Is Homes Under the Hammer one of your guilty viewing pleasures? If so, do you think you can do a better job than the people featured in the programme?
The UK property market doesn’t offer the rich pickings of previous decades but prices are still strong and if you can pick up a bargain there are considerable gains to be had, particularly in London.
Should you buy a property in need of renovation? We look at the arguments for and against.
When renovating is a great idea:
1. You are very particular about you want
Imagine having a blank canvas with which to create your dream property. That kitchen you’ve created countless Pinterest boards for. The master bedroom suite that’s your sanctuary from the outside world.
Unless they’ve got lots of spare cash, the price of most properties means most people can’t afford to create their dream home and will have to compromise their taste with that of the people who owned the property before.
But if you pick up a renovation project on the cheap you can decide exactly how it’s designed with the help of a local architect – from the layout of the rooms to the materials used and the quality of the finish. Many properties that have been renovated by developers are often done as cheaply as possible. They may look nice but the quality of the finish is poor. This is your chance to set the standard higher.
If you want to add eco credentials and cut down your energy bills then this is the perfect time to do it, from installing innovative sources of heating to extra insulation and ways of generating green energy.
2. The potential to add extra value
Let’s be honest, this is the premise that Homes Under the Hammer is built upon. And there’s a good reason for it. Most people don’t want to do much work when they buy a property, especially if they have a young family. They want a modern kitchen and bathroom. They want a converted loft space.
This is where you can add value to an old property. By putting in the hard work yourself you can add considerable value with these three elements. By spending £10,000 on a kitchen, you can add three times that to the value of the property. The same goes for a loft conversion; by spending £30-40k you can add up to £100k onto the value.
3. You have trustworthy tradesmen lined up
Back to Homes Under the Hammer again. There’s a reason a lot of the people at the property auctions are builders or surveyors. It means they can control the work done on the properties they pick up. They can either do the work themselves or have close contacts that they trust to do it. They also understand property. They know if a patch of damp is easily solved or a sign of a far larger problem.
Finding someone you trust to renovate a property on time and to budget is the hardest part of the whole process and can determine if the project is a success or failure.
Unless you have a team of trustworthy tradesmen lined up to do the job, it’s probably too large a risk to take.
When renovating is not a good idea:
1. You’re not great with budgeting
Where most projects go wrong is when the heart rules the head. As the project progresses and countless decisions are made about everything from flooring to taps and light fittings, it’s easy for the budget to spiral out of control. It’s a tough line to walk but you shouldn’t spend when it’s not necessary and should always be looking to save money. For example will replicas do the same job as the real thing? Can you buy certain things second hand or from salvage yards?
Always keep the finances front of mind, even if you’re planning for your dream property. Keep a regular tab on what similar properties in the area sell for and ensure you still have profit built into the project, even if it means making difficult decisions about not having certain things.
If you work within a sensible budget and use the advice of local estate agents, you are more likely to see a return on your spend.
2. You don’t have much money to spend on renovation
If you’ve got a very tight renovation budget, you may run into trouble if you don’t have contingency funds built in. Once building work starts, you may find yourself being asked to cough up cash for boring but important (and expensive!) things you hadn’t budgeted for – e.g. damp proofing or replastering walls. If you have to bring a stop to building work while you find extra funds, it can be very stressful, especially if you’re paying a mortgage on the property or are paying rent while living elsewhere during the build.
Unexpected costs can derail a whole renovation project so ensure you have enough funds in place to cover these – or an alternative source of funding such as loans from family and friends.
3. You have tight timescales
If you can’t be flexible on your timescales, you should consider whether renovating is the right thing to do. It can be a very long process from start to finish. You may need to factor in planning permission as well as finding the right tradesmen who are available when you need them to be. Unforeseen work will invariably crop up and need to be factored in. Projects can often go several months if not a year or more beyond the original timescale.
Advice if you decide to renovate a property:
Make sure the property is worth spending money on – sometimes properties are so run down that there is no possibility of making a profit from doing them up. Work closely with a surveyor on to determine if this might be the case.
Set yourself a budget and don’t go over it – when you’re calculating the budget ensure you’re realistic; not too frugal and with contingency built in. Many people end up spending twice as much as they expected because they didn’t budget properly for all the items included in the project.
Get advice from those that have done it before – they may be able to tell you things that you hadn’t even thought of.
You can also use Rightmove or Zoopla if you know the prices in the area you want to buy in – simply set the price filters lower than the standard prices and see what comes up. You should also talk to local estate agents who know what’s happening in the local property market.
If you decide to go for it, GOOD LUCK!