New research has revealed the key property renovations that are wise investments when trying to add value to your buy-to-let or home in a cooling property market, while also pointing out the work property investors might want to think twice about before embarking on.
Recent economic uncertainties and a settling market post-COVID have caused property prices in the UK to cool. With owners seeking ways to add value to their investment and make them stand out in a cooling market, the new research identifies the most valuable renovations to undertake by analysing 15 common renovation projects and calculating how much each could be expected to add to a property’s value once expenses have been considered.
The study showed that a property extension would add the most value, increasing the market price of the average home by 15 per cent or an additional £44,149 based on the current UK average house price of £294,329. However, the average cost of adding an extension was estimated to be £40,000, leaving just £4,149 of added value.
While the extension added the most market value, the research found that to maximise return on investment (ROI) in current market conditions, property owners should consider a garage conversion, which costs an estimated £13,750 to construct but adds 10 per cent to the home’s value, that’s equivalent to £29,433 in the current market. After accounting for costs, a garage conversion, therefore, offers an actual value add of £15,683.
The research also found that a garden room/office is a wise investment, as they cost around £9,500 to build but add 7 per cent (£22,075) in value, resulting in a potential ROI of £12,575.
This was followed by loft conversions, which produce a £6,649 uplift in value, then a utility room (+£6,616), redecoration throughout (+£5,898) and solar panels (+£5,636).
In contrast, the researchers advised property owners interested in maximising profits to think twice before undertaking landscaping or replacing their roof or boiler. The research found that landscaping cost an average of £3,750 to do but only added 1.4 per cent (£4,121) to the value, resulting in an ROI of just £371. Meanwhile, a roof replacement resulted in an added value of £1,124, while a new boiler resulted in a net boost of £1,592. However, while these low-profit renovation projects may not offer the highest real-world value, owners should still address these if the work is essential, as issues such as a damaged roof or outdated boiler can be significant turn-offs for prospective tenants or buyers when viewing the property.
James Forrester, Managing Director of Barrows and Forrester, which conducted the study, advises property owners to thoroughly research before embarking on any major projects by comparing value increases of similar properties in the area that have carried out renovations and seeking quotes from contractors and service providers to work out if the investment is worthwhile, saying: “The worst thing you can do is embark on a major project on a whim without thorough research or planning and chances are, it will leave you out of pocket.”
