According to a survey of estate agents so-called ‘fixer uppers’ could provide a more affordable way for first-time buyers to get onto the housing ladder because they generally sell for around 17% less than market average.
And even if you aren’t willing to go for the full revamp, finding a home which needs minor structural fixes can knock £13,500, or 6%, off the market price. Meanwhile, by redecorating every room, homeowners can boost the resale price by £9,980.
And if you only have money, time or energy to work on one room – make it the kitchen. This is the best single room to renovate, according to the research, and can increase the value of the property by £9,275. Improving the bathroom, meanwhile, can add an extra £7,532 to its value.
In fact, 62% of estate agents questioned by Direct Line, said there was still money to be made by ‘flipping’ properties, and capitalising on price reductions if renovations are required, to make a profit.
Buyer beware
But buyers considering this option should beware there might be regional differences and, in some areas, stamp duty has eroded the value of profits, according to Direct Line’s research.
Jeremy Bristow, head of Home Insurance at Direct Line, said: “Fixer uppers are still a good option for first-time buyers and there is still money to be made for those looking for a challenge by renovating a property.
“However, homeowners should keep the costs of major work in mind and ensure they are not taking on too much work.
“Putting your own personal touch on a home can be fun and exciting but complications could lead to a hefty bill. With this in mind, renovators should ensure they have a contingency fund in place should they come across any unexpected repairs.”
Hints and tips
- Before work starts, said Direct Line, householders should inform their insurer the work is taking place, so they can review the policy and make sure the work doesn’t invalidate their cover. They will also need to be informed:
- If the builder will have keys to the property
- If the property is being left unoccupied
- If there will be scaffolding up on the property
- If the security of the property will be compromised at any time during the work for example when replacing doors and windows
- Check they have accidental damage cover on their home insurance
- Ensure the builder is qualified and registered with a recognised governing body
- Ensure they have a Standard Buildings Contract in place with their builder
- Make sure the builder has public liability insurance, employer’s liability insurance and contractors all-risk cover
- Ensure they have the correct permissions from their local Building Control Officer before starting work, to ensure the renovations meet building and fire regulations
- Householder should also notify their neighbours of any renovation work, not only to let them know to expect a little more noise than usual, but also in case there are any party walls affected by the work
