Would buyers question a £50k rise after modest improvements in five years? What would you want to see done?

[DecisionTime123]

I'm looking at a house offered at £325k; good area so houses in that road go for minimum £375k, I can see all the Rightmove/Zoopla listings and you don't need to do much to sell for the higher price. I thought I was getting a bargain as owner (builder who took it in part exchange) wants a very quick sale. My plan was to decorate, carpet and put a new bathroom in, maybe a new boiler, and that's it. I can't afford to do much else. But the thing is I wanted to sell on in maybe 5 years - so in 5 years time, having spent less than £20k, if I put it on the market for the price they normally go for (now), what will potential buyers make of the apparent £50k hike?

Will they say hey yes still a bargain and less than the one next door? Or will they say who does she think she is, putting in a new bathroom and now wanting £50k extra? How does that seem to a buyer? Too much too soon? Or entirely reasonable bearing in mind I bought it below market value?

@Minnie798 do you think interest rates will go much higher in next 5 years?

Always a gamble of course but I am not up to date on current MN thinking 🤔I know there used to be a debate going on about it (well, there was a couple of years ago)

valuation (just for mortgage) has come back [at £325k] so not sure what to make of it?
I thought you said "houses in that road go for minimum £375k". Something doesn't stack up.

@senua yes but I don't know what isn't stacking up, not sure where to look for the incongruity if that makes sense. The builder (developer) just does a desktop valuation and then buys the house in part exchange for one of their new properties. The valuer for my mortgage sent me the report it says all fine just cosmetic. What do you suspect?

I’ve moved every five years since buying in London - just going for fourth property - first one was bought in the slump of 2011, second one during Brexit, 2016 third one was during the Stamp duty holiday in 2022 and to pay off my ex and hopefully now the final transaction!! I don’t think it’s unusual

What do you suspect?
If everyone agrees that it's worth £325k then why do you think you can sell it for £375k?

Agree they are delusional. Prices most places are down from a post Covid peak in 2022.

Interest rates could get higher. Property prices could go down. Or up. It’s always a gamble with the property market if you plan on moving on quickly - 5 years is quickly. If you planned on staying 10-20 years you are very likely to make positive equity but after 5 the market could be in a downturn.

Mortgage company valuations normally come back at the exact price you have agreed. If you had an offer of £340k accepted the mortgage valuation would probably have come back at £340k.

That’s the way mortgage company surveyors work. They are just trying to make sure you are not over paying. If you had offered £400k then they probably would have had something to say about it.

Agree on the valuation. Mortgage company just want confirmation it’s worth what they’re backing. I bought a house for 458 and the valuation was 458!

Can one ask for a re-count!? If the house is worth £375k but they call it £325k then the LTV ratio will be higher, which is nice for the mortgager but could cost the OP money.

The builder who took it in part exchange has been there 13 years?

Don’t worry about it. I used to flip properties so I’d buy them do them up and sell on in less than a year. Not once did anyone ask why - they knew what I was doing. I also have lived in about 15 properties in my life time and several for only two years - I get itchy feet. No one has commented as far as I know and I’ve always made money. One property I bought to rent out, all I did was a bit of touch up painting (so about £1500) and got tenants in a couple weeks later. When they gave notice two years later I put it on for sale as it had gone up 25%. Sold it right away.
I’d wonder why this property you’re looking at is selling now below market and I’d certainly hope it would sell for more in five years time. If it sold for the same I’d think it was a bad buy.

Thanks everyone, been helpful to get everyone's input I think I got what I wanted from the thread 🙂

No, I wouldn't question a "50,k price rise in 5 years. When buying, I generally use what other similar houses are priced at as a benchmark, not what the seller paid for it.

It entirely depends on where the market is in 5 years time - but I would say that the changes you are taking about making are just maintaining the property - and not doing anything significant to increase value. Decorating, carpets, boiler and bathroom are not going to add much value as they are expected upkeep really.
So if in 5 years time borrowing rates are low, and the economy is healthy, then including your planned maintenance projects its entirley possible it would sell at 50k more. That would be a 17% uplift - the equivalent of roughly 3.5% increase a year. In times gone by that would be completely reasonable. I would hesitate though - and suggest that given the current market and economic situation prices will likley continue to stagnate or fall for another year or two. So that means you need your extra 17% in the following 3 years - so increasing at close to 6% per year in that period. To me that seems very optimistic. It could happen if the government chose to introduce props to the market though and you should never rule that out completely. My feeling is - that isn't possible anymore though as they have proped the market and economy for nearly 2 decades and dont have any more levers to pull.
If I were you I would do my sums on the negative expectation that in 5 years the house will be worth about the same as you paid, or a little more. I like to plan my finances for worst outcomes, so that I'm not caught with my pants down, and so that I can genuinely celebrate if things are better than expected.
I would really suggest you reverse your thinking on this assumtion that you have got the house at a 50k bargain. To me its sounds like you are paying the market rate - and that the market in your are has shifted as it is doing in many places.

I’m not sure people always worry too much about how long someone has lived in their house. We bought our last house in 2023 and sold it 2.5 years later for £20k more. No major improvements, just better presented generally plus new windows and a new boiler. We sold to the second viewer, no one seemed bothered or asked why we’d only been there two years (small house, we upsized). Our neighbours house was also for sale at the same time and they sold quickly too. The house we now live in was owned by the previous owner for around 5 years. People move for all sorts of reasons, upsizing, downsizing, divorce, relocation, schools.

I have done this a few times now. Our last home we bought and sold in 3 years (it was a starter home for us). In those 3 years we increased the value by 60k by spending under £20k and the house sold quickly in a down market. High demand area in the southeast with good schools. We put in engineered wood floors throughout the downstairs, made some clever budget friendly changes to the kitchen layout and installed quartz worktop. We also cleaned up and made the garden more usable. Plus we added some built in storage, new paint, some nice lighting. We also converted a bath to be a bath/shower combo. I am an interior designer and we do a lot of DIY so that helps!

I think a new bathroom will add value. A new boiler is necessary but unseen unfortunately and won’t add lots of value, it’s expected to have a good boiler- might be a selling point but don’t expect a return. New carpet also not a “wow” feature unless it’s super luxe but even then not quite sure and carpet looks rundown fast. At the end of the day- If you get your house to a point where people can just move in and style it easily they will pay potentially even more than asking.

No one can answer your question accurately @DecisionTime123 because none of us know for sure what the housing market will be like in 5 years time, let alone the housing market in your specific area. Housing looks to be on a downturn to me and rates may well be higher in 5 years. If you like the house, buy it but don't assume that you will make profit (you could also make a nominal but a large real loss if we see a lot of inflation over the next 5 years which seems likely).

All really good additional comments; if I had to sell in 5 years at what I paid for it, that might be tricky; I'd need to get back the cost of the renovations, modest as they are, and hopefully sale costs like agents commission etc. so yes, there is a risk involved, its like speculating to accumulate but my margins are very tight. @rainingsnoring says "if you like the house buy it" - which seems really obvious, but I am not 100% on it; rather I was attracted by the lovely area and the fact that I could stretch my budget as I felt it was being sold below market value. Basically I can't really afford the house, but was justifying the risk on return by saying to myself "yeah it's really too expensive, but it's a great investment". I almost think I shouldn't have looked at it in the first place!

Have very much appreciated being able to discuss it on here.

I sadly bought my first house in 2022 for 165 and had to sell for 150. I have no idea why others think they are an exception.

Nobody can predict what it will go for in five years time based on a verbal description.

5yrs is a long time in house buying. I am buying and properties in area i’m looking at are 40% higher in last 5yrs. Who knows what it will be in 5yrs time. Many houses gain value without much improvement.

It was still bubble prices and low mortgage rates by historical norms, and all they needed to do to calm the bond market was U-Turn on her main policies, the UK can"t control the bond market reaction to U.S/Iran like that, we are in a different world now. Gilt yields also spiked higher under RS and there was barely a peep in the media as they do everything in their power to keep people borrowing, see the the ridiculous Iran coverage now for example where they are just parroting Trump"s social media posts.

What market are you buying in? Some markets are dropping a lot, a house can lose 50k in the blink of an eye in choppy markets.

https://www.northnorfolknews.co.uk/news/26078529.house-prices-burnham-market-slid-third/

I literally said in my first post that we are living in different time now – I never claimed OP could turn £100k on her property now.

Regardless, they weren't low mortgage rates in autumn 2022-spring 2023. It was 5.5%, which is higher than they are now, and it very much did inflict a lot of hesitation in the market. They did not fall until autumn of 2024.