Should you renovate your house before selling?

Owning a property isn’t easy, maintaining it can be difficult and costly and you might not always be in the position to carry out much needed work.

If maintenance and repairs are neglected for a sustained period of time the property could fall into a state of disrepair and be in need of modernisation. If this period of inactivity spans many years or even decades, a full renovation could be the only answer to make the property both habitable and saleable.

If you’re in a situation where you own a property that is run-down or in need of modernisation, and you’re aiming for a quick sale, then you’re in the right place. Here, I’ll walk you through the pros and cons of renovating versus selling as-is, and why, in certain cases, opting for a fast sale to a reputable house buying company might be your best course of action.

Should you renovate your house before selling

Pros and Cons of Renovating

To renovate or not to renovate that is the question. The answer though is not straightforward and there are many factors to consider when making your decision whether to commit to a renovation or sell as is.

Below are a list of some of the pros and cons of renovating a house before selling it;

Pros of Renovating Before Selling	Cons of Renovating Before Selling
1. Increased Property Value	1. High Costs
2. Attracting More Buyers	2. Return on Investment (ROI) Uncertainty
3. Quicker Sale	3. Time-Consuming
4. Competitive Edge	4. Regulatory Compliance
5. Energy Efficiency Improvements	5. Market Volatility
	6. Stress and Effort Involved
	7. Overcapitalisation Risk

Pros:

Increased Property Value: The main reason to renovate a property before selling it is to increase its market value, a newly renovated house that a buyer can just move in to is much more desirable and therefore demands a premium when it comes time to sell.
Increased marketability: A newly renovated property will appeal to a much border audience than one in a run down or dilapidated condition. Increasing the desirability of the property will mean more interested buyers and a faster selling time. This is even more the case if the property has issues that made it unmortgageable prior to the renovation.
Competitive Edge: In a competitive market a renovated property that has a high quality finish will stand out from the crowd.
Energy Efficiency: Having an energy efficient home is a growing concern amongst house buyers, especially with the rising costs of gas and electricity so improving this with a renovation could be deemed a big plus with potential buyers.

Cons:

High Costs and ROI Uncertainty: Renovations are expensive, and there’s no guarantee you’ll recoup your investment, in recent times everything to do with the building trade has increased considerably in cost from materials to labour making a full renovation an eye wateringly expensive prospect.
Time-Consuming: Renovations can delay your selling process considerably especially if you are relying on third party trades to carry out the work, the average waiting times for tradespeople to carry out work are considerable and even if everything does go to schedule a full renovation can take many months to get over the finish line.
Regulatory Hurdles: In the UK, some renovations require planning permission, which can be a lengthy and uncertain process especially if applications get refused and need to be resubmitted.

Things to consider before taking on a full renovation project

Before embarking on a property refurbishment there are several important factors to consider:

Budget and Financing: You need to come up with a realistic budget for the project and think about how you are going to finance the renovation. You need to consider all possible costs, including materials, labour, permits, and have a contingency for unexpected expenses. Be mindful that most renovations go over budget especially if the person in charge is inexperienced with property development. If you are financing the works with a bridging loan you need to factor in the interest to your final costs, a profit can quickly become a loss especially where the margins are tight.
Return on Investment (ROI): Assess your potential returns. Not all refurbishments will add equal value to your property. Research which improvements are likely to yield the best return in your specific market, speak to local estate agents to see where is the best place to spend your money.
Planning Permissions and Regulations: Understand the local planning permissions and building regulations. In the UK, certain types of work require approval from the local council. Ensure compliance to avoid issues further down the line, you will run into trouble when selling a property with unpermitted work and rectifying the issue after the fact could cost many months incurring further holding costs and interest payments.
Design and Functionality: Plan your design carefully. It should not only appeal to you but also to potential future buyers or tenants. Consider current trends but avoid overly personalised designs that might not have broad appeal.
Hire the Right Professionals: Whether it’s architects, builders, or interior designers, hiring skilled and reliable professionals is crucial. Check their credentials, references, and past work. Don’t just go with someone because they are available or they are a mate. Doing your due diligence and finding the right people will pay dividends in the long run even though you will want to tear your hair out trying to find them.
Timescale: Realistically assess how long the refurbishment will take. Delays can be costly, especially if you need to live elsewhere during the work. Always factor in some additional wiggle room as a contingency but push to stick to the intended timeframes, the property market is fickle and you don’t want to have the property ready to sell as a downturn hits.
Market Conditions: Understand the current property market in your area. If the market is declining, it might not be the best time to invest in a costly refurbishment. If it is improving try for a quick turnaround to benefit from a strong market while it lasts.
Energy Efficiency: Consider improving the property’s energy efficiency by adding additional insulation and a modern heating system. Buyers are becoming increasingly savvy when it comes to saving costs on energy bills and for many the environment is also a factor.
Resale vs. Rental: Your approach might differ depending on whether you plan to sell or rent out the property. Rental properties may require more durable materials that can take more wear and tear and a different design approach to maximise the potential yield.
Neighbourhood Compatibility: Ensure your refurbishment plans are in line with the neighbourhood’s character.
Insurance and Liability: Make sure you have appropriate insurance coverage for the refurbishment process. This can protect you against accidents or damage during the work.
Personal Disruption: Consider the impact of the refurbishment on your personal life, especially if you’re living in the property while work is being done. Also don’t underestimate how much of your time the project will take up, even if you are not doing the work yourself you will spend hours tracking down tradesmen, sourcing materials and running the numbers to ensure that the project stays on track.
Sustainability: Incorporating sustainable and eco-friendly materials and practices can add value and appeal to your property.
Legal and Tax Implications: Be aware of any tax implications or legal requirements related to the refurbishment, especially if it significantly increases the property’s value.

Careful planning and consideration of these factors can help ensure a successful and profitable property refurbishment.

What costs are involved in a house renovation?

The costs of a full back to brick refurbishment can quickly add up, even a straightforward refurbishment can cost many thousands of pounds. Below are some of the most common jobs associated with a renovation along with an estimated cost range for each;

Renovation Job	Estimated Cost Range
Kitchen Remodel	Basic: £5,000 – £10,000
	Mid-range: £10,000 – £25,000
	High-end: £25,000+
Bathroom Renovation	Basic: £2,500 – £6,000
	Mid-range: £6,000 – £12,000
	High-end: £12,000+
Roof Replacement	Basic (asphalt shingles): £5,000 – £12,000
	High-end (slate/tile): £15,000+
Painting (Interior)	Per room: £400 – £800
Painting (Exterior)	Standard home: £1,000 – £3,000
Flooring	Laminate: £20 – £30 per sq meter
	Hardwood: £40 – £90 per sq meter
	Installation: £10 – £20 per sq meter
Window Replacement	UPVC windows: £300 – £600 per window
	Wooden windows: £800 – £2,000 per window
Central Heating System	New boiler: £1,500 – £3,500
	Full system: £3,000 – £5,500
Rewiring a House	3-bedroom house: £3,000 – £5,000
Adding an Extension	Single-story: £1,300 – £1,600 per sq meter
	Two-story: £1,500 – £1,900 per sq meter
Loft Conversion	Basic: £15,000 – £20,000
	Complex: £25,000 – £40,000
Plumbing	Small repairs: £70 – £150
	Major work: £1,000+
Plastering (per room)	£400 – £700
Asbestos Removal	£50 – £200 per square meter
Removing Spray Foam Loft Insulation	£20 – £30 per square meter
Installing Insulation (Loft)	£400 – £1,500 (depending on size & material)
Drainage Works	£500 – £3,000+ (varies greatly)
Damp Proofing (per wall)	£280 – £1,000
Light Fittings (each)	£20 – £150+ (excluding installation)
Plug Sockets (each)	£25 – £75 (excluding installation)
Skirting Boards (per meter)	£5 – £20
Internal Doors (each)	£50 – £250 (excluding installation)

Additional Considerations:

VAT: Prices may or may not include VAT, so always check whether the quoted prices are inclusive or exclusive of VAT you don’t want any nasty surprises when it comes time to pay up.
Regional Variations: Costs can vary significantly depending on where in the UK the property is located, with London and the Southeast typically being more expensive.
Size and Scope: The size and scope of your project will greatly affect the total cost.
Quality of Materials: Higher quality materials will increase the cost, you need to make careful decisions on how to invest your resources, great quality fixtures and fittings may look great but if they don’t add to the value of the property then less expensive materials could surfice. .
Professional Fees: Don’t forget to factor in fees for architects, surveyors, structural engineers or any other professionals you might need.

Note: these costs are just a guide and It’s always advisable to get multiple quotes from reputable contractors and to factor in a contingency budget for unforeseen expenses.

Additional renovation costs if the property has major issues

If there are any substantial issues with the property, such as subsidence the costs could be even greater;

Major Issues	Estimated Cost Range (UK)
Repairing Subsidence	£5,000 – £50,000+
Japanese Knotweed Infestation	£1,000 – £5,000 (can be higher)
Rodent/Pest Removal	£100 – £300 (for initial treatment)

Details:

Repairing Subsidence:
- Subsidence repair can be one of the most expensive issues to address in a property. The cost depends on the extent of the damage and the method of repair (underpinning being a common method).
- The higher end of the range is for more severe cases where substantial structural work is required.
Japanese Knotweed Infestation:
- Treatment methods vary, including chemical treatment, excavation, and removal. The cost depends on the extent of the infestation and difficulty of removal.
- In some cases, especially if excavation and disposal are required, costs can exceed the typical range.
Rodent/Pest Removal:
- Costs vary depending on the type of pest, the severity of the infestation, and the number of treatments required.
- Some infestations may require ongoing treatment or integrated pest management solutions, which can increase costs.

How much should you spend on renovating a house

There isn’t a one-size-fits-all formula for calculating the exact amount you should spend on a house renovation to ensure a profit, as this depends on various factors including the property’s current value, the current market conditions, the nature of renovations, and the specific area in which the property is located.

However, a commonly used guideline in property development is the “70% Rule,” which is particularly popular among property investors, especially those involved in “flipping” houses (buying, renovating and reselling in a short timeframe) .

What is the 70% rule

The 70% rule states that an investor should not pay more than 70% of the After Repair Value (ARV) of a property minus the costs of the repairs needed:

Maximum Purchase Price=ARV×70%−Repair Costs

Where:

ARV (After Repair Value) is the property’s estimated value after all renovations are completed.
Repair Costs are the estimated total costs for all the necessary renovation work.

Example Calculation:

Determining the ARV: Research comparable properties in the area that have recently sold and are in a condition similar to what your property will be after renovations. For example, if you determine the ARV to be £300,000, that’s the expected market value of your property post-renovation.
Estimate Repair Costs: Get quotes or estimates for all the planned renovations. Suppose this amounts to £50,000.
Apply the 70% Rule:
Maximum Purchase
Price=£300,000×70%−£50,000=£210,000−£50,000=£160,000

So, according to this rule, to make a profit in this example, you should not pay more than £160,000 for the property before renovation. If you already own the property you can reverse engineer the numbers to work out how much you need to spend using the current market value (pre work) and the estimated value (post work) this would give you a rough guide as to how much you can spend on the renovation before it becomes financially unviable.

Important Considerations:

Local Market Variability: The 70% rule is a general guideline and may need adjustment based on local market conditions. In some markets, you might need to adjust this percentage lower to be competitive.
Accuracy of Estimates: The accuracy of your ARV and repair cost estimates is critical. Underestimating costs or overestimating ARV can lead to lower profits or even losses.
Experience and Skill: The rule is more effective if you have experience in renovations or a good team of contractors who can work efficiently and cost-effectively.
Market Trends: Be aware of current property market trends and future predictions, as these can significantly impact your ARV.
Additional Costs: Don’t forget to account for additional costs such as holding costs, financing costs, transaction fees, potential taxes and sale fees such as solicitor and estate agent fees.

This rule is a starting point and should be used alongside thorough market research and professional advice, especially if you are new to property investment or the property market is particularly volatile as it is at time of writing.

Selling As-Is: A Quicker, More Straightforward Route

With all that said it is easy to see why the majority of people don’t want to take on the burden of such a large project let alone take on the risk of funding it. So while renovating has its benefits, selling your property as-is can be a faster and much less stressful route, especially if you’re in need of a quick sale due to financial constraints or you are in a position where you value speed over maximising profits.

Here are a few reasons why you might consider selling your property without renovating it first;

Speed: Selling as-is means you can put your property on the market immediately, without waiting for lengthy renovation work to be carried out.
Substantially Less Costs: You avoid the hefty upfront costs of renovating which can run into tens of thousands of pounds.
Reduced Risk: A refurbishment isn’t a sure way to profit, if you are not careful you can easily end up spending more than the added value leaving you at a loss, selling as-is eliminates this risk.
Simplicity: The process is straightforward, devoid of the complexities and uncertainties that come with remodelling.
Less Stress: Even for experienced property developers a big renovation project can be stressful and that’s their full time job, if you are doing it as a side project alongside your current workload it can be exponentially more stressful. Not starting it in the first place is a good way to avoid it.

The Quickest Solution: Selling to a House Buying Company

For those needing a fast sale, selling to an approved house buying company is an excellent option. These companies specialise in purchasing properties quickly, often in as-is condition. Here’s are a few reasons that you might consider this as an option:

Speed to completion: These companies can often complete a purchase in a matter of weeks, as opposed to the months it might take on the open market.
Guaranteed sale: Unlike the open market, where sales can fall through, selling to a house buying company offers a high degree of certainty (if you choose the right company).
No Need to do any work: They buy properties in any condition, saving you the hassle and expense of remodelling.
Reduced stress and complexity: The process is straightforward, without the need for marketing, staging, or dealing with viewings.
No costs: There are no fees involved, they even cover your legal fees so you have nothing to pay out. This is because they make their money by purchasing the property below market value.

As this last point suggests you will get a lower offer than if you were selling the property on the open market but if you factor in the additional time it would take to sell on the open market given an un-renovated properties limited appeal to the general population, and factoring in holding costs, the offer is not too far away from what you could realistically hope to achieve.

Even compared to the other alternative of selling at auction, which comes with risk and uncertainty, the numbers add up.

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