Is Extension Worth It?

[tbtf]

How do you work out if you're adding value?

I own (mtg) a 3-4 bed detached house, in a rough () seaside town, walking distance to the beach, 3 beds upstairs, with a converted garage which is a study but I think could be classed as a bedroom. The house is 25 years old. Square garden, probably 14 meters from the back of the house to the fence, about 9m wide. Neighbours both sides, desirable caravan park at the back (the "lodges" sell for more than the houses on my street!). Quiet street, I can hear a pin drop at I'm wfh, front drive is about 3 car lengths to the street and 2-3 wide, so we don't feel overlooked at all. Bathroom big enough for a freestanding bath, separate large shower, double vanity, and the bedrooms are all small - medium doubles, no box rooms, but no en-suite etc either.

Zoopla estimate £207-229k but valuation last year for mortgage came in at £154k, we thought this was really low but it was lockdown 1 and we had no idea what was going to happen in the world so we accepted it and remortgaged to finally get a fixed deal (DH self employed). We released all the equity and put in new boiler, new bathroom, and double glazing, with the rest earmarked for the extension...

The downstairs is a living - diner (as was the fashion) and tiny separate kitchen, it's 2.3mx2.9m, I'm getting quotes to extend the kitchen adding a 4x4m flat roof with a lantern, patio doors and large window. These quotes are coming back at about £20k (£19.5-£23k) these feel really high as I was thinking an extension was £1000/ sqm?

I've got no plans to move, my street is lovely, all detached properties some larger some smaller than mine, friendly quiet neighbours, play park at the bottom of the street.

But am I spending too much for the actual value of the property?
How do I do that maths?

Prices for extensions have crept up recently, a combination of materials going up in price, and huge demand. Builders can pick and chose their jobs at the moment, and prices might reflect that. Also, the smaller an extension is the less cost efficient it is per square meter unfortunately. If I was planning an extension now I'd start from a ballpark of £2000 a square meter, a lot more if it was a small extension. Maybe its just me, but I feel it's harder and harder to add an extension to add value, unless you plan on doing a lot of the work/project management yourself. I'd only really now consider adding one to a house if I was planning to stay for quite a long time and I thought it would add to my quality of life whilst I lived there. Don't get me wrong, the right extension can absolutely transform a house and the way you live in it, but I wouldn't assume I'd turn a profit by doing so. As another option, if you feel you have enough space but its not really working for you as it is would it be worth considering re-configuring the space you already have? Would you prefer a kitchen diner and a separate living room and would that work within the existing footprint? If the walls separating the rooms are stud walls rather than supporting walls this would be much cheaper to reconfigure- you'd probably find you could even do some of the work yourself if you and DH are a bit handy.

Firstly, ignore Zoopla the only way to value your property is to look at ones that have sold on your street and look at the condition they were in when sold as a comparison.

Secondly £1000psm was a long time ago. Prices have risen a lot since then, as a bare minimum you should be looking at £1500spm but this depends on where you are in the country and the availability of materials and builders. Plus access to your property.

I am assuming your kitchen is at the back, so materials would have to be put at the front of the house meaning they will have to wheelbarrow/carry all the sand, cement, blocks and bricks, windows, lanterns etc round to the back unless your back garden is accessible to have materials craned in.

With a kitchen extension (which I did 8 years ago) that quote is probably to first fix, so cables out the wall waiting for sockets, pipes out the floor waiting for connections to sinks and a freshly plastered interior. Now you have to add the price of the kitchen cabinets, appliances, flooring etc on top.

Whether or not you will recoup your investment needs to be weighed against how it will change your home for you. For us it was a no brainer and I love my kitchen 8 years on. We have put a lot of money into this house (garage conversion, extension, boiler, windows, sofits, bathrooms etc) but it was to make it our home not as an investment. We have been here a decade and will be here for another decade.

You're both right, I'm not in this for an investment but it's hard for me to stop thinking about it being a "waste of money".
Also the points about builders prices having increased is so true, trying to find any tradesman in my area with availability is like a needle in a haystack.
The build cost is a lot of money to me so want to make sure I'm doing the right thing, I'm desperate for a bigger kitchen and don't want to lose my big living room either. I don't want to move, local houses I like are £300k+ I don't want to have a mortgage that big, so improving the home I have is probably my best option.
I'll have another look at sold prices on my street, but nothing's quite the same as ours, other houses are closer to the street at the front or closer to the caravans at the back, but maybe that's more of a preference rather than anything to do with value

Agree with pps, Zoopla is rubbish so disregard that completely. Unfortunately the mortgage valuation you had is likely to be much closer to the true value of your property than Zoopla.

We had a large extension about 4 years ago and we've made more than double back what we spent on the value of the house. Financially a no brainer but has also been brilliant for how we live etc. This worked out at £2k per sq metre to first fix so kitchen / bathrooms / flooring / bifolds etc all on top of that.

We're about to do another small extension - the estimates that we've had have all been again about £2k per sqm but we expect to have to pay some extras on top of that as things crop up during the build. We might get the cost back in the value of the house, we might not, so financially it doesn't make sense, but we need to do it (its an office, H permanently WFH) and will make our day to day lives better. Plus, this is as-close-to-forever house, we'll be here for at least a decade so makes sense.

In your shoes, I think you need to do some more research. Check what sold prices are locally, do your figures carefully (what are you likely to spend on top of the quote for kitchen / decoration etc) and think about whether you're likely to see that back in value. Then think about whether its worth it to you even if financially the numbers don't necessarily work out. Think of say the next 5 or 10 years with the layout you have, you / your children getting older.

O couldn't stand a small kitchen so I'd go fir the extension. The house I'm buying is an OK size eat in kitchen, but I'm going yo extend 2m out in to the garden to make it more a wow space. I imagine spending my days there and evenings in the sitting room at the front where the TV will be. It will be a 2m by 5m extension, all glass, then new kitchen and flooring plus under stairs loo. I reckon £60k at least - with build bit being £25-30k. This is London though. What you choose for finishes obviously makes a big difference, but I don't want to spend loads on the build and then get a cheap kitchen.

If you're not doing it for investment, think about the benefits to you. If it's going to make your life easier, more pleasant, whatever. I think you need to really want it so that you're not looking at it in the future and only thinking of the money.
I don't know about prices going up, but DH (bricklayer/builder) used to do these sort of extensions for people and £20k sounds about right (we're South East but not London). Materials have definitely gone up recently, I know that much.

£2000 plus per M2. Depends on the work needed too, eg drains, depth of foundations, finishes etc. If you really want to stay there, it is worth it. You must have some idea of what similar property sells for - Zoopla is a joke sometimes.

I think an extension is the exciting part. I did not feel giddy when I had a new boiler and replaced all the radiators.

Plot it out in your garden. I used tent pegs and string. Imagine walking around it. My kitchen was out of proportion with the rest of the house, sounds like yours is too. I had a Pinterest board with all the kitchen stuff on it. I shopped around and compared prices so I was confident in that cost.

Had a builder quote me. He wasn't VAT registered as he kept his income under the threshold which is around £75k. What he did instead is ordered supplies from the builder's merchant, passed the phone to me and I paid them directly with a credit card (earned points.) I also paid all the other sub contractors directly. However the builder's original quote included how much they would charge me so no surprises. He invoiced me every week for his days times his day rate plus any skilled labourer or unskilled (couldn't mix mortar but could pass bricks etc) I transferred the money into his bank account.

He came recommend by a very fussy woman I knew. He turned up on time and when he said he would. Sadly he is no longer doing any building work.

Your plan is to stay put, the extension would improve the desirability of your house further down the line. Get an estate agent round to value your property and talk to them about your extension plans. However, this is your home and I bet that kitchen would make a huge difference.

Following out of interest

It sounds like you aren't looking to move, so the question is not so much whether an extension adds value to the house (which a larger kitchen almost certainly will anyway) but whether it adds value to your quality of life. Sounds like it will, and the quotes seem to be reasonable. If you cannot afford it, go for it

• can

VAT is turnover of £85,000 plus p/a. Builders who don’t generate this are not doing much work or cheating HM Revenue. Obviously vat was only saved on his work. You paid it for the supplies from merchants as a member of the public.

We extended a few years ago. It has made a huge difference to the way we live in our home. I think it has added value but couldnt say by how much as we are the only people on our estate who have extended. But the real thing for us is how it has changed what was a stop gap house to somewhere we want to stay for as long as possible.

I've spoken to a builder who lives on my street, I really want to use him, his company usually does bigger jobs, highly respected, he's done most of the extensions on the street, we've bonded over being neighbours and the fact that neither of us want to leave the street. The quote is higher than I can afford this year, so he's going to see if there's any way to get the costs down, I've asked if Ive chosen non-standard windows and lantern sizes, could I choose a standard size if that's cheaper depending if I like it etc. And I've asked if I could get my DH to dig the footings, as apparently it's £8-£10k before we even get out the ground! So if my DH takes a week off work, we hire a skip and we get the foundation hole dug and carted round to the front, we hire a skip etc, I'd be over the moon to save a couple of thousand that way too. DH does a manual (I'm sure he'd say highly skilled) job in the power industry so hopefully he's got the stamina for digging the builder was really keen when I suggested that.

I keep trying to find similar properties that have sold but it's hard as I really feel this street is "special" in the town. So I'm concentrating on sales on this street only.

The most recent sale of my house shape is Dec 2018 for £155k it is almost exactly the same as ours, but we have a newer bathroom, and their garage conversion is slightly different, we have a window rather than garage door, entry by a door in the tiny front hallway and a stud wall to create a laundry by the stairs accessed only by an external side door if any of that makes sense.
I've added their floor plan and a picture of their kitchen mine is a rather fetching beige ( hasn't been updated since new in 1996) and a rear elevation so my new kitchen will be a square box added to the left with big windows facing the camera and French doors along the new side wall which will create a kind of courtyard / play decking with the original French doors from the living room you can see there too. I have visions of just swinging those doors open and letting DD play in an enclosed decking area there without full access to jump in my flower beds.
So with my valuation at £154k and spending £30k it does feel like I won't be doing it for a financial investment but as an investment in my happiness.
Am I mad though?!

I’m getting an extension done. It’s actually a lot cheaper than it would have been before So I guess it just depends where you are

I don’t really get this attitude of “is it a waste of money” surely you can relate that to anything you buy? do you feel holidays are a waste of money, cars? Once you have had a holiday it’s done and dusted, cars devalue continually, spending on your home (if you intend to stay and not move within a short period of time) in my opinion is never a waste of money and if improves your quality of life and makes you enjoy your home, surely that’s a very wise investment for yourself and the way you live.

Can't comment on your maths, but I'm in a similar situation. We want to do a loft conversion, big house so it will be about £60k once we have recarpeted the stairs throughout, decorated etc. We don't truly need the space, but it would make the house really lovely and the ceiling price on our street is very high, with other loft conversions and bigger homes, so it doesnt seem like a stupid decision. I don't think it will have a "pay back" in terms of investment, because prices at the minute are soooooo high, both due to demand and materials shortages. But we are going ahead because we don't want to hang around for years (we want to enjoy the rooms now!). I absolutely love my house, it is not perfect but i very rarely see a house I like more (the last one was a laughable £1.4m, which we definitely couldn't afford!) So improving this house just feels incredibly sensible.

But I am incredibly nervous about sinking so much money into the project and just hoping I like the finished product as much as I expect!

@PresentingPercy

VAT is turnover of £85,000 plus p/a. Builders who don’t generate this are not doing much work or cheating HM Revenue. Obviously vat was only saved on his work. You paid it for the supplies from merchants as a member of the public.

@PresentingPercy my extension was 8 years which I did state in my post. Where I live in gorgeous Yorkshire, £75k or even £85k for builder is a very decent salary. On my very desirable housing estate, in catchment for an outstanding primary and outstanding secondary school which sees prices stay relatively high, a 3 bed detached house on my estate will see you with change out of £250k.

He had been in the building trade for 20 years and was a perfectionist, tidy and reliable. He also liked to go on holiday every time the children were out of school. His father is a well known financial adviser in the area, he was the one who suggested my builder work this way. There is a difference as you well know, between tax evasion and tax avoidance.

My builder also finished every day at 4.30pm to collect his children from after school club because he absolutely adored playing football in the park or taking them swimming. Not everyone lives to work. In fact he did a volunteer role in the community too. Prices in other areas especially down south are eye watering much higher. My architect who drew up my plans to submit to planning charged me £400 at the time. My friend is an architect within the M25 ring. I know she wouldn't charge that for copying someone else's plans.

So no he wasn't cheating HMRC and he did have lots of work.

@tbtf this is about quality of life not about recouping money surely? At our last house we gutted it from top to bottom, full renovation and did not see any profit due to the market crash and slow recovery just a lot of experience in DIY. But we made it our home.