A new survey from Confused.com has found that over a third of Brits are buying properties in need of renovation as it is all they can afford.
However, the experience of doing up a property may not be exactly what theyenvisaged, with many struggling to complete the planned work.
Nearly one in 10 (8%) homeowners who bought a property to renovate said they couldn’t afford to do the necessary work to it, while 10% admitted that they had to live in an unfinished property for more than a year before they started doing it up.
Although a property may require some work, it can pay off in the long run. Nearly one in five (19%) homeowners said the market value of their renovation properties now exceeded the combined costs of buying and renovating it, giving them a profit of between £25,000 to £50,000.
The imbalance between supply and demand is putting increasing pressure on house prices and has led to many first-time buyers being squeezed out of the property market.
The latest figures from Nationwide show that the average price of a property in the UK has risen to £196,829. On average homeowners paid £152,792 for a property in need of renovation.
The most common things needing renovation were the kitchen, the carpets, the bathroom and general cosmetic decoration.
Gareth Lane, head of home insurance at Confused.com, said: “As house prices seem to be continuing to rise, it would appear that more and more people are resorting to buying properties that need renovation.
“Deciding to renovate a property is a big decision – and often more expensive than first anticipated. So it’s no surprise that nearly one in 10 homeowners couldn’t afford to do the renovation work to their property.
“However, of those that could afford make home improvements it’s worrying to note that so many haven’t let their insurers know. You should always tell your home insurer about major works that is being done to your property or if it is not in a good state of repair. Your home insurer also needs to know about home renovations that add value, such as a loft conversion, for example.
“When you have a home insurance policy you must disclose any changes that are made the property, otherwise you may be at risk of invalidating your home insurance policy or undervaluing the property and not being fully insured.”
According to a new report by think-tank the Resolution Foundation, the housing ladder is rapidly disappearing for most young working households on modest incomes.
It found the over-45s now account for three-quarters of all home owners and that only one in 10 young people are likely to be on the property ladder in 2025.
Home ownership has been falling slowly since the start of the century following a period of steady increase from the 1950s onwards and currently stands at around 63% today.
The government has introduced a number of new schemes in recent years to help those looking to buy a home, including Help to Buy and Right to Buy. In the Autumn Statement last year, Chancellor George Osborne unveiled plans to build 400,000 homes and announced a 3% rise in stamp duty as part of the government’s aim to curb the buy-to-let sector and free up property for first-time buyers.
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