Friday, 16 March 2018

An extension could add £56,400 to the value of your Thanet home

As our families grow bigger the need for more space, be that bedrooms or reception rooms,
has grown with it. Also, as our older generation lives longer and nursing home bills continue
to rise quicker than a rocket on the 5th of November  (the average nursing home bill in the
area being £706 per week) many families are bringing two households into one larger one.

So, should you move somewhere larger, or extend your Thanet property to make it large
enough for you and your family? In some circumstances the choice has been made for you.
If you live in an apartment with no garden, there isn’t much of an opportunity of making it
larger. But if you have a house with a garden or an attic with sufficient headroom, extending
your home becomes a real prospect.

Even if it makes more sense to extend or move, the choice hangs on a number of different
dynamics – your future plans, money (both saved and access to finance), in what way you
are emotionally attached to your home, the particular area of Thanet you live in and finally,
the type/style of house you prefer.

Interestingly, the average British home is 968 sq.ft, which as you can see from the table,
is in the middle of developed nations when it comes to the size of a property. Of the
1.11m homes sold in 2016 in England and Wales, the average floor area of the houses
was 1,119 sq.ft – that’s about an eighth the size of an Olympic sized swimming pool.
Apartments averaged 530 sq.ft that’s just over ten times bigger than an average garden
shed. Looking at apartments and houses together, the average size of properties sold in
England and Wales 968 sq.ft  – are slightly smaller than the European average, and much
smaller than households in the US.

So back to the question in hand.. extending does mean you will have a lot of
inconvenience whilst the work is being carried out. The location of your Thanet property,
the quality of construction, what type of room(s) you want to add, your plot, neighbouring
building lines, planning regulations and the overall demand for your type of Thanet home,
will make a vast difference to the financial repercussions of extending versus moving.
A medium-sized 270 sq.ft single storey extension (say around 17ft x 16ft) will add on average £56,400 to the value of a property in Thanet
It’s important to note the end result of the extension needs to be a sensible and realistic
home. A two bed semi-detached house extended to a four bedrooms with no lawn or
driveway, or a home with outsized reception rooms downstairs and miniscule bedrooms
upstairs, could be problematic if  and when you come to sell your home in the future.
Irrespective of whether your strategy is to live in your extended home for a long time,
you will want to side-step outlaying a lot of money on costly building work that will make
it tougher to sell.
In terms of what it would cost to build an extension, you can expect to pay on average
between £140 to £200 per sq.ft, depending whether the extension is a single or double
storey extension and other factors including finish and type of extension (note – I have seen
it cost a lot more than these figures – so please speak with a builder) … So taking a mid line
figure, that same 270 sq.ft extension on your Thanet home would cost on average £55,080.
However, moving means there are substantial costs incurred - Estate Agency fees,
Removal Van, Survey Fees, Legal fees and Stamp Duty on the property you are buying.
Neither option is the obvious choice and comparing the costs of extending your Thanet
home to that of moving is not a stress-free undertaking.
How realistic each option is will probably come down to one thing .. your mortgage provider.
You will need a considerable sum of equity in your Thanet home before you can think of
increasing your mortgage more, because most lenders will require you to have at least 10%
to 20% equity left in your property after the extension or move has been done.
The best advice I can give .. don’t assume anything …. get advice and opinion from builders, mortgage brokers, architects, mortgage people and of course… an agent. Look at your
options and make an educated decision with all the superficial and objective facts in front of you.

Wednesday, 14 March 2018

Thanet Property Market – The 22.1% ‘New Build Premium’

According to the National House Building Council (NHBC), 26,142 new homes were
registered to be built in the South East last year, on par with 2016 levels of 26,147 dwellings.
Great news when you consider it is one of the highest number of new builds in the region
since the pre-recession levels of the Credit Crunch and the uncertainty of Brexit and the
General Election.
So, when a landlord recently asked me why the brand-new property she was considering
buying was a lot more expensive compared to a second-hand/existing property of similar
type, accommodation, location and structure I thought this would make a fascinating topic
to do some homework on … homework I want to share with the homeowners and landlords
of Thanet.
You might believe that the difference between purchasing a new build home against
purchasing a second-hand/existing home is just individual preference. Some buyers/tenants
like the ostentatious trendy modern feel of a new home, whilst others like a home that has
stood the test of time.

So, what is the right answer? Well, I am going to be looking at some statistics that shows

there is a real difference in the Thanet District Council area’s property market when in to
comes to new vs existing homes and the price paid. Looking at the average price paid for
existing (second-hand) versus a brand new home since 1996, one can see from the graph
it makes interesting reading.

On this second graph, one can see the percentage difference in average price paid between
new and existing…

Yet possibly nothing is ever that easy, as there are issues with these statistics.
The overall average for the whole Thanet District Council area for the ‘new build premium’
(new build premium being the additional price a buyer pays for buying a new property
compared to a second-hand one) over the last 21 years has been 22.1%. These statistics
actually show that it is problematic to compare like with like because it is impossible to
completely separate all the different factors of type, accommodation, location and
structure etc.

One would have to have a mirror image second-hand Thanet home and a duplicate new build
right next door to each other, then calculate out which Thanet house buyers or Thanet buy to
let landlords would pay more for? Perhaps if everything was the same (all things being equal),
there might not be any difference in what buyers would be prepared to pay… but then again,
it’s like new cars versus cars that have a few hundred miles on the clock ... there is always a difference on the forecourt … because things are never wholly equal.
What I do know is that my statistics of the Thanet property market show that new build
Thanet apartments are worth more to people than their second-hand equivalents, whilst
the difference is negligible between new build Thanet detached houses and second-hand
Thanet detached houses.
However, I believe the really important lesson in all these statistics is the fact that ‘new
build premium’ for new-build versus buying a second-hand property increases in a buoyant
market and reduces in a tougher market.  So, if you want to buy new and the only
consideration is money … try buying in a tougher challenging property market.