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Home Improvements vs Moving House

Latest research from comparethemarket.com has found that nearly six out of ten (59%) of you home owners would choose to do up your current home over moving house. It seems that economic uncertainty following the Brexit vote and high house prices are contributing to this preference, as well as the high cost of moving and the potential to add value to your home with refurbishments.

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Record highs

House prices have been rising steadily over recent years and hit a new record high in July 2016. This seems to substantial contributing factor of you not wanting to move, with 31% of you citing this as a reason why you would prefer to stay put and improve. Stamp duty is another barrier, as one in ten of you said that high stamp duty costs would stop you from moving and 31% indicated that you would be more likely to move if stamp duty was cut.

Moving house can be an expensive business – of which stamp duty is a significant element. Once you add in the average cost of stamp duty, which is over £3,500 across the UK, to all of the other moving costs that you face, like legal fees, estate agent fees and removals, it can make moving house cost-prohibitive. Perhaps unsurprisingly, many of you would prefer to put your hard-earned savings towards improvements in your home to try to add value and make life a little bit better in your own home. You can see below the potential of these improvements, such as adding a new kitchen, bedroom or living room, or even just updating your garden.

adding value

Percentages ‘typical average value added’ from Move with us: http://www.movewithus.co.uk/house-estimate/how-are-the-home-improvements-calculated
Monetary added value based on ONS average house price of £213,927: https://www.gov.uk/government/publications/uk-house-price-index-summary-june-2016/uk-house-price-index-summary-june-2016

Key investment

By investing in an extra bedroom, you could add nearly 9% (8.8%) in value to your property, or on average £18,826. This of course depends on whereabouts in the country you are, and of course, the quality of the work carried out. Even something relatively small, such as double glazing or adding wooden flooring could add 4.2% and 2% respectively to the value of your home – over and above the average price of stamp duty.

In London, where comparethemarket.com has calculated that the average cost of stamp duty stands at over £16,700, putting that money towards refurbishments could affect the value of your home even more significantly. So no matter where you are in the country, if you’ve been saving up for a house move, it may make more sense to invest this in home improvements.

Adding value

These significant home improvements are now thought to be a key way to add value and ultimately help to get you up the property ladder rather than enhancing your quality of life. 38% of you said your decision to make home improvements was designed to increase the value of your property, compared to 32% of you who said they were to create more space and improve living standards.

Gemma Sonfield, our head of home insurance, said, “The huge growth in house prices since 2009, which has seen the average price go from just over £150,000 in June 2009 to nearly £214,000 in June 2016, makes it difficult for many people to make the move they'd ideally want and, for a lot of would-be movers, stamp duty is the straw that breaks the camel’s back. ‘Improve before you move’ is becoming an important tactic for climbing the housing ladder versus simply making a person's living quarters a bit nicer.” 

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Don’t forget your home insurance

It’s worth remembering that if you do intend to make home improvements, you must your inform insurance provider of the changes made so that if you do have to make a claim, your policy isn’t invalidated. This is because, if any building work is being carried out on your home, it could be a bigger risk to insurance providers – both due to the work itself to the building and to your contents, as if your home is unsecured and there are more people with access to your property, insurance providers believe that there is greater risk.

In addition, they’ll need to know about any changes to the number of bedrooms and bathrooms, as this contributes significantly to how your buildings insurance premium is quoted for. Changes to locks on windows and doors will need to be flagged too as this could affect how safe your home is perceived to be. It sounds like a hassle but it’s best to speak to them directly to get it all sorted out straight away so you don’t have to worry about making a claim if the worst were to happen.

So what will you decide – will you move or improve?

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