In the 1970’s, Do it yourself (or DIY) spread from America to the UK and proliferated. In part, this movement involved the renovation of affordable, rundown older homes. Enormous out of town DIY superstores sprang up. So fair to say the DIY explosion radically changed the housing market. It became possible for the ordinary and untrained to improve their homes – suffice to say improve the value.
My point of my discussion; ‘Over Capitalising’ on property. Can too much DIY sell your house or rinse away the free profit? As we all know, a property is described as being ‘over capitalised’ if the amount of capital spent on it is greater than its value. Spending too much renovating can result in over capitalisation.
Often, when I am in a property that has been improved, I am very impressed to see the creativity, but I start to worry when the seller needs to recoup their costs and they want it to reflect in the asking price. Where house prices have fallen in the last few years, cost of materials and the rates of tradesmen have not. House prices cannot really justify cosmetic improvements and even a new kitchen can be considered cosmetic by some. Taste will always vary. A kitchen hand carved by pixies and costs the same as a small yacht is not going to increase the value of your home significantly.
My point is; get good advice before you start. Check with an estate agent that has construction experience and be realistic when toting up the projected cost before you offer. It’s also a good idea to get tradesmen involved at this stage. Always make a budget and then add some more, because, you will go over budget. Your profit will be in the buying.
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