Homes that need major structural work can be bought for £40,000 less than the market average, according to new research by Direct Line Home Insurance.
The findings among estate agents revealed that ‘fixer uppers’ – in other words houses that require major renovation – can be acquired for approximately 17% less than the market average.
Consequently, these properties can be appealing to first-time buyers seeking an affordable way of getting on the property ladder. Equally, investors looking to ‘flip’ a property and make a quick profit can also benefit from investing in fixer uppers.
Houses requiring only minor structural fixes, on the other hand, can be purchased for £13,500 (6%) less than the market average.
The research also revealed that estate agents believe there is still money to be made in flipping properties, with 62% saying that buyers can capitalise on price reductions if renovations are required and still make a profit even if a property needs structural work. This does, however, depend on the area. One Bristol estate agent, for example, reported that there can be consequences with higher value properties: “Stamp duty has eroded the value of any profits,” they said.
For those planning to add value to a property, research has shown that homeowners can boost their resale price by £9,980 on average through redecorating every room in the home. The single best room to renovate is the kitchen, which on its own can add £9,275 to a property’s value. Renovating the bathroom of a property isn’t far behind, adding on average £7,532 to the value of a home. Renovating original features, adding modern dressing and refurbishing a property’s exterior are other profitable changes homeowners can make.
“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,” Jeremy Bristow, head of home insurance at Direct Line, commented.
“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.”
While some people prefer a home that is ‘ready to move into’, 21% of Brits think ‘fixing up’ a home is more cost-effective than moving into one that has been already ‘done up.’ Just 12% of those surveyed think the stress of fixing up a home is not worth the hassle of organising a renovation, while over a quarter of homeowners (35%) believe fixing up a home allows them to add their own personal touch to a property, something they find a very appealing trait.
“Householders who are planning home renovations should let their insurer know about any changes being made to their house,” Bristow added. “Any work that involves walls being knocked down, floors being taken up or electrics changed, can result in damage to the property. Having scaffolding erected and builders coming and going with spare keys also increases the security risk.”
“Once the building work has been completed, householders should also inform their insurer of any changes that have been made to their property, as adding rooms can not only add value to their home, but also change their home insurance requirements,” he concluded.