LONDONBuying To Renovate
Buy on line Energy
by Stephen Pritchard from
Buying a house that is in a less than perfect
condition can save money, and it is certainly a way to stamp your own
style on a home -- without paying to remove other people's improvements.
But taking on a derelict or even a tatty property can be a real
challenge, even for the hardened DIY enthusiasts. In today's market, it
is rare to find a cheap, run-down property with just superficial or
decorative problems. All too often there is something more serious that
needs to be put right. This does not mean that less than perfect
properties are off limits, but it is vital to enter into any deal with
both eyes open.
Start by comparing like with like. What is the price difference between
a "ready to wear" house and one that needs a lot of work? The savings
might not be that great. Ask local estate agents for an indication of
how much the house would be worth once it is done up. Knock off 10% from the selling price to account for the agent's enthusiasm, and
add at least 10 per cent to the cost of any work. If there is still a
difference, the house is worth a further look. "If you buy a property
for £90,000 in a street where houses sell for £100,000, and it
costs £20,000 to do it up you will end up out of pocket," says
Michael Day, a director at the estate agency chain Connells.
Be realistic about what you can take on. If you have good contacts in
the building trade, perhaps because you have refurbished a property
before, then a run down house should pose few real challenges. Some
problems, however, can be real warnings igns: subsidence, in particular,
is very expensive and disruptive to put right.
If the place is a real wreck, think about renting before moving in.
Builders work more quickly if owners are not under foot, and no-one
really wants to live on a building site. If you do have to live in the
house, think about the disruption and the time involved. "Buyers rarely
account for their own time when they try to refurbish a house," says
Michael Day. "But if you have to give up your evenings, weekends and
holidays, there is a cost to that."
Consult the professionals from an early stage. Start with a good
chartered surveyor; ask for recommendations to find someone who is
thorough and knows about refurbishment. A surveyor might be willing to
give a property a quick "once over" for a few hundred pounds, or even
visit several properties on a shortlist for a day's fees. Once you have
picked a property, pay for a full, independent structural survey. A bank
or building society valuation on its own will be next to useless for
this type of property.
Consider consulting an architect if the project is large. Architects'
fees come to around 15% of the total cost of the work, but often
an architect can save more than this by better use of space and
materials. Employing an architect will also help to keep the project on
time and to budget. If the property needs structural work, the architect
might recommend a structural engineer's services too.
If you can, arrange for trades people such as builders and plumbers to
quote for the job before you make an offer. Then you have a good idea of
how much the work will cost, and can use this in negotiations.
If you plan conversion work, such as converting flats back into a house
or changing a commercial building to residential use, consult the local
planners. Most planning departments will give basic advice by phone or
email, and this can save serious headaches later.
Talk to lenders at an early stage about the work. Most banks and
building societies will cap loans for less than perfect properties,
until the work is carried out. This is known as a retention, and it will
cause cash flow problems unless you budget for it in advance. For
large-scale projects, a phased release mortgage might be the answer.
Here the lender hands over money at key stages, such as roofing or
plastering out. The Ecology Building Society and the Norwich and
Peterborough are both sympathetic to self-builders and to refurbishment
When it comes to budgeting, allow a good margin for error. A 20%
safety net is a good guide, but some projects can easily double in cost.
Watch out for "project creep", where the cost goes up and up because
you, the builder or the architect are adding more work. Make sure at
least some money is to hand as cash, as there will always be urgent
bills to pay.
Don't try to compete with property developers. Refurbishing a house as a
way to have a home that is ideal for you is a reasonable goal. But when
it comes to making money, local developers will have the edge: they have
the contacts, the cash, the experience and most of all, they never have
to live in the house.
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