Home improvement

The information in this guide was last updated on 26/02/2014

Renovating your home not only makes it more enjoyable to live in, it may also add thousands to the value of your property

Whether you’re adding an extension, updating the kitchen or bathroom, or even just adding a new coat of paint, investing in improving your property can add significantly to its value when you come to sell.

Choose the right improvements and the value you add may outstrip the cost – and provided it’s your main residence, you won’t pay capital gains tax on any increase in value.

Choosing the right home improvements

When you’re considering what home improvements to make, you’ll need to find the right balance between making your home somewhere you want to live, and making it attractive to future buyers.

Maintenance or renovation?

If your property is old or in poor repair, maintenance should be your priority, rather than improvements. Make sure the wiring and electrical system is sound, and that any appliances that use gas are safe and serviced.

At the most basic level, consider installing central heating or a new, efficient boiler if your home’s got an old-fashioned system. You’ll be more comfortable, and a new system is one less thing for a future buyer to use as a bargaining tool when it comes to price.

Review your home’s insulation and energy efficiency too, and check whether any financial help is available: for example, your energy supplier may contribute to the cost of loft or cavity wall insulation, and there are government grants available for some large energy-saving projects such as solar panels.

Think like a buyer

What counts as a home improvement can be a matter of taste. If your heart is set on a whirlpool bath or a landscaped garden, the amount you pay might not be reflected in a higher value, because not all future buyers will appreciate the changes.

Likewise, if you’re repainting, tiling or choosing new appliances, neutral colours like white or magnolia will appeal to a larger proportion of buyers. Generally, pale colours, a lack of clutter and space for a new buyer to impose their own tastes will go down well.

Imagine you were buying your home and looking out for work that needed doing. What would make you ask for a discount on the asking price? Examples might include:

  • repainting
  • rewiring
  • new boiler
  • new carpets needed
  • draughts or leaks.

A buyer seeing several of these items could quickly come up with a high-cost estimate for ‘work that needs doing’. As a seller it will probably cost you less to do the work before you put the property on the market.

Some popular home improvement ideas

Double glazing makes your home more energy efficient, as well as more secure. Most buyers will appreciate this, although if you have an older property, there may be value in keeping the original windows as a feature. You may also face restrictions if you live in a conservation area so check with your local council before you do any work.

kitchens and bathrooms get a lot of use, so they can quickly become shabby. They’ll also be a focal point for new buyers. Adding new appliances in the kitchen and utility areas can give them confidence that everything will run smoothly when they move in. And a shiny new bathroom suite adds a memorable ‘wow’ factor.

An extra bedroom, basement flat or even a conservatory can all increase your home’s value, but they need careful consideration. Dividing up space to create new bedrooms may make your property more appealing to families, but not if it means making other existing rooms uncomfortably small. Loft conversions are popular as they can be relatively cheap. Whatever you decide, make sure the cost of the work doesn’t outweigh the extra value you add to your home.

While it won’t add as much value as larger works, a new coat of paint in a neutral colour can give the house a fresh, clean feel. If you have a bit more budget, you could also update.

Limits to what home improvement can do for property value

Some properties will have a ‘ceiling price’ that’s determined by factors outside your control, like transport links, plot size or neighbourhood area. Home improvements won’t raise the value of the house above this level, no matter how much you do.

One of the best things to do is talk to a local estate agent first to find out what they think could add value and how much.

Paying for your renovations

Once you’ve identified improvements that will add value to your home, as well as your enjoyment of living in it, you need to work out how to pay for them. This might be through savings, by budgeting your income, or by borrowing extra money.

If you already have a mortgage, you may be able to borrow more, up to 85% of the value of your home (including your current mortgage).

Think carefully before securing other debts against your home.  Your home may be repossessed if you do not keep up repayments on your mortgage.

Keeping the costs down

Home improvements can be a big outlay, so it makes sense to save on costs where you can.

  • Shop around for quotes (websites like ratedpeople.com allow you to instantly compare quotes from different companies).
  • Ask your neighbours if they need similar work doing, and club together to get bulk rates with trades men.
  • See if you can carry out any of the work yourself. You should only do this if you’re confident and experienced at DIY, as poor workmanship could lower your home’s value rather than increasing it.