Adding value? Extend or move?

[WelliesAndPyjamas]

Hoping for some help and direction from someone with more knowledge and experience. 🙂

We have a 3 bed detached house, purchased for £120k, mortgage of £60k (20 years remaining), with current estimated market value of between £180k and £205k, going by long term observation of the local property market (I base this on some valuations we had 18 months ago and also on sold prices for similar properties, the current 'status' of this area, etc).

We need an extra bedroom. There is no avoiding it any longer!

We have had a quote for an extension which will change our conservatory in to a 'proper' room and put a bedroom above it. Worst case it will cost us £40k, says builder, who can also do some fine tweaking on the price to try and get it down a little bit.

We would need to remortgage or take out a loan to pay for this.

4 bedroom houses in similar spots, with similar features, are on the market around here for between £190k and £225k.

The property market is doing fine here. In top three areas of UK for market growth.

What is the wisest, most financially sensible, thing to do? Add the bedroom for £40k, and if so, do we retain enough value? Or move?

I could be wrong but moving costs alot in itself, stamp duty, cost of moving vans...etc etc..so for the sake of 40 grand I would have said stay....

I'd guess it depends on how much you really love your house. If you really like it and the area and it's close to schools, amenities or whatever you need, then extend. But if you're not that fussed and think there might be a better house somewhere for you, or you plan on moving in the near future anyway, then do it now.

Good point.

We also have yet to see any 4 bedroom properties come on the market that we could afford and that also replicate what we love about where we are (lovely school, very small village, back on to fields etc)...but that is a more sentimental arguement trying not to be drawn by it .

Read my mind, metalmum.

There are really lovely areas that we dream about and would move to in a flash but out of our league financially.

Any thoughts on the sums? I have to think long term too. If it makes bad financial sense then the third option is to just make do, change the living room in to a bedroom and adjust the house a bit.

40k seems a bit of an ambitious estimate for a double story extension. We've just done that in a 5x4 metre single story kitchen/shower room and that was without appliances, furnishing and flooring.

When doing your sums, you can factor in a good £10K for all the costs and hassle related to moving.

You love the house and the location, so it makes sense to stay put for that. If you were going to extend then end up moving again in 2 years, (eg for work) then it would be fluke if you even got a resonable proportion of your money back - your comparison of prices of 3 and 4 bed properties in your area bears that out - the differential is small. If you're sure that you'd be sticking around for a lot more than 5 years, then the cost of the work is likely to be absorbed and buffered by price rises, when you do move, if you can afford to never see absolutely all of your money back. In fact, you'd be no worse off selling your current 3 bed for 180K and buying a 4 bed for 210K, if you could replicate the things that you like.

What you're planning to do isn't just to increase the value of the house, though, it's to make it suit you better. We've spent loads more on improving our house than we've got back, on selling, even after being here over a decade, but those improvements have made it a nicer house for us to live in. A better home.

Thanks for replies.

davenotchas do you mean it sounds too low or too high? I have to trust the quote a fair deal because he lives across the road from us and is my friend's husband, but if you think it sounds wrong, maybe another couple of quote would be wise. If I could get any builders to respond 😂 they seem to be in high demand.

pickachew this is true: you'd be no worse off selling your current 3 bed for 180K and buying a 4 bed for 210K, if you could replicate the things that you like . And we could keep waiting and waiting for the right place to come along, while the prices rise and our income (and mortage power) stays the same, and the kids keep getting bigger! Your last paragraph reflects how we feel, i.e. we want to make the home better for the short term and also ensure that in the long term it is a place the kids always feel they can come to feel comfortable and at home, however old they get. But I have an annoying sensible streak running through me that resists getting us in to financial ties that do not pay us back. Hmm, tricky.

We are very unlikely to move away from this area.

£40K definitely sounds way too low for a double story extension; I'd double that.

We paid £35K all up 6 years ago just for a loft extension on our tiny 11-foot-wide terraced house under permitted development, and we're not in London.

I would definitely get some other quotes before making this decision.

Measure the square metreage, and allow 2.5 k per square metre, that will give you a pretty good idea of the cost. 40K does sound low, but not knowing what size it is its difficult to say. If you love the house, extend. Moving house or having builders in are both pretty unbearable in my experience.

Another thinking 40k is way too low for a double storey extension - you need to be absolutely clear what that includes. If it's just to a plaster finish, by the time you've added VAT, flooring, electrics, plumbing etc it's likely to be significantly more.

I think moving expenses (estate agents commission on sale, stamp duty on purchase, legal fees, removal costs) are just wasted costs - could easily be £10k+ on those numbers.

Yes sorry, I meant it sounds too low. Ours cost that and my husband did the electrics and father in law the plumbing so it saved us £££

The cost of building materials has increased lots since we built an outhouse 6 or 7 years ago. We were really surprised!

There doesn't seem to be a huge difference in your figures between the value of your 3 bed (180-205) and the 4 beds (190-225). Is this realistic? For example where I live a 3 bed would be £250k ish but a comparable 4 bed £350k+ making it a huge step up in affordability. With your figures I would probably move, providing you were not moving to a much worse area, plot, quality of house. Extending is a huge pain and takes way longer and costs tell up way more than you originally anticipate.
However if you love your house and would enjoy living there in the long term then extending would make the best sense. Just make sure that by extending you don't ruin the layout of the house e.g. Having a bedroom that leads off another.

I am surprised that your house could be worth up 205k but a bigger house would start from as little as 195k... I'm not sure you've got your numbers right. I also find the quote of 40k a bit dubious.

Having said that, I'd probably extend and fund it through remortgaging. If you went for a bigger house, you'd need to get a larger mortgage anyway, and that's on top of moving costs. Moving is also more stressful that remortgaging.

The £40k figure for an extension - what sort of size is this? Id work on a figure of £1000 per sqm (per floor not just footprint), and this is to second fix only, including basic plumbing and electrics and plastered walls.

If the foundations under the existing conservatory are sound enough to take a two storey (engineer advice needed), and the drains dont pose a problem for a bathroom connecting, then I could see 40k being enough depending on size.

You then need to add on decoration, floor and wall coverings, light fittings, switches, and the bathroom suite itself (and fitting of such). Thats where the costs start to add up and can be overlooked.

As for the financial comparison to moving - how do you want to look at your home? It could be worth a million, but it's all meaningless really. Unless you intend selling it and moving to something cheaper then you will never see that money - unless you borrow more against it in which case you are going to have to pay it back at some time.

As long as you aren't in negative equity, and dont see yourself moving any time soon, does it really matter to you whether the money you spend is 100% reflected in thevalue of the property at the end. Sometimes having the home you want in the area you like for you and your family is more valuable than being able to look at a piece of paper telling you how much you would get if you sold it. You still have to live somewhere.

In short is your house an investment, or a home for your family?

I assume your home is currently decorated throughout to your taste. Would any house you could move to be decorated throughout to your taste? If not you need to factor in possibly redecorating a whole new house over time.

Try and distance yourself from viewing your own family home as an investment would be my opinion. Decide what you and your family want for the money, and then choose to move or extend. Make sure you get what you want from your hard earned, not just what you would like to see on a valuation report.

I think £1k per square metre is a bit out of date unless it's mates rates.