An extension or loft conversion which creates a double bedroom with its own bathroom can bump up the value of a home by nearly a quarter (23 per cent) – and is the single most effective home improvement project which most owners can carry out, says a survey.
New research by Nationwide Building Society suggests a ten per cent increase in floor space adds five per cent to the price of a typical home, but that an extra bedroom is usually a more effective use of your money than moving.
While moving up from a three-bedroom house to a four-bedroom, two-bathroom property costs an average £40,000 – not including legal fees and other moving costs – a loft conversion or other extension can be accomplished for possibly £30,000 to £35,000.
But the extra bathroom is the critical point; an extra bedroom, by itself, adds only 12 per cent to average price.
Nationwide figures show the gap in value between three- and four-bedroom homes widens as buyers head southwards: in Scotland it is £39,107, the North £35,629 and in the North West it is £32,756.
In the East Midlands, the gap is the lowest in the country at £31,710.
But in London, the price gap is nearly £91,000 – and in the South East it is £42,017.
So the more expensive the homes in your area, the stronger the case for home extension – if you have the space and the plans to do it in a way that will impress a subsequent buyer.
As the number of homeowners prepared to put their homes on sale is falling, extending an existing home could become increasingly attractive to many.
Builders, short of work, offer competitive quotes, while the 30 per cent surge in remortgages, confirmed by the Council of Mortgage Lenders, suggests many homeowners could have raised finance for building work.
In July, Nationwide said a record 19 per cent of advances given to existing borrowers were used to pay for structural improvements, such as extensions and loft conversions. More than ten per cent of its remortgages were also used to help fund similar structural work.
Nationwide chief economist Robert Gardner said: “With housing market demand still very weak, increasing numbers of homeowners may opt to improve rather than move.
“Households are happy to pay for more space, and our analysis suggests that, providing the room is usable, adding an extra bedroom can be a good way to increase the value of a home.
“While larger properties cost most to buy, smaller ones tend to have a higher price per square metre.
“This marginal cost falls in part because it is relatively cheaper to build larger properties.”
Nationwide also found many people live in homes which are already too big for them.
Some 84 per cent of owner-occupied homes have at least one spare bedroom. Some 47 per cent are actually classified as ‘under-occupied’, meaning they have two or more spare bedrooms.
Under-occupation is most widespread in south-west England at 51 per cent, while London has the lowest proportion, just 36 per cent.
Nationwide’s report also says energy efficiency is an issue set to loom larger in buyers’ minds, with Government figures suggesting more than 19 million homes (86 per cent of stock) could benefit from at least one of the cost effective improvements recommended through the energy performance certificate now required when a home is sold.
Improvements in this area include loft insulation, cavity wall insulation and better boilers for more efficient heating systems.