Buying a home that needs a lot of improvement can be quite a romantic idea – you’re reviving a once lovely house and making it your own.
Then again, it might be the only way you can get onto the property ladder in the area you want.
Whatever your motivation, there are things to be aware of when you’re buying with a view to renovating – so we’ve put them into a list, so you don’t find out the hard way.
Our first tip is one of caution – be realistic with what you can achieve.
That’s not to say you shouldn’t be ambitious – but if you’re buying with a £20,000 budget set aside to spend on improvements, you need to know what that will get you – because getting rid of damp or having roofing works done could see that gone in the blink of an eye.
If this is your first ‘buy-to-renovate’ then start small – and if you’re not willing to start small, at least enter into the task with your eyes (and wallet) wide open…
Develop the house with the right proportions in mind
At some stage it’s likely you’re going to want to sell – or perhaps remortgage. At that point you’re going to have someone looking around your home trying to establish a value – and if you’ve got 6 bedrooms but only 1 small shower room, you’re going to severely hinder your asking price or what can be borrowed against the house.
When you’re planning your expansions or improvements, see if you can keep them in line with the other properties on the market that your renovated home will be compared to should the time ever come to sell.
Do you need planning permission?
Planning permission can be very difficult to obtain – so if you’re buying a property with a view to expanding its footprint or anything else that requires local authority permission, you need to know before you put your signature on any paperwork.
It’s not uncommon for planning to take months – and it can sometimes take years, if the plans are authorised at all. Can you live with the property without your planned improvements? Buying without planning permission is a risky move – but one that can pay off financially if you hit lucky…
What do lenders say?
Lenders are very much about what a property is worth right now – simply because it’s their only security – and plans on paper don’t equate to money in the bank should they need to take possession.
With that in mind, you need to ask if they’re willing to release the full value of the property up front? Or whether they’ll lend as and when improvements are made or the home itself comes together?
Watch the budget
Renovating a home isn’t something you can do without a financial plan – unless you want to see your costs spiral out of control.
The process is likely to be absolutely chock-full of unexpected costs – a replacement carpet might expose work needed to the flooring, a renovation of windows might lead to replacements being needed – the list could go on and on.
Ideally you should spec each job that needs to be done out fully before work begins. Professionals know what hidden problems you’re likely to come across – so accounting for the worst now means you’re only going to be pleased if there’s less worked needed when you get moving.
On the other hand, if you plan for the best and run into problems, it can lead the whole project to a standstill if you haven’t budgeted the amount you’ll need to fix the problems…
Closely related to the budget of your project is the fact that you’re probably wanting to add value to the home
Now, adding value might be easy, especially if you’re buying somewhere that’s in a state of disrepair – but adding enough value to cover the original purchase price, the work done and your time might be a bigger challenge.
If you’re planning on living in the house long term, this might not be as much of a concern for you compared to someone who’s buying with profit in mind – but for your own financial security, it makes sense to talk to an estate agent about what they anticipate the property’s value to be assuming you complete the work you’ve got in mind.
Who’ll do the work?
There’s a chance you’ll be able to do some of the work you’ve got in mind for your new house – but there are some things you’re unlikely to be able to handle alone.
Many tasks relating to renovating a home require skilled tradespeople – from builders and brick-layers to plumbers and electricians. At the very least, work that’s done in a home will often need certifying by professionals so that you meet with lender, insurance company and legal requirements.
Try to work from recommendations about tradespeople from friends or family. Don’t always plump for the lowest price – instead, look for people who have a track record of getting work done on time – and at the price they quoted.
Can you live-in while you’re working?
A really big consideration when you’re renovating a property is whether or not you’re going to be able to live in the house while work is being done.
For small scale internal works this should represent no problem – but when there’s significant structural work being done, the house might not be safe or practical to inhabit for days – or even weeks.
Have you got a back-up plan if this is the case? Can life continue with minimum disruption even if you need to base yourself somewhere else for a short period? It might not happen, but you need to be prepared in case it does…
Can you work in stages?
There’s a temptation to really ‘go for it’ when you’re renovating a home, starting by tearing up carpets, pulling down walls and making your new property a clean-slate from which to work.
While the attraction of this kind of ‘ground-up’ renovation is obvious, it might not be the most practical route to take.
Is this renovation project going to be more comfortably achieved if you work one-room at a time? Could half of the house be habitable with work is carried out on the other half? Breaking the task down into stages can make a lot of sense logistically – as well as meaning you can keep an eye on your budget – and allowing you to slow down progress if needed.