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Moving shelved as millions of homeowners choose to stay put, according to research

Amanda Jarvis

October 21, 2004

1 in 2 intend to modernise their home; 1 in 3 are looking to re-do their bathroom or kitchen and nearly 1 in 5 are planning to extend.
 
Signs that the housing market is cooling in many parts of the country is leading to buyer apathy and resulting in a half of all households – some 8 million – planning to improve rather than move this year, according to research from Bradford & Bingley.
 
David Bitner, head of product operations at Bradford & Bingley, comments: “There are two key factors creating a stay put attitude: high house prices and costly stamp duty levels.
 
“House prices are still relatively high, despite reports of a slow down, and in some areas the difference between a 2 and 3-bedroom property can be as much as £100,000.  In addition, the government’s decision in recent years to tax homeowners by raising stamp duty has meant that many are now put off moving because the next home they want to buy means having to pay 3 or 4 per cent stamp duty.  On a £300,000 property, for instance, this equates to £9,000.  Given that the costs and prices are so high, an increasing number of people are deciding to renovate or revamp their home rather than trade-up.”
 
The research carried out by NOP, on behalf of Bradford & Bingley, also found that:
·       1 in 2 households (52%) plan to refresh their home by replacing outdated furniture, carpets and curtains; 
·       A third (32%) intend to fit a new bathroom, with the same amount deciding to remodel their kitchen; 
·       Over a quarter (27%) are looking to landscape the garden; 
·       Conservatories are planned by 1 in 5 (20%);
·       16% are organising extensions while 14% are looking to convert their loft. 
 

Funding the transformation

One way to fund home improvements is through remortgaging.   Bitner says that with interest rates still relatively low there are some fantastic remortgage deals available, potentially making doing up your home both an affordable proposition and a shrewd investment plan.

 
Example: With mortgage rates still very attractive, by remortgaging onto a current market-leading 2-year tracker at 4.59%<= and even extending the loan by £20k, a borrower with an existing £100k repayment loan over 25 years, paying a typical standard variable rate of 6.75%, could even reduce their repayments by around £18 a month.    What not to change… There are plenty of ways to refurbish your home but which will ultimately improve the overall value?   Changing Rooms – done correctly, smartening décor and refashioning rooms can add real value to your home and increase saleability, though it must be remembered that very personal colour schemes and unusual designs could put many buyers off when you come to sell.   Gardener’s World - your own private eden will give you an outdoor space to relax and entertain in.  A well presented, well maintained garden could increase the value of the house by 5%-10%, though of course this will depend on what it lacked beforehand.  In terms of saleability, it’s worth thinking about the atmosphere you are trying to create and the functions you need.  A play area may be a great asset to a family with young children but young professionals may want something more tranquil, a space to unwind and entertain.  Getting the balance right is key if you are aiming for mass appeal. Conserving Space - a conservatory is a welcome addition to most homes as it provides a light and airy space.  Adding a conservatory at the back or side of your home may take up some garden space but it’s a room you can use all year around.  As with any major change to a property though, always ensure that it compliments the style of the original building.  As a general rule, good conservatories should add more to the value than it cost.  Onwards and Upwards - loft conversions release extra living space at a relatively low cost and enable you to gain another room without going up a full price band.  It can also add to the saleability of your home if the work is of a high standard and there is a real benefit in having the extra living space.  However, be careful that you do not price yourself out of the market. Bitner continues: “Done properly these improvements can also been seen as an investment, adding real value to your property.  Before embarking on any major works, though, we would always advise people consult an expert.  Similarly when it comes to funding their home improvements, we would urge people to seek financial advice to ensure they get the right product for their individual circumstances.”   Bradford & Bingley is offering borrowers, unsure about the possible benefits of remortgaging, a no obligation review of their current mortgage arrangements.  It gives homeowners the chance to see whether they can get a better deal than the one they are currently on and to see how much they could benefit by switching.


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