Over recent years, the appeal of renovating a property, restoring period features or transforming an unloved, tired home into a unique space has soared – inspired by renovation shows, viral social media channels and cost pressures that mean it is often more feasible to buy a rundown property and improve it over time.
The concept of the fixer-upper is certainly not new, and we often speak with buyers and experienced renovators who are always looking for their next project at auction.
There are, indeed, distinct advantages to a renovation project, especially if you’d love to buy a home somewhere with premium property prices, can undertake some of the work yourself, and have a passion for interior design.
However, it’s always important to proceed with caution, carefully reviewing the particulars and legal documents, checking whether there are structural issues you’d not be able to correct without a significant investment, and making sure you’ll be able to achieve a return on the time and effort you invest.
Considerations Before Buying a Property Renovation Project
- Reinvigorating a rundown home can be a big project. Before you place a bid or make an offer, it's essential to review the extent of the damage and clarify whether the renovations will be primarily cosmetic or whether there are structural issues and external problems that would need addressing before it can be liveable.
- Location is often a primary factor, and a little research may help you decide between two renovation prospects, especially in up-and-coming markets where a freshly renovated home could be worth considerably more in the coming months.
- Creating realistic, detailed budgets is essential, outlining the work you can do yourself, what you’d need to hire a contractor for, and how long you anticipate it taking before your project becomes a ready-to-move-into home.
Renovating a House: The Importance of the Legal Pack
Our top tip is to download the legal pack we host publish alongside every property due to be sold in an upcoming auction and review all of the information with care. These packs ensure that buyers make informed decisions and don't go into an auction process with questions unanswered.
If you’re looking at bidding on a renovation project, we’d suggest you pay attention to:
Conveyancing searches and surveys, especially anything indicative of more extensive structural damage or repairs needed to the roofing, drainage system, exterior walls, cladding or brickwork.
The property information form, which sets out the condition of the property now, and any details about recent repairs already carried out.
The status of the property, if it is anything but a residential home. Reclassifying a renovated building, such as a barn or church, can be a little complex, and a change of use application may be refused.
Carrying out due diligence beforehand ensures you ascertain how extensive the scale of the renovation would be, understand any challenges before you place a bid, and avoid taking on a house renovation that is more than you had expected.
Related Reading: What is the auction legal pack
Reviewing Local Property Price Ceilings Before Buying a House for Renovation
Our next advice is to spend some time looking at the average values of similar properties in the same area. or having a chat with one of our experienced property auctioneers, who may be able to provide some insights. This matters because, as we’ve briefly touched on, many buyers choose a renovation where they can see a great opportunity to add value.
This matters because, as we've briefly touched on, many buyers choose a renovation where they can see a great opportunity to add value.
That might be appealing because they'd like to sell the home once the work is complete or because they want a sizable return and the certainty that they'll be able to remortgage at a comfortable LTV ratio. If the cost of the renovation, added to the property's listing price, is much higher than the estimated ceiling price, it may be incredibly difficult to resell at a profit.
Ceiling prices are also relevant because:
While not set in stone, a ceiling price indicates the maximum value a home might achieve at sale – including once a renovation has finished.
If the cost of the renovation, added to the property's listing price, is much higher than the estimated ceiling price, it may be incredibly difficult to resell at a profit.
Taking out development finance or another form of borrowing to fund the renovation often relies on a valuation that indicates you’ll easily be able to remortgage to repay those loans —which may not be possible if the ceiling price is lower than you'd hoped.
In most cases, houses needing renovation are affordable and offered at well below the market price for a comparable property in a good state of repair. However, taking the time to research local markets and create an outline budget could help you avoid a costly mistake.
Setting a Maximum Budget Before Buying a House in Need of Renovation
On to budgets, which are one of the less exciting aspects of embarking on your dream renovation but an important factor nonetheless.
Accurate, clear, and comprehensive budgets are pivotal. No matter how cost-effective the property is or how fast local selling prices are rising, you need to have firm control over the total renovation costs.
Some renovators commission an architect who can assist, but if you’re going it alone, we'd suggest reviewing the floor plans and the surveys in detail to get a clear idea of the following:
Bigger jobs such as knocking through walls, replacing external brickwork, repairing the roof, or making the property watertight – ideally with three quotes or estimates to ensure you have clarity about the cost.
The costs linked to technical and specialist work, such as electrics, plumbing and gas installations – both to remove or decommission existing wiring and cabling or to fit new appliances and connections.
Expenses associated with other professional services, from outsourcing the renovation to a project manager to hiring a party wall surveyor, structural engineer or architect.
Great renovation projects are managed with exacting attention to detail, and while it’s not mandatory or always possible to hire an architect, their assistance could prove beneficial in unlocking potential, controlling unnecessary costs and ensuring the designs are efficient and achievable.
Finding Your Dream Renovation Project at a Property Auction
There is no question that renovating a home can be enormously satisfying, but following our guidance is a good way to protect yourself from spiralling budgets or buying a home that is more complex or costly to renovate than expected.
The auctions hosted by the Clive Emson team feature a diverse array of homes that need renovation. You can register at any time to download the legal pack, which contains all the information and documentation you need to conduct your due diligence well ahead of auction day.
