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Property Development

Improving your property

Nicholas Newman Editor Oxfordprospect.co.uk 12 November 2006

PROPERTY DEVELOPMENT IMPROVING_YOUR_PROPERTY Suggested Reading For_Further_Advice__

PROPERTY DEVELOPMENT

· Before you buy - Check out the location, the market and location, and then plan the improvements that are necessary for attracting the rent you aspire to.

· Once you have decided what is needed, put together a realistic and affordable budget and stick to it. Remember don’t forget about VAT and Capital Gains Tax. See also property taxes

IMPROVING YOUR PROPERTY

A. Convenience. Think about what is really required, don’t splash out on a new luxury kitchen or a bathroom with jacuzzi, thinking it will add thousands in value.

B. Adding Value. Not all improvements add value; even if they do you will find a ceiling price for the type of property in your area. Nationwide has found that:

i. A loft extension will add value to some properties but not all.

ii. Lacking a full central heating can reduce the value of a property by 7%.

iii. Adding a parking space can add 6.5%, especially in a residents parking zone.

iv. Building a single garage adds 7.7%, while a double garage can add around 14.5%.

v. Creating an extra bedroom can add value. In a two bedroom house, adding an extra bedroom can improve a property’s value by 6%, assuming the total floor space remains the same. But turning a three bedroom house into a four bedroom house adds less.

vi. Adding a second bathroom, can add 5%, as long as you don’t lose a bedroom in the process.

vii. It is debatable that PVC double glazing adds value, but this might change as energy prices increase.

viii. Probably your most cost effective investment is to give the house a new lick of paint, preferably in plain neutral colours to act as a blank canvass and to make the rooms bigger.

C. Nice to have - but won't add value

Expensive stereos, DVD recorders, sandwich makers, flat screen TVs, fully internet-wired homes are all well and good, but they won’t earn you much in terms of extra rental income – unless your tenant profile requires this as standard.