Worth doing up? Do improvements always add value?

[Hause]

DP has recently inherited a house from a relative. It’s a 1930’s, 4 bed semi in a London suburb but it needs a lot of work: total rewire/ re lighting/new plumbing/ heating / flooring /kitchen/bathrooms /decor /garden the lot. It is also rather dark with a badly thought out/cheap looking extension that was added in the 80’s blocking out a lot of light in the kitchen and living room.

We don’t have masses of savings to spend doing it up (maybe could manage 30-40k). We could make some essential improvements ie rewire and new heating and maybe kitchen but nothing structural so we’d be still left with a rather dated looking house ( and risk nobody buying it).

Would we be better off selling it without doing anything? In its current state we’d probably get £500k but if it was completely gutted and refitted it would probably go for £1m plus.

DP is of the opinion that any work will add value and that we should put some cash into it but I am dubious… what if a developer buys it/ guts the whole thing and redoes it? Then anything we spend will have been a total waste both of money and resources.

Property development is completely new to me so I don’t know where to look for impartial advice any ideas?

We don’t want to / can’t live in the house by the way.

If you are skilled and can do work yourselves then it should pay off with the budget you have you would get big return

If you have to pay someone to do all the works - retuned will be mallard and it's likely to cost more than you can afford to do

In that case you can't get it up to scratch you will be selling for development I'd be minded to sell as is

In its current state we’d probably get £500k but if it was completely gutted and refitted it would probably go for £1m plus.
Why wouldn't you!!?? Even if it doesn't go totally to plan, you would still make a packet. Have a look at other properties on the street (sold houses on Rightmove) for ideas of what improvements have worked for that design of house.

what if a developer buys it/ guts the whole thing and redoes it? Then anything we spend will have been a total waste both of money and resources.
That's not on you, that's on the developer.

Thank you so much 😊 - DP is quite handy but we both have full on jobs and a young family I don’t think it would be practical to take it on ourselves.

Factoring in time, stress, availability of builders, materials etc. I'd just sell it on as a doer upper. We've just had an extension done - a big one - and we seriously ate into the contingency, it ate up time, etc

If you know what you are doing, have contacts and can manage the project yourself. Crack on. .

You won’t be able to gut it and refit it to £1m+ standards on £30-40k. I don’t think the improvements you could make on £30-40k would pay back as the house would be incomplete, and people want either fixer-upper or turn-key, not to pay for “well, some stuff has been done, but not other stuff, and you might want to undo the stuff that’s been done since you’re doing the other stuff to your taste.”

Just sell it.

Thank you everyone- I really appreciate your advice.

As above, just sell it as is.

The small amount of work that could be done with your available funds are a drop in the ocean and may not add any value while leaving you short and with a lot of hard work.
If someone was going to redevelop it (probably the only way to realise the upper valuation) then possibly all your work would be ripped out without a second thought.

I agree with @stuntbubbles. Unless you can afford to finish it and sell as done up then I would sell as is. You can't do that on your budget so it's a no brained for me.

If you have inherited then surely it's mortgage-free. Can't you borrow against the value of the house as-is and therefore get money for the development budget?

Just sell as is. Lots of people underestimate what work costs and hence will probably pay you more than it is worth and selling now will be more profitable for you than doing the work and then selling. That is not even taking in to account the fact that we are heading in to a recession and prices may tank.

Sell it.

You can't do it up to a 1m property with 40k. No way. You'd need to invest at least 200k probably to make it worth a million.

Given the time, the effort and the money required, just sell.

It will probably go for over the odds anyway, people love a project rather than spend money on someone else's idea of decor.

Sell!

We bought a very similar house 18mths ago. 4 bed, 1930's, dodgy old extension. Uninhabitable, needed new roof, wiring, plumbing, bathrooms, double glazing, kitchen the lot. Completely overgrown garden too with a crumbling, asbestos garage! Its detached and 70 miles from central London though.

18mths ago- we were told we'd get the work done for approx £150,000. We are now nearly double that with the increase in wood, steels and everything and not even finished! We have been lucky to get local trades who have then recommended others and all been fantastic. If the house is in an area where you don't know the trades, or can't do the work yourselves, it can be a mine field finding good trades. The good ones are booked up so you might be waiting months, or even till next year in some areas! As an example of price increases- most quotes we got were valid for 4-6 weeks. When we were quoted for supporting steels- it was a 7 day quote- because the prices were going up that quickly!!!

I learnt the hard way a few years ago that in some cases- its better to just sell as is and don't waste your time. My nan moved to a care home and her house was to be sold. Some estate agents said- do up the kitchen, bathroom, re-paint then sell. Others said do absolutely nothing and sell.

Myself, mum and aunt spent weeks painting the inside and touching up where we could. Slight kitchen revamp and new flooring in there and hall. Looking back- it was a complete waste of weeks of our time and what it sold for- would barely have covered the bits we added. The next owners ripped out the kitchen, re-arranged the rooms and did the proper overhaul it needed.

£30,000-£40,000 will be swallowed up extremely quickly and I cannot see you'd get all the work it needs doing with that! IF you attempted to do it ALL yourselves, you will have no family time and even then- it sounds unachievable.

I would sell it as a doer upper. If you look on the house extensions thread on this site you will see people suffering over their projects getting out of hand and doubling/tripling in price from the original quotes. It sounds like you have enough on your plate.

Once again thank you all so much - really really useful advice!

I would sell it and enjoy the money. Like others have said, it will cost a lot more than you have available to do it properly and then factor in the time and stress on top of that.

@senua
You cannot reasonably get a mortgage on a second property if OP already has a mortgage that’s high on the first property that’s owned by the op. (Assuming she is buying a property) There’s only so much a young family can pay off every month.Borrowing even more still has to be repaid every month. Also houses that are doer uppers are hard to get mortgages on.

You will have to pay CGT on any profit won't you?

the cost of paying for the work to be done and in this current climate would make me not be so sure about rising prices.

You won’t do much for £40k in this current market. You’ll also probably be waiting MONTHS for availability for tradesmen all
the while you’re paying bills on it?
You’d probably get to a state where it was in a worse before it got better stage, and let it go for less. Just get rid.

Agree , sell it. You’ll get a good price as people generally don’t want to pay a premium for something that’s clearly been done up to sell (usually cheaply)
Plus what everyone else said about increase in materials, trades etc