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Home improvements vs moving house – which one is right for you?

As the cost-of-living crisis spirals and mortgage interest rates rise, many homeowners are thinking about staying put instead of moving. So, is it better to improve what you have or up sticks and move?

We take a look at how renovating could add value to your home, whether you’re planning a sale or not.

As the cost-of-living crisis spirals and mortgage interest rates rise, many homeowners are thinking about staying put instead of moving. So, is it better to improve what you have or up sticks and move?

We take a look at how renovating could add value to your home, whether you’re planning a sale or not.

Written by
Helen Phipps
Insurance comparison expert
Reviewed by
Rachel Lacey
Insurance and money expert
Last Updated
25 APRIL 2023
7 min read
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Should I move or improve?

If you want more space to accommodate a growing family or crave a touch of luxury like an ensuite bathroom, you have two choices – renovate your existing home or buy a new one.

Both options come with pros and cons. If you decide to renovate, you might have to live on a building site for a while (even seemingly small jobs can create huge amounts of mess), but you could also add value to your home. 

However, it’s important to remember that there are some parts of your home no amount of DIY or renovation work can change. If you don’t like the area your home is in or your garden is the size of a postage stamp, it may be worth selling up rather than doing up. Likewise, if your children have left home and you’re rattling around a giant house that’s getting increasingly hard to take care of, you might be better off downsizing.

What can I do to renovate my home? 

There are many changes you could make to your house to make it more workable and enjoyable for you and your family – or to make it more attractive to potential buyers. Here are a few common examples:

  • Create more space to accommodate your growing family by building an extension 
  • Convert existing space, such as a garage or loft, into a bedroom or family room 
  • Update your kitchen 
  • Install modern insulation to increase energy efficiency
  • Install renewable energy devices, like solar panels or a modern heating system, to make your home greener and reduce your bills
  • Modernise your bathroom or add an ensuite
  • Remove internal walls to create an open-plan living space
  • Add a conservatory to your home, or a deck or patio to your garden.

Which home improvements add the most value?

Not all renovations will automatically add value to your home. Something that’s to your taste might not appeal to potential buyers down the road. If you want to renovate your home to make it a better fit for your family, then there’s priceless value in that. But if you’re renovating with the goal of selling in the near future, you’ll need to be mindful of how much value your improvements will actually add.

Whether it’s upgrading your kitchen, adding a new room or creating off-street parking, there are many ways you could improve your home and add value in the process.

But exactly how much value you add to your property will depend on what renovations you choose to make, as well as other considerations like your individual property, performance of the local market and what buyers are looking for in your area. Young families, retired couples and young professionals will all place different value on different improvements.

The table here shows how much popular home improvements cost on average, and how much you could stand to gain.

Typical value home improvement can add to your home:

Home improvement Average cost Typical % increase in home value**
Garage conversion £10,000-£20,000 10-15%
Loft conversion £20,000-£30,000 15-20%
Off-street parking £1,000-£2,000 5-10%
Basic kitchen makeover £6,000 3-10%
Additional bathroom £6,500 4-5%
Open-plan living space £1,500-£3,500 3-5%

**Percentage value added from Virgin Money. 

How much can I add to the value of my home?

Exactly how much value any renovations will add very much depends on where you live. In London, where house prices are typically much higher to begin with, returns will also be higher.

A loft conversion has the potential to earn you the most money, adding roughly 20% to your home’s value. Based on the average house price of £296,000^, this could equate to an uptick of £59,000 on the sale price. But, with a typical price tag of up to £30,000, it’s also the most expensive area to renovate. 

The next best investment you could make is a garage conversion. This will add up to 15% – that’s an average of £44,250 – to the value of the typical UK home. It’s also the second most expensive option, though, with a typical cost of up to £20,000 to renovate a garage and turn it into another room.

But even relatively simple improvements, such as installing off-street parking, could offer a big return, adding up to an extra £29,500 to the value of the average house.

It’s also worth noting that most areas will have a ceiling price – the maximum value your home will reach, regardless of what improvements you make. Before planning any big changes, it could be helpful to speak to a local estate agent or surveyor to find out how far your plans can realistically expect to affect the property’s value. 

Read our guide on how to increase the value of your home.

^ONS UK House Price Index: October 2022

Will home improvements affect my insurance?

Yes, they could do, especially major building work. If you do intend to renovate your home, make sure you tell your insurance provider. Otherwise, if you have to make a claim, your policy may be invalidated.

Why do I need to tell my insurance provider about my home improvements?

If you have building work going on at home, your insurance provider might consider that an extra risk to your house and its contents. And it’s not just the work itself that adds to the risk. Your home may be unsecured and more people will have access to it. 

Your insurance provider will also need to know about any changes to the number of bedrooms and bathrooms, as this will affect your premium. You’ll also need to flag up any changes to locks on windows and doors, which will be considered a security issue. 

It sounds like a hassle, but a quick call to your insurance provider could save you a lot of trouble in the long run, should you need to make a claim.

Read more in our guide: Will home improvements affect my home insurance?

Can I afford to make home improvements?

While home improvements could be a great way to add value to your home, our research showed that 47% of homeowners are struggling to afford home renovations due to the increased cost of building materials. And 54% of people have had to delay works due to the current cost-of-living crisis. If you’re determined to go ahead with your construction plans, make sure you have some contingency built into your budget.

Top tip

If you’re planning to sell your home, but can’t afford to make any big changes, consider getting planning permission. It costs around £400 to submit a PP application, but it’s a great way of enticing buyers, and could add as much as 10% to the value of your home.

How can I fund home improvements?

If your heart’s set on a home renovation but you don’t have enough money saved, there are other ways you could get your project off the ground. First, though, it’s a good idea to get quotes from a few different tradespeople to get a more accurate idea of costs. Then, carefully work out a budget to see what you can afford and how you’ll be able to repay any money you borrow. Remember to build a contingency of at least 10% into any budget, as renovations often end up costing more than predicted.

Smaller projects

If it’s a small, short-term project and you need a little advance to get it started, you might be able to fund it using a credit card. Just make sure you can make the repayments before the interest starts building up.

Big projects

If it’s a larger project, you could consider a home improvement loan instead. Or if you’re coming to the end of your mortgage, you could remortgage for a larger amount to cover the renovation costs. You’ll end up with higher mortgage payments or paying your mortgage for longer, but it could be worth it if your renovations will improve your quality of life in your current home and save you from the costs of moving. 
  
Read our guide to funding home improvements

What do I need to do if I decide to move house instead?

If you’ve decided it’s time to move on, read our guide to selling your home for tips.

How much does it cost to move house?

There are many different costs to consider when selling your home. Read our guide to the cost of selling a house to find out more.

Author image Helen Phipps

What our expert says...

“If improvement work is done on the home, you must inform your insurance provider of the changes made. Properties that are undergoing building work can constitute more of a risk to providers and, if you’re planning to undertake major works, it’s always worth notifying them.

“They need to know if the number of bedrooms and bathrooms is changing, or if there are changes to security features like locks on windows and doors. Equally, there’s a risk to contents when premises are unsecured and if a larger range of people have access to your property.

“If you decide to do the work yourself, you might want to see what level of accidental damage cover you have in place, just in case something goes wrong with your handiwork. 

“Always check the terms and conditions of your policy to see what it covers before starting any major home improvements.” 

- Helen Phipps, Insurance expert

Frequently asked questions

How do I work out the ceiling price of my home?

Start by having a look at property websites like Rightmove and Zoopla to see what similar properties, with the same number of bedrooms and bathrooms, are selling for in your area. That should give you a good idea of the maximum price people will pay for a home like yours. 

For an accurate valuation, though, you’ll be better off getting a professional opinion from an estate agent. That could help you decide if your renovation project will add value or not, and if so, roughly how much.

Do I need to tell my home insurance provider about all home improvements?

If you’re just giving your house a fresh lick of paint, there’s no need to update your insurance provider. A good rule of thumb is if your renovation project will increase the value of your home then you need to notify them, because it will be factored into the rebuild cost of your home.  

Find out how to calculate the rebuild cost of your home. 

Will I be covered if I move out during renovations?

It depends for how long. Most standard home insurance policies will cover an unoccupied house for 30 to 60 days. If you’re planning a big renovation project and you need to move out for longer, your standard home insurance policy might not cover you.

You should let your insurance provider know if the property will be empty for a certain length of time. You may need to take out additional unoccupied house insurance to ensure your home is protected while you’re not there. 

Helen Phipps - insurance expert

Having worked in both sides of the industry, Helen’s a real insurance expert. She’s worked directly with several insurance providers and now Compare the Market. She’s always searching for the cheapest prices for customers and is passionate about saving people money. Being married with two kids, Helen knows all about the cost of living and the benefits of having the right products and insurance for the whole family.

Learn more about Helen

Rachel Lacey - Insurance and money expert

Rachel’s a self-confessed money nerd who’s been writing about personal finance for more than 20 years. She spent 17 years writing for Moneywise, including a few years as Editor, and likes making complicated subjects like insurance, pensions, investing and tax, easy for people to understand.

Learn more about Rachel

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