firm in the day before completion who told us that in 5 years of cleaning, she had never seen anywhere as bad. So:kitchen, creating a completely new family bathroom, ensuite bathroom, downstairs loo, flooring throughout, new rads to all rooms, new skirting to all rooms, some plastering, redecoration throughout, some wiring, garage door, fencing & garden etc.

We have a choice now to do a simple replacement of internal fittings, or a full refurb involving internal walls etc. The higher figure reflects the full refurb & extension - to get it to a house that would work for us. Our builder, whom we have used before & have a great relationship with, has estimated that to do the full refurb & extension will be "mid forties", with us purchasing the contents on top of that



So, 350k house. No comparables on pushing the ceiling price as we'd be the first to do it.

40k gets us a house where we simply replace like for like. 80k gets us internal renovation & alteration, and extension

Okay. This makes a bit more sense, although what on earth did the previous tenants do to the radiators to make them all need replacing? And the skirting boards? I have a feeling that you might be over-speccing things a bit even with the £40k figure -- I've seen amazing things done to what looked like total wrecks of houses by a decent tradesman armed with nothing more than a bit of filler, sandpaper, the odd spare tile and some paint.

Anyway, it seems it's a choice between a necessary basic refurb which anyone'd do in these circumstances and which should add at least its cost on to the current market value, and the "perfect for you" refurb which may not add very much (if anything) more on to the market value than the basic refurb would. In this case, I'd recommend you simply view the additional expenditure on the "perfect" refurb like you would any other discretionary spending e.g. luxury holiday, fancy car, etc. -- if you can afford it and think the pleasure it'll give you is proportionate to the financial cost, then go for it; if not, then don't.

cattie

If you feel it's going to be a lovely & comfortable home for a good few years, then my feeling would be to go ahead & make it the home you want it to be.

Too many people nowadays look upon a property they buy as an investment they might want to cash in on in a couple of years or so or walk away from rather lovely properties because they feel they can't 'add value'.

It's as though somewhere along the line properties ceased to be homes & just somewhere where you lived & did work to to improve & try to cash in.

So many people came unstuck who bought from around 2005-2007/08 by finding the properties that they thought were a great investment as a doer upper, were actually worth far less than they could have dreamed of despite spending a fortune on 'improving' & felt very distraught that their property wasn't going to bring the price they were fully expecting.

When you buy a property to be a long term family home, possible future value should really be of little concern if it is the house that you feel you will be happy in.

Grimbal

alexanderalexander wrote: »

Okay. This makes a bit more sense, although what on earth did the previous tenants do to the radiators to make them all need replacing? And the skirting boards? I have a feeling that you might be over-speccing things a bit even with the £40k figure -- I've seen amazing things done to what looked like total wrecks of houses by a decent tradesman armed with nothing more than a bit of filler, sandpaper, the odd spare tile and some paint.

Anyway, it seems it's a choice between a necessary basic refurb which anyone'd do in these circumstances and which should add at least its cost on to the current market value, and the "perfect for you" refurb which may not add very much (if anything) more on to the market value than the basic refurb would. In this case, I'd recommend you simply view the additional expenditure on the "perfect" refurb like you would any other discretionary spending e.g. luxury holiday, fancy car, etc. -- if you can afford it and think the pleasure it'll give you is proportionate to the financial cost, then go for it; if not, then don't.

We are slightly over-speccing, yes, but not top of the range by any means. The kitchens will be trade, installed by the builder. The bathrooms are high street, but supply only, again to be installed by our builder.

Your last sentence struck a chord with me. I'm not a "frivolous" spender - I don't holiday really, and bought a good car almost 6 years ago which is still going very strong. I think part of the reason I'm struggling on the house refurb is that it's not needed but rather wanted. I'm very much of a homebody, so I suppose it would make sense to use the money making our home the focus of our finances