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The British like a fixative upper. We enjoy the opportunity to gain more space or put our own stamp on a property. But it was a brave soul who took on a project in the years after the pandemic. Global supply chain issues were driving up the costs of raw materials such as wood at a record pace. Construction projects were often repriced two or even three times before completion as costs rose.
Homeowners struggled to find quality builders available as large numbers of professionals left the industry – and in some cases the country – during the pandemic. As a result, the cost of some home improvements has risen by more than 40 percent between 2020 and 2023, according to property portal Zoopla.
But after years of rising prices and supply shortages, the madness is finally starting to cool.
Meanwhile, the alternative to renovation – moving – remains eye-wateringly expensive and will continue to rise.
According to the Compare My Move website, the cost of moving is £12,187 for an average house in Britain costing £285,000. This includes £1,750 in stamp duty, £2,706 for transfer on purchase and sale and £5,700 for typical estate agent fees. On a £1 million house, stamp duty alone would be £41,250. And from March, stamp duties will rise even further.
Darren and Helen Taylor transformed a seaside cottage into a Hampton-style beach house
The amount a buyer can pay for a property before becoming liable for stamp duty will fall from the current temporary threshold of £250,000 to £125,000, and the threshold for first-time buyers will fall from the temporary threshold of £425,000 to £300,000. .
So, is this a better time to improve than to move? Wealth investigates how much it currently costs to refurbish a property – and which renovations are likely to get you your money back.
What does the renovation market look like now?
Qunatity researcher Tim Phillips of Quantiv says it’s much easier to make a renovation now than it has been in the past few years as prices have stabilized and the market has cooled. “Tradesmen’s lead times have been reduced from nine months to two or three, and construction traders are less busy,” he says.
Materials typically account for about half of each estimate. Pandemic supply chain issues and then Russia’s invasion of Ukraine caused prices to skyrocket, but they have since calmed down. According to the Office for National Statistics, UK building material prices were two percent lower in December last year than the previous 12 months. Nevertheless, prices were still 38.4 percent higher than in January 2020.
However, Professor Noble Francis, economic director of the Construction Products Association, warns that we are not out of the woods yet. He says material prices have been falling for seven consecutive months, but while the cost of some goods, such as wood, has fallen, “prices for kitchen furniture, metal doors and windows have increased.”
Attacks on ships in the Red Sea have tripled freight costs from China to northern Europe, pushing up the prices of some items such as electricity, white goods, fixtures and accessories. Labor costs – which make up the remaining 50 percent of construction costs – are also finally declining, says Prof. Francis. “Construction wages were only 3.8 percent higher in December 2023 than a year earlier,” he says.
Architect Tomas Kinver of Kinver Kreations says he is finally seeing the relaxation of material and labor costs translate into lower estimates for aspiring renovators.
“Projects are now coming in with lower price estimates from contractors than a year ago,” he says.
The owner of a typical semi-detached house with a terraced house suspended a 400 sq ft, two-storey extension project last year after estimates came in at £140,000 including VAT.
“The estimates are now around £80,000 including VAT, so the owner is pushing ahead,” says Kinver. He adds that the reduction is due to the drop in material costs and that builders do not have to price to anticipate unforeseen higher costs. Nearly half (47 percent) of construction companies reported a decline in the number of requests for new work at the end of last year, according to the latest figures from the Federation of Master Builders.
So how much do renovations cost?
Anyone who has ever done a construction project knows how wildly costs can vary. Quotations often come in with price variations in the tens of thousands of euros.
They depend on the availability of labor in a given area, which items are currently experiencing supply chain issues, and the specifications you are targeting for the project.
For example, Matthew Boyd of Force 1 Construction in West Sussex says a typical 4×8 meter single storey kitchen-diner extension in his area could cost around £60,000 to £90,000. But just one more expensive design choice – such as popular Crittall-style steel doors instead of bi-fold doors – can add thousands of pounds to the cost of the project. So coming up with even numbers for Britain as a whole is a tall order, especially after a period of huge price volatility. It costs around €1,500 to €2,250 for every square meter of internal space you add to a property during a home renovation project, excluding VAT according to self-builder and extension brand Homebuilding & Renovating.
That would mean a 30 square meter kitchen extension would cost around £45,500 to £67,500.
But our snapshot of current price estimates shows how much they can vary. Craig Colton, founder of Absolute Lofts, which operates in South East England, says a simple loft extension using Velux windows currently costs around £30,000. A dormer extension costs around £55,000, but the cost of fitting a bathroom is on top of that.
“A typical loft extension, which adds a bedroom and bathroom to a three-bedroom terrace or semi, costs around £60,000 to £65,000,” he says. ‘But it would add around £100,000 to the value of such a house which is worth around £650,000, allowing the owner to recoup the money spent on it.’
PR agency owner Lisa Taylor, 38, has received quotes for a 122 sq m single-storey rear extension to her three-bedroom ex-council house in the village of Lodsworth, West Sussex.
She had to buy a fixer-upper to afford to stay in the village where she rented. She and her husband bought the house last year for £410,000 and live there with their daughter Freya, three.
‘Quotes for the rear extension, which would add a kitchen diner with glass doors to the garden, totaled around £50,000 to £60,000, so we’ll have to save first,’ says Lisa. ‘We are going to live here for ten years, so hopefully we will come back. I have seen beautifully renovated former council houses for sale for £750,000.’
Gareth Gazey, of Gazey Architects in London, says TV shows such as Grand Designs have fueled the appetite for architect-designed extensions.
“The popular glazed side extension (or side infill) of Victorian L-shaped houses typically costs £84,000 to £90,000, plus costs, in the south-east,” he says.
Matt Waller of construction company MW Residential says kitchen extensions in his patch of south-west London typically cost at least £100,000 including VAT – and that’s without the luxury fitted kitchen.
‘Some types of loft extensions cost around £120,000… and basement extensions from £200,000,’ he adds. Russell White of Winkworth estate agents in Putney, south-west London – says side return infills can add £100,000 to a Victorian terraced house, while a loft conversion can add £120,000 to £150,000. Some estimates remain eye-wateringly high, even as price increases overall are declining.
Sarah Capes and husband Adam have moved into a four-bedroom house in Radlett, Hertfordshire, and looked at a double-height extension. ‘But the quote we got for it was astronomical, £800,000, so we decided to just live with what we have now,’ says Sarah, who works in asset management.
Save costs by doing it yourself
Darren and Helen Taylor saw a 1970s bungalow with sea views and knew they could convert it into a Hamptons-style beach house. “We decided to do it all ourselves,” says Darren, 51, who invests in real estate. “We knew we could add value by simply building on the flat roof – without any earthwork,” he says. “Building up is a much more cost-effective way to add more square footage.”
Darren says they learned it all on the job, with his 80-year-old father Brian, a former builder, helping out, along with their son Etienne, eight, who loved the hired excavator.
Helen describes how they planned the layout by drawing out the walls on a printout of the floor plan. ‘It would have cost £500,000 if we had used builders.
“We renovate to make money, but also for the feeling of achieving something: turning ugly ducklings into swans,” she says. The four-bedroom house, bought for £610,000 in 2019, is now for sale for £1.25 million through Jackson-Stops.
How much should you spend?
If you’re renovating to live in it for years to come, priorities will likely be very different if you plan to fix it up and move on.
If you’re renovating to make a profit, you need to focus on maximizing the return on your investment and making sure you don’t spend more on the property than you could ever recoup.
Property investor Darren Mold of Domus Developments in Cambridge sold a four-bedroom house in Saffron Walden for £455,000, just a month after buying it at auction for £340,000. He gave it a light £10,000 makeover, including painting, new doors and electrical and heating updates. “I could have done more, but my margin would have been smaller,” he says.
Those who plan to stay in the home long term may have to wait longer until they can afford to make improvements.
Matt Waller of MW Residential says people have been making improvements soon after moving into a home, but that’s not always the case in the current rates environment. “What has changed is that in our last six jobs, the owners have lived in their home for at least two years,” he says.
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