Extend and improve

Do you want to move because you need more space? If that is the case maybe you can simply extend the property you already have. Kathleen Hennessy explains how.

Homeowners, like goldfish, tend to expand to fit any space around them. Traditionally, when homeowners have desired more space they have traded up to a bigger home, cashing in on the equity in their existing property.

But this moves comes far from cheap. Selling your existing property through an estate agent will incur fees of 1.5 per cent to 3 per cent of the selling price, even more if you sell using more than one agent. Stamp duty is now 1 per cent on property purchases up to £250,000 and 3 per cent up to £500,000. With the average UK property costing just under £195,000, this would mean paying £1,950 in stamp duty and up to £5,850 in estate agent’s fees.


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Add to this the price of a HIP, conveyancing costs, removals charges and mortgage arrangement fees, and you’re looking at very little change from £10,000 - and that’s before you’ve added so much as a lick of paint to your new home, or factored in the time it takes to actually find a property that suits your needs.

Options

Alternatively, you might consider adding an extension or converting your loft to increase the size of your existing property – and, potentially, its value. Research from Alliance & Leicester in April 2007 suggests that the addition of a dormer-style loft conversion adds, on average, a whopping £100,000 to a property’s value – and at an average cost of just £23,000.

“Taking out a personal loan to fund all or part of a loft conversion can be a far cheaper option than moving to a larger house to gain an extra bedroom,” points out Richard Al-Dabbagh, senior personal loans manager at Alliance & Leicester. “Carrying out home improvements instead of moving can have amazing results, potentially increasing the value of your existing property.”

The other advantage of staying put and extending is potentially less upheaval in your family’s life: access to transport, good schools and place of work, plus proximity to friends and family probably influenced the purchase of your existing property and shouldn’t be over-discounted when deciding whether to move or improve.

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“Having chosen where to live and settled into a neighbourhood, it’s understandable that the majority of homeowners looking for more space would prefer to extend and improve, rather than starting the hunt for a new and potentially more expensive property,” says Allison Crawford, director of marketing at Standard Life Bank. “Your home is probably the biggest investment you will ever make, so it follows that you will want to spend money and time getting it exactly as you want.”

Choose carefully

But before you take a sledgehammer to your back wall, be warned: certain home improvements don’t recoup their costs and may even reduce your home’s value.

According to estate agents, the best home improvements for boosting property values are extra living space, bedrooms, studies or garages. Badly finished work - uneven brickwork, poorly fitted doors and windows, or bad plumbing/wiring - is likely to negatively affect your property’s value.

As Andrew Thompson, general manager of the Building Cost Information Service, says: “With any work on your home, it’s crucial to make sure it will be beneficial and add value. A surveyor can advise you about building regulations, planning permission and whether the proposed improvement will actually add value.”

Getting approval for any work you plan to carry out is crucial, says London-based builder Stephen Palmer. “You don’t need planning permission for all home improvements - you don’t generally need it for loft conversions, for example - though you still need building regulations approval for any construction work you carry out,” he explains.

Some exceptions

“Although each project is considered individually, as a good rule of thumb, if your extension is less than 50 cubic meters (or less than 10 per cent of the volume of the original house) and no higher than any part of the existing property, you most likely won’t need planning permission. There are some exceptions, including properties in conservation areas, areas of outstanding natural beauty, national parks or the Broads, and terraced houses. You might also have problems if any part of the existing house has already been extended.”

If the work you plan does need planning permission, you need to contact the planning department of your local authority. Fees for planning applications vary according to the type of work being proposed but residential applications cost £135 in England and £159 in Wales. Your local authority will then approve or reject your application.

Making progress

Once building work is underway, and even if you didn’t require planning permission, you will still need building regulations approval. These regulations govern building standards for the design and construction of buildings to ensure the health and safety of those living in or near them - so you can’t build walls that might crumble in the rain, or put up a roof that might collapse under its own weight, for example.

The work will need to be assessed at four to five key stages by your local authority building control officer. Generally, these stages are: excavation of foundations, insulation, drainage, foundations and roof construction. A one-off fee, calculated as a percentage of the building costs, is charged for building regulations approval, and there may also be a smaller sign-off fee once work is completed.

“Assuming you don’t need planning permission, you can start work at 24 hours’ notice, pay your fee and get the work approved as you go on, but it’s worthwhile waiting and getting approval for submitted drawings,” suggests Palmer. “That way, if there’s something you have neglected to account for - the most awful of which is having to go deeper than anticipated with your foundations - it can be sorted by building control before you start, rather than further along in the build. This can save you money.”

Building regulations approval is not an area where a devil-may-care attitude can work: if a building control officer declines to approve your work, you can be forced to tear it down.

source:http://www.whatmortgage.co.uk/mortgages/192210/50/Homebuying_in_depth/Extend_and_improve.htm