Stay and improve versus move for more

The number of homeowners choosing to stay and improve; rather than move for more, has jumped from 3% to 15% in the last four years. With Brexit uncertainty growing by the day, this trend looks set to stay. A recent study conducted by insurance firm Hiscox; has found that:

  • The number of homeowners choosing to stay has increased fivefold in the last four years;
  • one in four millennials would rather stay and improve;
  • Over 10% of those surveyed said that Brexit uncertainty had led them to opt to stay put.

Other factors influencing the decision to stay and improve, or move were:

  • high property prices,
  • increased stamp duty fees,
  • concerns that the interest rate might change,
  • a slow property market (properties now take an average of 10 months to sell).

Lloyds bank surveyed second-steppers; homeowners that are starting a family and need more space, finding that the price gap between their first home and their second home was £135,985 on average; making the move for many unaffordable.

Paying for home improvements or home moves

For some there is no option to create more living space in the current home.

If this is the case individuals should consult with a mortgage specialist IFA. Consideration can be given to raising additional funds through existing assets or family and friends, but we would recommend talking options through with a financial specialist.

There are a range of funding options for those considering home improvements.

  1. Home improvement loan with the existing lender;
  2. Remortgage with a new lender – take equity out of the property to fund home improvements;
  3. Equity release – also known as lifetime mortgages.

More about equity release and lifetime mortgages:

Lifetime mortgages are designed to help homeowners that are nearing retirement or approaching later life to release property value. Lifetime mortgages are restricted to UK residents aged 55 or older. Equity release enables homeowners to take loans out that are secured against their homes. The loans are paid back when either the homeowner dies or goes into long-term care. Lifetime mortgages are extremely popular and are used in the main to fund home improvements.

We would strongly advise anyone considering a lifetime mortgage to speak to an equity release specialist IFA.

Adding value is not guaranteed

But, staying and improving; even when additional living space is added, does not always guarantee adding value. This is because properties have a ceiling price. The development needs to fit the area and the house.

As an example; a basement excavation in a mid-terraced house in Kensington, West London; where other extensions – up, out or back, are not possible, would add significant value to a million pound plus house. Extensions such as these are popular in affluent areas of London, where space is commoditised, these developments do not price properties out of their local market.

According to Money Supermarket; in most cases adding an additional bedroom or converting loft space adds the most value to houses from 7 to 9%.  Improving flooring and landscaping gardens can also add value from 3 to 6% in most cases.

But; some improvements can reduce the value of a house; swimming pools are costly to maintain and could, in the wrong property, make a house sale more unlikely.

Please call our team of  Chichester-based IFAs on 01243 532 635 to arrange a consultation.

To discuss mortgages please ask to speak to James Mayne.

To discuss life assurance, serious illness cover, equity release (to provide for retirement income) and income protection insurances please ask to speak to Hamish Gairns.

To discuss pensions, retirement and investment plans (including ISA’s) with us please ask to speak to Richard Smith.

Mortgages, lifetime mortgages, home improvement loans that are secured against a property, and remortgages are subject to the same regulation. Meaning that homes are at risk of repossession if mortgage repayments are not made.