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Adding Value to a House

Make the most of your property

For most of us, our home is the single biggest component of our wealth. How can you get the best price for your property when the time comes to sell?

When it comes to our personal finances, our homes are highly significant. Households around the world have far more of their wealth tied up in property than in shares or any other form of investment. Housing accounts for as much as 30 - 40 per cent of total household wealth in Western Europe and almost 25 per cent in America.

This being so, spending a few moments contemplating how we might enhance the value of our home is actually far more relevant to most of us than any discussion about the state of the stockmarket. The financial sections of the weekend papers might be full of informed thinking about whether to buy Consolidated and sell Conglomerated, but we would potentially get more financial benefit out some analysis of the merits of converting a bedroom into a bathroom.

So what can really add value to your home when you come to sell it? Interestingly, advice about the property market is not unlike that proffered in other financial areas, i.e. somewhat contradictory in places. But taking into account the range of views expressed by building societies, estate agents and surveyors, there are some areas of broad consensus. Not surprisingly, location is a dominant factor but the type of property, overall size, number of bedrooms, garage and central heating also have an impact.

Improvements that generally add value or will at least recoup their cost

Installing an energy-efficient condensing boiler pays for itself. Central heating is viewed positively by buyers and will generally recoup your outlay.
Adding a garage is very beneficial, especially where parking in the area is difficult. You should get your money back.
Creating more living space generally works well: new conservatories and loft conversions should pay for themselves. An extra bathroom should pay for itself as long as it isn't at the cost of a bedroom. So should adding French doors and a patio to create an outside room.

Improvements that won't add value

Turning a bedroom into a bathroom: the value added by the bathroom is more than offset by the loss stemming from a reduced number of bedrooms. And beware of chopping a bedroom in half to make two oddly-shaped rooms.
Knocking through walls to create an open-plan look - losing rooms generally reduces you price you'll get.
Digging up a garden to build a swimming pool - you'll do well to recoup 20 per cent of your outlay.
Unnecessary enhancements. For most properties, there's no merit in creating a third bathroom.
Improvements that are disproportionate to the overall value of the house won't add money. Adding a £30,000 kitchen to a million-pound property might make real financial sense; adding it to a £100,000 semi is a waste of money - you won't get it back.
Smokers could be reducing the value of their homes by £16,000 according to a poll by ICM

A final warning: don't improve a house to a point where it needs to attract more than 20 per cent above the going rate for similar houses in the area. You're taking a real risk.


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