Your home's value can fluctuate according to the wider market, but you can also increase its value by taking a few steps. Whether you simply want to have more equity or you hope to one day sell your property for a higher price, adding value to your home could be a worthwhile investment.
You can add value to your home by making some home improvements, but in terms of what you spend and what you get back, you may not always get a great return on investment.
The value of your home comes down, ultimately, to just one thing: How much someone is willing to pay for it.
That means a rise in demand for homes like yours, or the area you live in, will see your property’s value rise too.
The reverse of this is that undesirable features, or a change in the attractiveness of the general - or specific - area you live in can see your home drop in value.
To see what your home’s likely to be worth, you can search for similar properties for sale near you on sites like Zoopla.
Just remember that asking prices aren’t necessarily the same as what the home eventually changes hands for.
If you are simply looking for extra value so you can sell your property in future, or if you are looking to release equity in your home to remortgage to buy another home, then adding value can help with that.
You can potentially add value to your home irrespective of market forces by making home improvements. This can be a slight risk as the amount you spend on, say, refurbishing your kitchen or converting your loft, might not always increase or even add the same value back on to your property.
Before you begin, you should have an idea of the ceiling on house prices in your area. This is to make sure you don't spend too much on home improvements and lose out on potential returns. Consider looking at your estimated house value and the value of similar properties in your street or area to get an idea of maximum prices.
It's also worth looking at what estate agents value most when trying to sell a property. Many estate agents advertise the number of bedrooms, bathrooms and property size before anything else. If you shoehorn a bedroom into an existing closet space, then you may not really be adding much value.
Once you have an idea of property prices in your area and what is valued by estate agents in resale, you can make a list of improvements to be made in your house. More importantly, you should weigh up which of them have the potential to make the biggest positive impact on your property value without incurring large costs.
There are two ways of thinking about home improvements when you're looking to add value: smaller DIY-style home improvements to cosmetically refresh and modernise, and bigger more costly structural changes.
You can change the look and feel of a dated property by remodelling the inside on a budget.
Potential buyers will look to the kitchen as the heart of the home, and a modern finish has a great potential to draw offers in. You can refresh your kitchen on a budget by repainting cabinet doors, changing handles and hardware, replacing the sink and taps, and updating old appliances.
For an old bathroom, you could replace shower curtains with a glass screen, get new taps, or create new shelving for storage. If you want to grab a modern bathroom suite without the price tag, suites used in bathroom shop showrooms are also heavily discounted when sold.
A fresh lick of paint and new carpets or flooring can make a big difference when refreshing a space.
Or for a more bespoke offering, you can add fitted storage into awkward spaces that would otherwise go unused. Fitted storage is usually seen as a plus for would-be buyers, particularly in smaller properties or big cities where space comes at a premium.
Some of the more costly home improvements which could significantly more value include:
Adding an extension
Converting the loft
Building a conservatory
Refurbishing the kitchen
Installing a new bathroom
If you want to increase the square metres of your property, consider how much value it could potentially add versus the cost. Property outside of London typically costs £900-£2000 per square metre, and around £5,000-£10,000 per square metre inside London.
Even for a modest extension, you are likely to have to pay anywhere between £10,000 and £40,000. It will also likely take up much of your time to ensure the work is carried out efficiently and safely.
A badly built extension could reduce the value of your home, so it's important to get trusted and reliable builders. You will also need planning permission and a survey before the work begins.
A loft conversion could potentially add an extra bedroom and bathroom to your property. Some homeowners find they have no need for their loft, while others use it as storage space. Either way, the extra liveable space could add thousands to a property's value. A loft conversion could cost between £15,000 and £50,000. You don't always require planning permission but it's worth checking first.
A conservatory is a relatively quick and simple way of adding additional square metres to your home. You rarely need planning permission and they can be built within a week or two. They usually cost upwards of £10,000 depending on what level of luxury you want.
Refurbish the kitchen
There is no guarantee that a new modern kitchen installation is going to add value to your home, but it could be the additional selling point that attracts more buyers and bumps up the price. The design and feel of a kitchen might also come down to personal taste, and not all buyers are going to agree with the way you've done it. A new kitchen could cost you around £10,000, give or take, depending on how many appliances and units you are replacing, and the quality of each one.
If you are refurbishing your bathroom, you might not have any guarantees that you will add value to your home, although retrofitting appliances to be more eco-friendly could save you money on your water bills. If you convert some unused space to create an additional bathroom in your home, then that would likely increase the value of your property.
If you have plenty of equity in your home, then you might be able to get a good remortgage deal to get you additional money to improve your home. You could see it as an investment to further increase the value of your home, but you would still need a plan in place to help pay it back.
If you don't have a lot of equity in your home, i.e. you have not paid back much of your mortgage yet, then you should certainly avoid remortgaging. If you are in the early stages of your mortgage repayments, then you should only consider remortgaging to switch to a better deal, and not to release more money.
When you remortgage you will likely have to pay penalty fees for paying off your existing mortgage early, so weigh up all of the costs first.
There are many factors that could potentially devalue your home, including:
Housing market cooling — prices falling across the board
Local issues, such as bad schools, high crime or noise pollution
Home improvements that have gone wrong
Degradation of the building or appliances not in keeping with modern standards
There are other factors too, such as having single glazed windows or poor insulation in your home. If a large number of buyers are likely to be put off by something about your property, then there's a good chance that it will devalue your home.
There are many websites that can help give an estimated valuation range based on your postcode and some information about your home, but for a more accurate result, you can pay for a professional to view your home. Estate agents will be able to give you an estimation of what they think they could sell it for. It's best to get your home valued when you are ready to sell, and ideally after you have made any home improvements.
Equity is the amount of mortgage you have paid versus what's left to pay. If your home's value has increased, then your equity will also be higher. For example, if you have £150,000 on a home you bought for £200,000, then your equity is worth £50,000 — but it's easier to understand as a percentage, which is 25%. This is because the price of your home could increase or decrease in value and thus change the value of the equity, but your portion as a percentage will be the same.
The more equity you have, the more remortgaging power you have. You will have access to a wider range of deals and find it easier to borrow more money. Equity when it comes to remortgaging is your borrowing power. The less of it you have, the less you will be able to borrow.