According to leading property website Rightmove, most of us expect to climb the housing ladder, particularly when we have a growing family. But with the outlook for the housing market looking unsettled this summer, a peak time for moves, is it best to move up or improve and extend the home you already have?
It’s easy to outgrow your home. Children get bigger and want their own room and to fill what space there is with noise, toys and friends. You might want a home office for study or work, especially if you run your own business. You might have an elderly relative who needs a granny annexe.
But you might not want to move. It is expensive, it means upheaval – and you might be worried that house prices could fall. The alternative is to extend, or to create more usable room in the space you already have.
But what about the costs of each option?
What does it cost to extend your home?
Because size makes a difference, building costs are usually worked out in metres. A single storey extension is anywhere between £1,250 and £1,750 per m2, or £2,100+ per m2 in and around London. Add 10-15% for professional fees for the architect, planning application, building regulations, structural engineer and so on, and 20% VAT.
Two-story extensions add 50% extra to the build cost of a single storey extension.
Loft conversions may be a little different. Minimum ceiling height is no longer part of Building Regulations, which might mean you have a large potential space going unused. Loft conversions start at around £25,000. If you have to install a large dormer and want a master bedroom with ensuite, you might need to double that figure.
You may be able to recoup your investment when you sell, because a larger home should be worth more than a smaller one. But you can’t just add rooms and expect to add value automatically. A four-bedroom family house with no garden or parking, or a house with large living space and tiny bedrooms may be harder to sell, or potentially worth less.
The government’s Planning Portal lays out the rules and has a cost calculator.
How much does it cost to move?
Extending your home could mean months disruption. Moving can give you the home you need, ready made – but the costs will also be significant. You need to pay estate agency fees, solicitors’ fees and search fees, removals costs, survey fees, and possibly more.
On top of this, there’s Stamp Duty Land Tax. This is charged at 2% on properties sold for between £125,001 and £250,000, rising to 12% on those worth more than £1.5 million. The cost of the actual move can top £10,000 even before you start thinking about bigger mortgage payments.
You can see the government’s SDLT calculator here.
Perhaps most important of all, you need to deal with the cost of buying a home – which will mean getting the very best mortgage deal possible.
How to pay less, whatever you decide
Moving or improving will both mean costs. At Continuum we can help find the solutions you need to cover the costs – and in both cases, your mortgage might be the place to start. If you are moving, you will obviously need to look at your mortgage again and if you are improving, remortgaging could provide the most cost-effective solution to raise the cash you need.
Whatever you decide to do with your home this summer, you could save money by getting some expert help with your mortgage. A call to the Continuum team could provide it.
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.