Help! Tough property choices financial details included

[Biggleswick]

NC for this as sharing personal finance info.

We live in London NE, now a nice area has gentrified a lot since we bought 9 years ago.

We have a small Victorian terrace with a loft conversion is half house style so quite narrow. We now have 4 bedrooms 2 bathrooms and a nice location with good schools at primary and good enough ones at secondary.

We have a large through lounge and you have to walk through it to get into the smaller kitchen. The total cost of us buying and doing up the loft and repainting sprucing floors up means we have spent about £480k to date. We have no mortgage.

We don’t really want to move for more room so considering a large kitchen extension and we have gone through planning for it. Long story short we have totted everything up from building work to finishing and it will be just over £200k.

We think our houre is worth about £800k now then will be about £850- £875 with the kitchen.

Have you done something like this?
Would you?! What do you think about the costs quoted?

Whether I would do it would depend on how financially viable it was for us at the time, and also what our expectations were of getting that money back upon sale.

If we had 200k sitting in the bank to do it and had a steady income to replenish savings, I’d do it. If I would need a loan for that amount and the loan repayments weren’t affordable or were right, I wouldn’t do it. If we needed a loan but could comfortably afford the repayments, and I really wanted it, I’d do it.

I’d also do it with the expectation I wouldn’t see that money again upon sale. We’ve recently done similar and extended rather than move and accept we won’t get every penny back but it’s absolutely worth it to us because we love where we are, don’t want to move, and that extra space will make this our dream home so that is worth it personally for us.

So you'd be spending £200k and you'd hopefully get £50-75k of that back? It would cost you £125-150k to avoid moving, minus stamp duty and legal fees. That's a lot of money to live on a building site and avoid moving house IMHO.

It’s obviously not going to return what you’ve spent on it but sometimes house renovations don’t return on the money spent. Does your £200K include a contingency? Otherwise I’d probably consider more like £250K.

You say you don’t want to move for more space and you seem to like your current house and area. Would £250K get you an equal house in an equally nice area with good to good enough schools? Including moving costs of stamp duty, removals, survey, estate agents fees? If it wouldn’t, rather than a return on investment I’d see the extension as making the most of your current house. Whether that is worth it to you depends on if you can afford it and whether you can tolerate living in a building site for a few months.

I can but dream.

If I loved the house/area & wanted to stay there long term & the numbers looked like yours, I'd do it, if I either had the money or could pay the 'loan' (might get a mortgage, might be a lower interest rate)

id check out the ceiling price of the house to be double sure it wasn't exceeding it (or not by too much).

id look around to see what was on the market that eas suitable & I liked, but unless I'd gain something significant I'd stay & do the work

sorry, nowhere near enough detail to have an
opinion about the cost, except to say it's always more than you think!

Another thing to consider is how it will impact the size of your garden. Also does it bother you to have a walk through lounge? It would be an ideal time to look at moving internal walls to avoid this & also putting in a ground floor toilet if you don't have one.

Thanks all this is really helping. I have to decide in next couple days so it’s great to get some thoughtful perspectives.

I would spend more than I might back on a home if I was going to live there long term. Not £150 grand more though. That seems like a huge loss.

Are you saying that the houses in your road/area with large kitchen extensions are going for no more than 75k more than the unextended ones? That doesn’t sound right.

Also 200k is a lot for a bogstandard Victorian terrace extension even with current crazy construction prices.

Have you looked at “orangery” extensions - ie solid roof with skylights, big windows/bifold doors they can come in cheaper

What did you pay for it?

£285k

If you’re in for 680k in total, even if you had to sell for 875k you’d still make money. If you stay there 10 years it will be worth a lot more than that.

If you were doing it to sell it would make no sense, if you’re doing it to make the house work for you and save moving costs, it should be fine.

I would to look to ways to get the cost down though. Have you got the plans to hand?

If you're in a terraced house, will they have to bring everything through the house (soil from the foundations out, building materials in etc) or is there rear access? That would be a nightmare and make the house virtually uninhabitable for much of the build if you've got young children.

Erring towards doing it but with some cost reduction plans maybe on glazing spec and going for a basic kitchen fit, no island. Turn utility into a small loo… see if there are ways to get it closer to £160k without compromising too much. Should have said the shell to first fix level was coming out at £130k including VAT

Does “shell” include flooring and heating?

On paper it makes more sense to move. Sell your house, deduct stamp duty (approx £40k?) on new place that costs about a million.

BUT are there houses in that bracket you would buy? The market near me in a similar situation is dead. Very little coming on the market.

Really that extension needs to be returned to be cheaper to be worthwhile.