'Use home improvements to increase property values'
Published On 10 April 2007
Many people decide to use a home owner loan to finance improvements to their property in order to increase its value. But with so many possible improvements available, what work could represent the best investment?According to recent research from Nationwide, people looking to use a home owner loan to finance work to increase the value of their property would do well to think about environmental improvements.
The lender found that 82 per cent of people said they were more likely to buy a property if it offered features - such as solar panels - which meant that their new domicile would have a reduced impact on the environment.
Equally, Home Information Packs, which become mandatory in June for all house purchases, will contain an Energy Performance Certificate (EPC). This document will contain information about how 'environmentally friendly' a property is. It is hoped that EPCs will encourage people to begin to put more value on the 'green' aspects of a property.
If this were to occur then investing a home owner loan in improving the sustainability of a property could turn out to be a very sound investment.
"With the recent publication of the government's climate change bill and the pressure on households to become more energy efficient, it is inevitable that environmental home improvements will have some impact on house prices over the long-term," explained Nationwide's chief economist, Fionnuala Earley.
Nationwide's study also revealed other improvements that an owner could carry out to make their property more desirable and increase its value.
Half (54 per cent) of those questioned said that the kitchen was the room that most influenced their decision on whether to purchase a property. This could mean that people could sensibly use a home owner loan to improve their kitchen as a means of increasing their property's value.
However, as only two per cent of people said that the condition of a bathroom influenced their decision, it would appear that homeowners could ignore these rooms when it comes to pre-sale improvements.
Recently, a separate study by Alliance & Leicester suggested that people could sensibly use a home owner loan to undertake a loft conversion as this would substantially increase the value of a property.
The lender's figures showed that the average cost of a loft conversion in the UK is approximately £23,000, but the work typically adds £100,000 to the value of a property.
Richard Al-Dabbagh, Alliance & Leicester's senior personal loans manager, explained that using home owner loans to undertake a loft conversion "can be a far cheaper option than moving to a larger house to gain an extra bedroom.
"Carrying out home improvements instead of moving can have amazing results, potentially increasing the value of your existing property and also saving a great deal of money as well."
However, Nationwide's research did throw up a warning to people considering increasing the value of their property through building work. According to its figures, 91 per cent of people said that they would be put off a property by poorly executed building work.
"With any work on your home it's crucial to make sure it will be beneficial and add value," explained Andrew Thompson, General Manager of the Building Cost Information Service.
"A surveyor can give you professional advice about building regulations, planning permission and whether the improvement will add value."
