As a result, these properties can provide a more affordable way for first-time buyers to get on the housing ladder, or for investors looking to flip a property to still make a profit. In comparison, houses requiring only minor structural fixes can be purchased for £13,500 (six per cent) less than the market average for the property.
Estate agents highlight there is still money to be made in flipping properties, with 62% believing buyers can capitalise on price reductions if renovations are required and make a profit even if a house requires structural work. However, there are considerations depending on the area, as one estate agent located in Bristol reported that there can be consequences with higher value properties: “Stamp duty has eroded the value of any profits.”
When planning to add value to a property, research shows homeowners can boost the resale price by £9,980 on average by redecorating every room. The best single room to renovate is the kitchen, which alone can add £9,275 to the value of the property. Renovating the bathroom on a property can add £7,532 to its value.
Jeremy Bristow, Head of Home Insurance at Direct Line, commented: “Fixer uppers are still a good option for first time buyers and there is still money to be made for those looking for a challenge by renovating a property. However, homeowners should keep the costs of major work in mind and ensure they are not taking on too much work.
Putting your own personal touch on a home can be fun and exciting but complications could lead to a hefty bill. With this in mind, renovators should ensure they have a contingency fund in place should they come across any unexpected repairs.”
While some people want a home that is ‘ready to move into’, one-in-five2 (21%) Brits think ‘fixing up’ a home is more cost effective than moving into one that has been already ‘done up.’ Only one in eight (12%) people think the stress of fixing up a home is not worth the hassle of organising a renovation. More than a quarter of homeowners (35%) believe fixing up a home allows them to add their own personal touch to a property, which they find extremely attractive.
Jeremy continued: “Householders who are planning home renovations should let their insurer know about any changes being made to their house. Any work that involves walls being knocked down, floors being taken up or electrics changed, can result in damage to the property. Having scaffolding erected and builders coming and going with spare keys also increases the security risk.
Once the building work has been completed, householders should also inform their insurer of any changes that have been made to their property, as adding rooms can not only add value to their home, but also change their home insurance requirements.”
Hints and tips:
1: Before work starts householders should inform their insurer the work is taking place, so they can review the policy and make sure the work doesn’t invalidate their cover. They will also need to be informed;
o If the builder will have keys to the property
o If the property is being left unoccupied
o If there will be scaffolding up on the property
o If the security of the property will be compromised at any time during the work e.g. replacing doors and windows
2: Check they have accidental damage cover on their home insurance
3: Ensure the builder is qualified and registered with a recognised governing body
4: Ensure they have a Standard Buildings Contract in place with their builder
5: Make sure the builder has public liability insurance, employer’s liability insurance and contractors all-risk cover
6: Ensure they have the correct permissions from their local Building Control Officer before starting work, to ensure the renovations meet building and fire regulations
7: Householder should also notify their neighbours of any renovation work, not only to let them know to expect a little more noise than usual, but also in case there are any party walls affected by the work
