Homeowners who extend upwards are reaping the biggest rewards, with new data from Nationwide showing that loft conversions incorporating a bedroom and bathroom can add as much as 24% to a property’s value.
The building society’s latest analysis of its House Price Index data reveals that while kitchen and bathroom refurbishments remain the most popular projects, larger structural improvements – particularly those that add liveable space – deliver the greatest financial return.
A 10% increase in floor space typically raises the price of a home by around 5%, but adding an additional double bedroom can boost the value of a two-bedroom house by 13%.
Nationwide found that 71% of homeowners who had renovated in the past five years carried out kitchen or bathroom updates, while 42% added a bathroom or ensuite. One in four added an extra toilet, and a similar proportion (24%) opted for a loft conversion.
ENERGY EFFICIENCY
Green improvements are also gaining traction, with a third of renovators making eco-upgrades such as insulation or solar panels.
Of those, 56% installed photovoltaic panels – now found on nearly 1.5 million homes in England, representing 6% of the housing stock.
Younger homeowners were most likely to invest in energy efficiency, with 69% of 25- to 34-year-olds making green improvements, compared with just 18% of over-55s.
The average renovation spend was £52,000, rising to nearly £97,000 among younger households.
The average renovation spend was £52,000, rising to nearly £97,000 among younger households, who were more likely to embark on larger-scale projects.
The most common motivation was to improve the look and feel of a home (54%), followed by boosting value (35%) and adding space (26%). Only 7% of homeowners said they renovated in preparation for sale.
Nationwide adds that energy-efficient improvements are becoming increasingly important, both for cost savings and sustainability.
Over half of UK homes are now rated EPC band C or higher, up from just 23% in 2013.
Despite the rising costs and disruption of renovation work, homeowner satisfaction remains high. Only 4% of those surveyed said they regretted making improvements, with most citing overspending or disappointment with the final result as the main reasons.
INCREASING VALUE
Andrew Harvey, Nationwide’s Senior Economist, says: “We’ve used our house price data to look at the factors that affect the values of homes as well as the potential to add value.
“While we can’t identify the value associated with kitchen and bathroom renovations, we are able to explore the impact of more substantial projects, particularly those which increase the size of the property.
“Location remains key to house values, but other factors, such as the number of bedrooms, are also important to homebuyers. Home improvements that increase the size of the property, such as an extension or loft conversion, remain a compelling way to add value.”
And he adds: “Homeowners that add a loft conversion or extension, incorporating a large double bedroom and bathroom, can add as much as 24% to the value of a three-bedroom, one-bathroom house.
“Our analysis suggests that, providing the room is useable, this can be a good way to increase the value of a property.”
DEVELOPMENT RIGHTS
Mary-Lou Press, NAEA Propertymark President, says: “While aspects such as new kitchens and bathrooms have long been known to enhance property prices, cleaver home improvements such as loft conversions give houses vast new space and typically help add substantial value down the line.
“There are a multitude of regulations to consider when specifically looking at loft conversations, however.
“While most may fall under permitted development rights, if they stay within strict pre-agreed specifications, some will require full planning permission to be granted.
“Additional considerations to be aware of also include if your property is listed or sits within a potential conservation area, so it is always vital to fully check with relevant planning departments before undertaking any alterations.”
