The number of homeowners choosing to stay put and invest in their existing property instead of moving has soared in the past five years, according to a new report from specialist insurer Hiscox.
In 2013 just 3% of homeowners took the decision to improve instead of move, but fast-forward five years and this figure has increased to 15%, further rising to one in four (26%) amongst millennial homeowners (those aged 18 – 34).
The Hiscox Renovations and Extensions Report draws on insight from homeowners, UK-wide estate agents and over 400 local council planning permission records to highlight the growing number of homeowners choosing to invest in home improvements and the profits and pitfalls they’re facing as a result.
Key findings:
Driven by an impenetrable property market: The subdued and costly property market has been a clear catalyst for this trend. When questioned, homeowners cited prohibitively high property prices (25%), stamp duty (13%), a sluggish property market (15%), potential interest rate rises (8%) and even the uncertainty caused by Brexit (8%), as reasons for investing in their current home instead of looking elsewhere.
UK local councils have seen a near one third (29%) rise in the number of planning permission requests made by homeowners over the last ten years. Requests for loft renovations have seen the greatest increase at 114% from 2008 to 2017, closely followed by living room extensions (113%). There has been a steep decline in planning applications for conservatories over the same period (-74%).
In the London boroughs of Redbridge and Harrow (the UK hotspots), one in every 28 households made a planning permission application last year compared to the coldspots of Weymouth and South Ayrshire where this figure falls to one in every 700.
Overall, bathroom and kitchen renovations are still the most popular, but garden renovations are now the third most common home improvement, and the renovation type that’s seen the most growth.
According to estate agents, adding a bedroom does the most to boost the value of a home, with the average bedroom extension delivering an 11.2% increase (£25,383 in today’s property prices). A loft conversion (10.8%) and extending with a new kitchen-diner (10.8%) are estimated to add similar amounts.
Today’s renovators typically set a budget of £16,100 per project and allow five months for work to be completed. But the experience of past renovators (projects completed 2008 - 2017) suggests this may be optimistic; two in five (40%) overspent by an average of 20% (or £3,200 in today’s budgets). Delays also bedevilled 35% of past projects, with the average delay lasting three months.
Living in the property whilst work was carried out proved to be the biggest challenge, according to 40% of for those who’ve completed renovations (40%). That’s followed by finding the right tradesman and experts (34%) and staying within budget (25%).
Looking at previous renovation projects and those currently underway, just under one in six (17%) has sparked some form of neighbour disagreement. Issues include neighbours officially (through the council) and unofficially (to the homeowner) complaining about the project and are most prominent in London where two fifths (39%) of projects result in some form of dispute.
Head of direct home insurance at Hiscox UK & Ireland, Phil Thorn, commented: “The decision to improve instead of move is a new normal for homeowners whose lifestyles are evolving. People are looking at ways to adapt their existing homes to meet their changing needs, whether that’s a growing family or the beginnings of a new home business. Many view home renovations as an easier or more economical alternative to moving, but our report highlights that these projects are often underestimated in both cost and scale.”
Architectural designer and television presenter, Charlie Luxton added: “There’s been a generational shift resulting in more and more of us feeling empowered to change our houses rather than move. We need to renovate and improve our aging housing stock and if we can nudge people to make sustainable, as well as spatial improvements, this can only be a good thing. It also means people stay longer in their homes, which is usually beneficial for both community spirit and engagement in local issues.
“There is however, a big but. Renovating and extending houses is almost never easy, and should always be tackled with careful professional advice on both design and cost issues. Relying on optimism and a ‘back of envelope’ cost plan can actually take longer and cost a lot more in the end, so don’t rush or cut corners in the planning stages as this is likely to show in the end results.”
Other key findings:
Many homeowners are unaware that renovating without telling their insurer first can leave them with little or no cover. This is perhaps why only 17% of those who’ve previously renovated or are currently doing so notified their home insurer before work started, falling to 10% amongst over 55s.
Insurance claims data for larger renovations undertaken in the past three years, highlights theft of materials as the most claimed-for renovation peril. Escape of water (from a burst pipe for example) and damage caused by storms completes the top three.
Mr Thorn continued: “A home is the most valuable asset the majority of people will ever own, so before making substantial changes to it, make sure you’ve got the right experts and tradesman and the right level of insurance. Many home insurers will limit or even withdraw the cover they provide when major renovations are undertaken, so having a conversation to understand whether extra cover is needed is also really important.”