With an increasing number of UK homebuyers seeking out properties with renovation potential, it's clear that the charm of a bespoke home is hard to resist.
Purchasing a property for renovation can help you step on to, then climb the property ladder more quickly, as it often comes with a lower initial cost than a new house. Additionally, by carrying out the renovation work yourself or with the help of professionals, you can save money and tailor the property to your taste and needs.
However, diving into the world of property renovation can feel daunting. This guide is designed to help you every step of the way.
From spotting a diamond in the rough to maximising its value, our guide will be your trusty companion on this exciting journey.
Finding the perfect property to renovate
A renovation property is simply one that requires significant work to make it habitable, modern, or comfortable. For that reason it is often nicknamed a fixer-upper.
Work required could range from minor cosmetic updates to major structural repairs.
Location, location, location
One of the key things to consider when buying is location. That is true of any property.
It's often said that you should buy the worst house in the best street to maximise your investment potential. A rundown property in an ideal location can offer the best returns once renovated, as the work allows you to add considerable value to the property while capitalising on the area's desirability.
Be aware though, that in the most desirable or affluent areas property prices may already be high, and there may not be the supply of run-down houses for the less experienced developer to take on.
Instead, look for houses in a reasonably well-to-do area that offer the maximum scope for adding value. This might include houses with large gardens, space for loft conversions or extensions, and features that are highly sought after in the local market.
Researching the area's property market and speaking to local estate agents can provide valuable insight into what buyers are looking for.
While older houses often come with more character and potential for significant value increase, they may also require more extensive work and may have hidden issues.
A new property, on the other hand, may require fewer repairs but offer less scope for adding value.
Weigh up the pros and cons of each option before making your decision.
Evaluating a property's potential
The importance of a full structural survey
Before buying a property for renovation, you should commission a complete structural survey. Don't just have the basic one required for a mortgage carried out.
An in-depth inspection by a qualified surveyor will identify potential structural issues, such as subsidence, damp or timber rot, which may affect your renovation plans and budget.
Put money aside in your budget for surveys for several properties. The first couple you look at might seem good to go on when you visit, but the survey might reveal greater problems than you first thought.
Building and drainage surveys
In addition to a survey, consider commissioning a building survey and drainage survey to further evaluate the property's condition.
A building survey highlights issues related to building regulations and safety, while a drainage survey examines the property's plumbing and sewerage systems.
These are just another way of being more thorough at the planning stage, before you have invested money and time into the property.
Building regulations and planning permission
When planning your renovation, be mindful of building regulations and the need for planning permission for certain works.
Check with your local authority to determine whether your planned works require permission or if there are any restrictions on the property, such as being a listed building or located within a conservation area.
If you are buying a leasehold property, check that there are no restrictive covenants that might scupper your plans.
This will ensure your project complies with local rules and avoid potential fines or delays.
Potential issues with older properties
Older properties often come with their own set of challenges, such as damp, timber rot, outdated wiring, or asbestos.
Be prepared to address these issues as part of your renovation project, and budget accordingly. This may involve hiring specialists to deal with specific problems and ensure the property is safe and compliant with modern standards.
Obtaining a second opinion
When evaluating a property's potential, it's always a good idea to seek a second opinion from an expert, such as a builder, architect or surveyor.
Their advice can help you make an informed decision about whether the property is the right choice for your renovation goals, and help you anticipate any unforeseen major work.
Estate agents can also be useful sounding boards, as they will know the demand and likely prices for homes such as the one you intend to create.
Financing and legal aspects of buying a renovation property
When you're considering buying to a property to renovate, one of the first things to consider is financing.
A first-time buyer and an existing homeowners have different alternative finance options available to them when purchasing a renovation property.
For first-time buyers, government help schemes can assist with the initial deposit, while existing homeowners can consider remortgaging or using equity release to fund the project.
A renovation mortgage may be required to provide the funds needed for both the property purchase and the renovation work.
These mortgages often have different terms and requirements than traditional mortgages, so it's essential to research your options thoroughly.
Be aware that mortgage lenders have specific requirements for renovation projects.
They may need a detailed plan of the proposed works, including estimated costs and a realistic budget.
A full structural survey and any relevant permissions (e.g., planning permission) may also be required.
Conveyancing process and property contracts
The conveyancing process remains largely the same as for any other property purchase.
However, it's essential to understand any clauses in the property contract that could impact your renovation, particularly covenants and disputes.
Specific legal considerations may apply to listed buildings in conservation areas.
There may be restrictions on the type of work that can be carried out.
Working with a conveyancing solicitor who has experience with renovation properties can provide invaluable guidance and advice during this process.
Create realistic, detailed estimate for a successful renovation. It should cover each stage of the work, estimated costs, and have a realistic timeline.
Once you have it, consider that you should also add a margin as a contingency fund for unexpected costs.
In addition to the purchase price and renovation costs, consider other expenses such as insurance, professional fees, and any required permits.
Communicate regularly with your contractors, and don't be afraid to make adjustments to your plan if necessary.
Planning, managing, and timeline of your renovation project
The importance of a project manager
Having someone appointed as a project manager is essential. It might be you. It could be someone else with experience.
The manager oversees the project, coordinates contractors, and ensures the work stays on track and within budget.
If you're new to renovations, don't assume you're the best person to be the manager.
Often, experienced managers can recognise risks and mitigate them before they happen, so to pay someone might actually be a way of reducing costs rather than adding to them.
Before you start renovating a property, make sure you know who will be the manager.
Challenges of renovating older properties
Renovating an older property can present unique challenges, such as dealing with damp, timber rot, or structural issues.
It's crucial to recognise these problems early in the project to avoid costly repairs or delays later on.
Consider the key aspects that would make your project successful
A successful renovation often includes elements such as loft conversions, extensions, or even adding a new kitchen or bathroom.
When planning your renovation, consider which aspects will add the most value to your property while meeting your estimated costs and timeline.
Create a realistic timeline
A realistic timeline is critical to avoid over-run costs.
Consider factors such as the complexity of the work, contractor availability, and any potential delays (e.g., waiting for planning permission).
Keep in mind that renovations often take longer than initially anticipated, so build some flexibility into your timeline to account for unexpected issues or setbacks.
Working with contractors and selecting materials
You will need to collaborate with various professionals, including as architects, designers, and builders.
Choose experienced professionals who understand your vision and can help bring it to life while staying within your budget.
Establish clear lines of communication and maintain regular contact to ensure everyone is on the same page throughout the project.
To ensure you choose the right tradesmen to work with, obtain multiple quotes and compare their prices, experience, and references. Don't be afraid to ask for recommendations from friends or search online for reviews to help you make an informed decision.
When choosing materials for your renovation project, remember that quality matters. Opt for durable, cost-effective options that add high value to your property. For example, you might invest in energy-efficient windows or stylish but affordable floor tiles. Additionally, consider eco-friendly and sustainable materials that not only benefit the environment but can also increase your property's appeal to potential buyers.
Stray away from materials that you personally like, but which are not proven to increase the value of the property over their price.
Estimating and controlling costs
Creating a profitable renovation plan starts with setting a realistic budget. Projects can be prone to unexpected costs, so it's wise to have a contingency fund of around 10-20% of your total budget to cover any surprises.
Even if you don't feel that you're on a tight budget, act like you are.
To save money, consider buying materials such as floor tiles and electric heaters in bulk and use them in more than one room, or negotiate deals directly with suppliers or manufacturers.
You can reduce costs by doing some of the building work yourself (provided that you can do a reasonably good job) or opting for cost-effective yet durable materials.
When negotiating the asking price of a property, don't hesitate to use the renovation work needed as leverage for a lower price. Building surveys can help you identify potential issues, allowing you to estimate the costs of the necessary work and negotiate the right price accordingly.
Health and safety regulations are crucial during a renovation project. Make sure you and your contractors follow guidelines and best practices to maintain a safe working environment. Be aware of potential hazards such as asbestos or structural issues in older properties, and consult with experts when needed.
Insurance is another important consideration when undertaking a renovation project. Types of insurance to consider include:
- Buildings insurance, which covers the cost of repairing or rebuilding your property if it's damaged.
- Contents insurance, which protects your belongings from damage or theft (for example, of tools or materials).
- Renovation insurance, which provides additional coverage for renovation-specific risks, such as damage caused by construction work.
Make sure you have adequate coverage for such a project as yours.
Maximising the value of your renovation project
The ultimate goal of renovation is to add significant value to the property. To achieve this, you need to focus on high-quality structural work, finishes, and key improvements at a (relatively) low price.
Prioritise structural work to ensure the property is safe and sound. Use high-quality finishes that will stand the test of time and appeal to potential buyers.
A new kitchen or bathroom can significantly boost the value of a property. These rooms are often the focal points of a home and can sway buyers into deciding to buy. Keep the design modern, functional, and in line with current trends.
An additional room, perhaps as a result of a loft conversion, may bring the property into a different price bracket. Adding extensions might be possible.
Energy efficiency is becoming increasingly important to homebuyers. Upgrading your property's insulation, heating system, and windows can lead to long-term savings and make the property more attractive.
Adding renewable energy sources, such as solar panels, can further increase the property's value. Don't forget that energy-efficient appliances such as dishwashers can also add value.
Finally, consider the resale value of your renovated property given the costs that go into it. Will you make a profit, even in a slow market?
- Find the right property by looking in a reasonable location for your budget with maximum scope for adding value.
- Obtain a full building survey and consult experts to ensure a solid foundation for your renovation work.
- Understand the legal and financial aspects of buying a renovation property, including renovation mortgages, conveyancing, and budgeting.
- Plan, manage, and create a realistic timeline for your project.
- Prioritise high-quality structural work, finishes, and improvements like new kitchens, bathrooms, and energy-efficient upgrades.
- Keep the resale value in mind and make choices that will appeal to potential buyers.
Lastly, remember that patience and perseverance are crucial.
With the right approach, a property renovation project can be a rewarding experience and a fantastic way to climb the property ladder.