Why Extend Your Home?

There are many reasons to consider extending your home. For a growing family, it is an easy way to get valuable extra space without all the stress and hassle of moving. It is also a way to add value to a property. Potentially, you can also earn money by renting out the spare space or using it for business.

Here we are going to look at the benefits of extending your home as well as the potential pitfalls of doing so. Read the entire article and you will have the information you need to determine whether a home extension is the best option for you.

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Add value to your property

As mentioned, extending a house can be an easy way to add value to your home. Unsurprisingly, this is one of the top reasons people give when asked why they want to build an extension.

Provided you do it right, adding an extension to your home can increase its value by a huge amount. On average, the return on investment (ROI) for an extension is a whopping 71%. This was the ROI, in 2014, according to a study carried out by the peer-to-peer lending specialist Zopa.

The exception to the rule

However, you need to be careful and do your calculations before going ahead. The return on investment will be much lower in an area where house prices are low.

In addition, if you choose expensive materials or a high-end finish your extension can end up costing more than the value it adds to your property. Special ground works, installing new drainage and other jobs can also make the cost of an extension prohibitive.

How you use the additional space can also have an impact on how much value you add to your property. For example, currently, bedrooms add the most value to a home. However, usually, that rule does not apply if you are planning to add a fifth bedroom. That is unless you happen to live in an area where demand for this type of property is high. Most people want three or four bedrooms, so are not prepared to pay a lot more for a house with five bedrooms. Therefore, the cost of building the fifth bedroom can often work out to be more than the value it adds to the property.

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Working out your return on investment

Fortunately, it is not hard to work out whether your extension will actually add value to your house, or not. We can help you with this, or you can work it out roughly yourself.

First get a valuation on your current property. Tell the estate agent what you plan to do and ask him or her how much they would expect your property to sell for once the extension is complete. Alternatively, look online and compare the values of the two different types of properties.

The difference in price minus the cost of your extension gives you an idea of your return on investment.

OK, that has covered adding value to your property. Now we will look at other reasons to extend your home.

Give your family the space they need

Another good reason to extend is to provide your family with the extra space they need. There are a few building regulations that affect how you will be able to use the additional space you add, but most of the time you use it in any way you want.

People add granny annexes, bedrooms, walk-in wardrobes, en suites, guest quarters, offices, playrooms and gyms to their home. In areas where parking is at a premium adding a garage with a bedroom above and an office in the new attic space is a popular option.

Avoid the expense of moving

Moving home is expensive. Most people know this, but are still surprised when they sit down and tot up the actual cost of moving. It is only after they have moved that they realise they could have afforded that extension after all.

To help you to avoid making this classic mistake below is a roundup of the costs and fees that are associated with a typical UK move. Of course, the costs vary, but the information below should enable you to work out roughly how much moving home would cost you.

Stamp duty

When you buy a new home in the England, Wales or Northern Ireland you pay stamp duty. In Scotland, you pay a similar fee called the Land and Buildings Transaction Tax.

How much you pay depends on the value of the property you are buying. At the time of writing this article, there is 0% to pay on the first £125,000 and 5% on properties valued at up to £925,000. Above that level, you pay an even higher percentage.

In addition, in April 2016, this cost is set to increase.

Surveyor’s fee

You need to get the property you are buying surveyed. This is a good idea even if you are not buying it with a mortgage. Set aside between £250 and £600 for this.

Legal fees

You need to budget for two sets of legal fees, one for selling and one for buying. Local search fees cost between £250-£300, and the rest of the work costs between £500 and £1,500.

Bank charges

Remember to factor in the transaction fee charged by the banks. This typically costs £40-£50.

Cost of staging your home

Most of us let things slip a bit in our home. We are all busy so little maintenance jobs that should be done often get delayed, and eventually forgotten. For example, painting the garage door or replacing the grout in the bathroom.

Unfortunately, before you put your property on the market those jobs will probably have to be done. If you don’t do them your home will take far longer to sell and you will not secure the best price for it.

Estate agent fees

You’ll need to set aside 1% to 3% of our sale price to pay your estate agent.

Moving costs

The cost of moving your stuff works at between £300 and £600 although this will vary depending on how much you want them to do. If you get the removal firm to pack your stuff into boxes for you that will cost much more.

Even hiring a van and doing it yourself will set you back around £150 for van rental, insurance and petrol. In some areas, it can cost you more than that.

Mortgage costs

Mortgage fees often catch people out. Typically, you will have to pay a booking fee of between £99 and £250. The arrangement fee can be as much as £2,000 along with a mortgage valuation fee of around £150, which is also payable.

Redecorating costs

Once you have moved there is always work that needs doing in your new property. Most people end up redecorating as well as buying new furniture and soft furnishings, so you need to add those costs to your budget.

This can work out more expensive than you realise. Most people also find issues with their new home that need fixing. For example, getting the boiler serviced or getting gutters cleaned. Not to mention the fact that your survey may have picked up things that need doing, for example, fixing the roof, or dealing with damp.

On average people, spend £5,570 bringing their new property up to spec and making it comfortable. This is a significant cost that many people underestimate or completely leave out of their moving budget.

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Additional running costs

Lastly, you need to add in the additional costs you can incur when running your new home. For example, you may have to pay more for your insurance policies.

If you move to the wrong postcode, this may mean having to pay more for your car insurance as well as your contents and building policies. You may also have to pay more council tax.

If your new home is not as well-insulated as your old one you may also find some of your utility bills increasing as well. If your commute, school runs and journeys to relatives or clubs are going to be longer you need to factor in that additional cost too.

Avoid the stress of moving

Moving is stressful, for many people it is one of the most testing times in their lives. Even if everything goes smoothly, you have to put in a lot of time and effort into moving home. For most of us doing this while holding down jobs and taking care of the children and relatives is really hard to juggle.

When things go wrong, our stress levels shoot through the roof. Unfortunately, this happens more often than you think. One survey carried out by Right Move Now, showed that a third of house purchases were affected by the breakdown of the buying chain.

The longer the chain is the more likely it is to happen. It only takes one buyer in the chain to change their mind or not get their mortgage approved for things to go wrong for everyone.

This is stressful, and can work out expensive, for example, having to pay for an additional survey to be carried out on another property.

No need to move from the area you love

Moving is very disruptive to your life and that of your children. You have to get the kids into new schools. They have to make new friends, and so do you. Moving can also mean seeing less of your existing friend who you eventually lose touch with.

It always takes time to settle into a new area, even if you really like it and things go well. You have to get to know the area and find shops that you like, somewhere to walk the dog, a good park and a nice cafe. It always takes a while before you feel at home in a new area.

Building an extension to get the additional space you need completely avoids all of these issues. You and your children get to stay in the area you love and avoid the stress of moving and having to make new friends.

Make money from leasing out the extra space

There is also the chance to make extra money from the additional space you create by extending your home. It opens up all sorts of opportunities for you. Here is an overview of a few of them.

Rent out a room in your home

Renting out a room is becoming easier. There is growing demand for this kind of accommodation from students, transient workers, commuters and even holidaymakers. Depending on where you live you can generate a fairly consistent additional income from renting out the new en suite bedroom you have had built.

Rent out extra garage space

In some areas, building an extra garage can also be a viable way to add value to your property and generate income.

Rent out your granny annex

If you have built a granny annex that is not yet needed you could also consider renting that space out. If you know that you want to do this, your extension will potentially have to be built a little differently.

Space like this that you plan to rent out as a permanent home has to meet certain standards. There are size, ventilation, light and insulation standards that the space you provide has to comply with. Complying with these regulations can mean that your extension costs a little more to build.

In addition, there are overheads involved in this kind of rental. For example, having the heating serviced and fire safety inspections, and having to pay additional council tax.

If you plan to lease out your extension it makes sense to check out these regulations, in advance. That way you can factor those costs into your budget.

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Run a home business in the extra space

Extending your home also gives you a chance to start a second business or expand the one you are already running. Adding a workshop, a small kitchen, an office, treatment room, salon or some other type of workspace to your home can give you the space to work from home.

This can be a great way of cutting out the time and cost involved in commuting. Not only can you add value to your property you can make money from that space and improve the quality of your life at the same time.

Again, if this is your plan, from the start, it really is worth taking the time to do some research to work out if it is viable from a financial and practical point of view. To carry out certain activities, you may need to have some special features built into your extension.

For example, if you are a small food producer a proper ventilation and extraction system has to be built in to remove heat and smells. You may also want to consider noise insulation, so you do not disturb your neighbours.

Remember, that keeping neighbours happy will be crucial to your being able to run your business as you want to. Often it is worth spending a few extra hundred pounds at the construction stage to install this type of thing because retrofitting is very expensive.

A word of caution

As you can see, extending a home can typically be a great option. The list of benefits from doing so is a long one.

However, as we mentioned at the start of this article there are situations when extending your property does not make sense. It is, therefore, important to sit down and go through all of the pros and cons of building an extension. You always need to cost the project out and work out whether you can afford to do it and make sure that it makes financial sense for you.

Let us help you to build a fantastic extension

At D2 Architects, we have helped hundreds of clients to extend their homes and do so successfully. We are here to help you to do the same. Our experienced team will offer you advice that is tailored to you and we will help you to determine whether building an extension is the best option for you.

Posted by Matt Hughes
January 15, 2016
Features

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