When it comes to renovation projects, sometimes it takes money to make money – that’s the finding of the latest research by Towergate Insurance.
Landlords are often looking at ways that they can increase the value of their properties, either to command a higher monthly rent and therefore earn stronger rental yields, or sell the asset for a better price, which will improve capital gains.
Towergate has analysed some common renovation projects to find out which will add the most value to your property, without breaking the bank in the first place.
However, its research has indicated that sometimes it is worth putting a larger sum behind a renovation project to reap the rewards.
We used the current average house price of £220,700 (taken from the latest Office for National Statistics/Land Registry index) to calculate how much some popular renovation projects would cost on this property, how much they would increase the value of the home and the estimated profit on each.
If you would like to put in the value of your own properties, simply use the tool here: https://www.towergateinsurance.co.uk/landlord-insurance/most-profitable-home-renovations
Landlords, Which Renovation Projects are Most Profitable?
On the typical UK property, the cheapest renovation project is to transform a space into open plan living, which costs an average of £2,100. However, if you’re looking to opt for this feature (something that may appeal to many modern tenants), you’ll be pleased to know that it’s not bottom of the list for profit and increase in value.
It’s actually decking that will deliver the lowest increase in value to your property, at just 2% (or £4,414 on an average home). In addition, the profit on this renovation project is just £2,239, following a £2,175 initial outlay.
The most expensive project on the list is a single storey extension, which would cost a huge £20,000 on the average home. But is this worth it? It appears not, as you’ll only receive a £4,277 profit from this job.
So, what is the most lucrative investment? It turns out that adding a garage will deliver the highest estimated increase in value – a solid 20% (or £44,140)- and the greatest estimated profit – an impressive £28,690.
Other ideas on the list include outside décor, a conservatory and a loft – find out which will be the most profitable on your property and happy renovating!