Welcome to our special mini series called Home Truths. We’re gonna be talking about some common misconceptions in the world of renovating, bust some budget myths, and basically shine the light on how to avoid a stressful renovation. If you’re thinking about renovating or about to start, or you’re right in the middle of it, this is for you.

Amy: we are gonna be diving into one of the biggest questions homeowners face is renovating really worth it? Whether you are itching to knock through a wall or dreaming of a big kitchen or wondering if you should just pack up a move.

Instead, we’re gonna talk about how to work out if renovating makes sense financially, what research you can do in your local area, as well as the bigger picture of how your time and energy and relationships and lifestyle, how they all play into whether a project is the right thing. So if you’ve ever found yourself asking, should we renovate or just find something else? This is the episode. for you. Let’s get into it. Jane, big question. How do you work out if renovating makes financial sense? Just start off with an easy one.

Jane: It’s what everybody wants to know, isn’t it? Because it is such an investment. I think the first thing to think about is actually what does worth the money actually mean to you? Is that an increased property value? Is that a better lifestyle or Is it cheaper than moving or is staying in your area and getting more space without moving?

Like, all of those things are valid reasons to want to put money into your home.

The reasons for wanting to do a renovation are quite varied, so it’s important to decide what, what is your driver and what’s important to you. But I think in all of the options, you still want to figure out whether your home, is going to manage that investment that you’re making in it what’s the value of your home after the renovation?

because you don’t want to invest so much money in your home that you lose money if you’re moving on kind of in 5, 10, 15 years.

Amy: What are the best ways to go about that?

Jane: A good way to kind of think about what your house could be worth after the renovation is obviously by looking at homes on your street, what’s the price that homes that have been renovated, what do they go for? and obviously you would want something that’s, you know, within five, the last five years.

that has sold on your street and maybe, uh, a similar kind of renovation. Either a loft extension or a rear extension, or, you know, just an internal refurb. Another way that you could do it is look at the price per square meter in your area. if you are on a street that doesn’t have like.

Identical houses and it’s not very easy to get a straightforward comparison, you could actually break down the square, look again at right move and break down the square meterage of the houses that have recently sold, that are done up importantly, and see what the price per square meter is.

Amy: That’s a great idea. Have you done that for your house that you’re about to renovate?

Jane: I think the thing that we have done for our house is that all the houses on our street are quite different. Um, so we’ve had a look at the street in total and said, what’s the, what’s the maximum? Like, what’s the highest value house on the street, and that’s another way to look at it. What’s the, what’s the kind of top end of houses in your area, in your location on your street?

Because it’s very unlikely, like whatever you do to your house, even if it’s super amazing, you probably are, are not going to push past that top mark very easily. So we’ve been using that as kind of like a top end guide. Like we don’t feel like the street could manage a house that was worth more than x, for example.

And so we’ve deducted that from the price we bought, and we now have our renovation budget, So that price, that price difference is more than we have. but it just shows that we’re working in the right kind of ballpark figure.

Amy: And what about state agents?

Jane: Yeah, I think estate agents can be really helpful because they. It’s more on the nuance of what types of things go quickly or seem really popular. So they will, they will have a bit of an idea about what people want in the area that you are living or in the area that you are thinking of buying. such as do homes with a garage.

Fly off the shelves and actually you are thinking of converting your garage and taking that space away. So there might be things that they just know from speaking to lots of people about what’s a popular features or things that make a house kind of very sales worthy or valuable.

Amy: And in your opinion, What kind of renovation tend to give the best return, would you say in your experience?

Jane: Well, what do we think? I don’t know.

I think. The old kind of saying like, buying the worst house on the best street is a really kind of safe place to begin because you’re gonna have a big potential uplift in the value of the home.

I think the really good ones are the ones that look ugly, that really, it’s not just that they’re run down, because I think people underestimate how much price of works cost, but if it genuinely looks unappealing, like why would anybody want that house?

But it’s on, it’s in a good area and it’s in on a good street, then you’re going, you know, the stuff that you can do can really raise the value and the, you know, street appeal of that house. So that’s a really, really good place to be.

Amy: I was just gonna say, I think when there’s a typology that people really shy away from, so I think obviously London, Victorian homes are very highly prized, but say for example, a neglected sixties bungalow. That kind of typology of the bungalow gets really overlooked. And I, I always look at bungalows and just think, wow, there’s just, there’s always space, there’s always kind of potential.

And you could, really make it work for your family, but also kind of invest in a way that’s gonna add value to that property. Um, but that’s just a personal preference. I.

Jane: I think people are definitely realizing the value of like sixties houses now. I think maybe unmined territory is actually eighties, seventies, eighties houses

Amy: that’s true.

Jane: again, like we’re getting used to seeing these sixties aesthetic and kind of realizing that it’s, it’s. minimalist form is really good for renovating because you can just, you can make a really big difference with some quite simple moves, whereas the seventies kind of, you know, that more orangey brick, you know,

you really wanna, like, you could choose something that really isn’t popular.

Um, and then I think you’ll see the biggest change.

yeah, so something that you could make a big impact on and that places where other people haven’t seen. The potential, uh, are really good places to begin. obviously if there’s anything you can do to the plan such as adding an extra bedroom, um, if there’s some kind of clever way in which you can reorganize a badly organized plan to make it work better.

Those things are always really good. Anything else you can think of, Amy?

Amy: Well, I was just thinking about, um, one thing that’s always really worth doing is looking at planning applications in your street just to see what’s possible. And I think even before you buy, I would like, we would recommend that.

Right. Um, and, but if you have already moved in and you’re happy with your house, obviously there’s still time to look at the, the planning applications. And I think what was good about that is you can just learn so much from what has been rejected, what’s been approved, what, what kind of scale and massing the planners in that area.

Like, you know, I, I think there’s just a lot to be gleaned there.

Jane: and ideas. Ideas for layouts. If you live in an area where a lot of the houses are similar plans, um, if you look at the applications you can get, you know, I. Probably almost all the options for your house, over the past few years that the different ways that people have squeezed in the stairs or, you know, done nifty little things to kind of, especially with loft extensions, how they’ve managed to get up.

Um, so yeah, go to your local, authority website and look up. Do a planning search and look up your street. but be sure to look at the refused ones as well because you learn as much from or if not more from those, than you do from the approved.

and always check out the, um. the planner’s, approval notice or rejection notice because they do a little written summary and it’ll often explain the reasons why something has got through or why something hasn’t. So that’s really good to look at to.

Amy: Yes. And actually in that bit they sometimes refer to local policies So that can be quite a good indicator of where to go look and see what might be applicable to your, your property. I guess the other one is also just walking around your neighborhood and, um, I know that you have lent heavily on Right Move in the past as a research tool. Do you wanna explain how you use that?

Jane: We are not being sponsored by right move by the way. Um.

Amy: Actually, that’s a great idea.

Jane: Yeah. How have I used, I just, I’m a right move. Obsessive. I just liked looking at houses and if anyone has something they’re looking for, I’ll look for them too. Like, it’s not limited to, to me. Um, I guess you can see the sold prices.

That’s really interesting. So you can, you can get a good idea of what things have sold for in your area, which is good at getting that kind of higher, you know, that budget that we were talking about, but also what things have sold that are do or uppers so that you can see the relative difference.

Amy: I guess the thing that we haven’t talked about yet is the reasons for renovating or moving I. Will impact what you do. we were talking about this earlier, just this notion of working out what your real intention is. Um,

Jane: Mm.

Amy: is this your forever home or is this like your three to five year home and you were, you mentioned, a project or a client.

Jane: Yeah, well, quite often we were dealing with people that, um, would kind of say, okay, well this is our three to five year home.

And. It sounds like a long time, I guess if you’ve not done a renovation before, but a three to five year home is pretty much doing the renovation, then immediately moving out. I think it was somebody who was buying a property to move out, so it was own, they were like, this will do us for three to five years and then we’ll move on to something else.

And I think the question that we were putting back to them is, if this house isn’t suitable for you long term. Do you really want to go to the trouble of buying a house, doing a renovation project, and immediately selling? Is that the type of things that you want? And I think that they had just thought that the whole process would be quicker, but once you’ve, the, the buying process takes quite a long time.

You know, finding professionals to even do your designs. Uh, you know, we’ve just put an article up on the website, haven’t we, about how long it takes to renovate your home. And it is just, it’s just a lot longer than you would imagine. so if they were, if you are imagining, right, yes, we’re doing this to flip a house, we think we can make money on this, and that’s all we’re doing, that, you know, we’re just gonna live through that and benefit in our next property.

Um, if you’re thinking about doing, that’s great. The one caution is, is that flipping houses, it’s not really financially guaranteed that you’re going to make money on that. And it would have to be a very special project to make that worth your time because really at the moment, the price of renovating pretty much equates to the uplift you’re gonna get in the house price.

Unless you are in an area you know that is. The house prices are rising anyway. And if it, if that’s the case, then you don’t need to renovate. You could just buy, wait five years and, and sell it as it is and you’ll make the same money. So I think quite often when people say they’ve made money out of houses, they forget to mention that the area they were living massively, massively went up in price.

Um, nobody really wants to admit that they could have done nothing and made the same money.

Amy: But do you think, when do you think that changed? Because obviously that was quite a solid, strategy, wasn’t it?

Jane: I think it’s always been a little bit debatable because I, I remember a client of ours from a long time ago when we first set up, and um, it was a big, it was a big house that they inherited and it was time to kind of, they wanted to make a special home for themselves, but.

Always, we were talking about the value of return, the value, you know, making sure it’s going to make money. Um, that they only wanted to invest as much as, you know, the uplift in the house. And so I said, well, if that’s your main driver, if that’s the only thing that is driving this project is making money on the house, then you should sell this house as is and go and buy the house up the street that’s for sale.

That’s. Like already been done up, uh, because the price that you’re gonna invest in this house is not, is not going to make you money. Um, and, and I can remember the person was just so shocked in a way that I’d suggested that we don’t do the project at all, um, and that he just move in into the other house, but.

When it actually came down to it, he wasn’t really being honest about it because when we looked at the house up the street, he was saying, yeah, but it’s not done up how I want. Um, it, it’s not my style. It’s not the layout that I want. It doesn’t have X, Y, Z. And so I was kind of saying, well, well then the real reason you’re doing your house up is because you want a house that’s bespoke to you and that fits.

What you want. And as well as that, you don’t want to overspend so you don’t lose money on it, but the priority is actually getting the house that you want. And he was really, really reluctant to take that as a reality. but it, it was true. he didn’t want really to admit to himself that he wanted to make something special.

Um, and it’s very valid to want that to. Pay for itself in the end. But I think it’s unrealistic to think that you’re gonna make a house that is what you want and that is also then gonna make you money. The reality is you’ll probably get a return, the same value back when you sell.

Hopefully you won’t lose money. Um, but I think you have to be honest with yourself for the reasons that you’re doing the project. Yeah.

Amy: So what, what would you say to someone who basically wants to make the home bespoke to them.

Jane: Mm-hmm.

Amy: the money that they’re gonna spend doing it. Doesn’t make financial sense, you know?

Would you say, well, don’t do it? what would you say to them?

Jane: I think you have to weigh up all your options because, there’s so many factors that come into it, especially location. I think lots of people find that. They no longer can afford the area where they live, or they can’t afford the house up in the area where they live and they want to stay where they are for lots of different reasons.

sometimes to do with schools or where their kids are growing up or job connections. So I guess you have to look at the alternatives. If you moved house further away, you have to start factoring. The move prices, the upheaval, the additional travel costs, you really have to look at it holistically in terms of all of the prices.

All of the sacrifices that you’re going to make through either moving or relocating or adding the extra space that you need into the house that you already have. And if that means that some of that money you don’t get back in the sale or you’re not guaranteed to get back in the sale, you have to make a judgment of whether that outweighs moving location and, and that’s okay.

I think. I think this idea that you. You should never spend more on your house than you’re gonna get back in a sale. It’s not as simple as that. You need to take in these other life factors as well and put a value on how much moving would be to you or starting again in a new place. So it’s about making that massive big picture.

And I know when we moved we got to the point where we, we got out a massive, big piece of paper and literally started like bubble diagramming. Like moving, what does that mean? What’s the negatives? Positive money factors, you know, what does it mean travel costs? Because sometimes, a season ticket from somewhere outside of the city where you live or, or somewhere dis distant can be a big investment.

So I’d just say, just get it all down and make sure you are thinking about the complexities of the different decisions as opposed to just, am I gonna make my money back?

Amy: Yeah.

guess it’s like if it is your forever home, that changes the. The optics of what

Jane: Mm-hmm.

Amy: because you are, you are kind of investing for your long-term future,

Jane: Yeah.

Amy: means that you are gonna experience the value of what you’ve put in.

Do you know what I mean? It’s like you might not

Jane: Yep.

Amy: it financially, but

Jane: Mm-hmm.

Amy: gonna benefit from the investment that you’ve put into your property. Um,

Jane: We’ve kind of touched on it a little bit, but I think it, again, it’s really important to think about your lifestyle and the logistics of doing a renovation. So just like we’ve got other factors coming in, whether it’s your forever home or whether you want to stay in your area, you either will like the process of renovating and want that kind of be bespoke house that only you can get with choosing your own things, which is great.

Or you might hate the concept of renovating and actually you would be very happy with the house up the street if it had the right area and it was done up. So I think for the people that haven’t got an appetite for renovation. and know already that they would struggle with that upheaval and aren’t too worried about, the particulars of, you know, when they look around houses, like, it’s like this, but I’d rip it out all out and start again.

Anyway, if, if you see houses that you like that you would be happy with. I like, definitely consider that as an option not only is renovating kind of expensive and it, it may not pay back value wise in terms of, selling your home as existing and buying a home that’s already done up.

It is just a, it is a big lifestyle commitment for several years of your life, probably. and if you are not taking pleasure from that, I mean, I think a lot of the people that we listen to on the podcast, you can hear it in them, you know, the buzz that they get from tearing their house apart and putting it back together how they like,

And I think if that you, you need to think very carefully about whether that’s a good option for you. And likewise, if you are gonna take joy from actually doing that process, then that’s another great reason to get stuck in and get something that is really that the house and the process that you really, really love.

Um, and I think perhaps this concept of not knowing what the right thing to do financially actually comes down to not knowing how much renovating your house is gonna cost or how much renovating another house is gonna cost. And that is where doing that budget and breakdown and using, you know, the app, what we are talking about all the time right now.

But that’s where that comes in because if you haven’t got a handle on the actual costs of what it’s gonna take to either updo a house that you’ve, you’ve moved into or upgrade the house that you are in right now. None of the sums will be correct. You are, you’re not comparing like with like. and that’s where people can, can come unstuck.

So you need to get all of those costs in. And if, if you’re comparing one with the other, then that’s adding the stamp duty, adding the lawyer’s fees, adding the removal van. And if you’re doing a renovation that’s paying for architect’s fees, that’s building control. That’s, you know, in both sides of the coin, you have to.

Think about all those costs that are less obvious and throw them all in together so that you can make a, a full picture and make a decision based on real numbers.

Amy: Mm.

Jane: I think that’s the way to unlock the decision really. I.

Amy: Yeah, I totally agree.

So I guess we’ve got a few closing questions for you, our listeners. which I, we thought might, be interesting. so what’s the one thing you’re hoping a renovation would fix in your life? Have you run the numbers and compared them, to what’s available on the market? And if you didn’t renovate, what would you do instead?

So I will put these on Instagram and you can come and uh, we can chat about it.

Jane: they’re great questions and you know, I. Get, use those questions. Get your giant piece of paper out. Give everyone a felt at pen and start, start writing everything down. I think that is a really good, a good way to work things out. Um, so hope you enjoyed that and we’ll see you back for another episode next week.

Amy: Bye.