House extension/renovation: How important is making your money back?

I recently started looking at developing our home so we have a bit more space (for studying, office, storage, and generally making it more pleasant to live in). The quote came back from the builders and I’m comfortable with the cost (i.e: we can make it work without cutting back on what we already do).

To set the scene a little bit, I have a bit of a sentimental attachment to our home and I generally tend to think “better the devil you know” when it comes to housing, having heard and seen a few horror stories. I’ve also always been someone who tries to live frugally when it comes to the larger expenditures (I don’t covet expensive cars, jewellery etc). So when we purchased our house, I thought more along the lines of what can we buy that’ll still allow us to have a life worth living and bought accordingly.

With all this in mind, the comments coming back from a couple of people close to us are to sell and max out our affordability and buy the biggest place we can, and “you’ll never make your money back” when they know what doing the house up is going to cost.

The way I see it, these aren’t really valid arguments. With the first one, bigger houses cost more to run (heating, council tax etc), and a larger mortgage means less money available to do the things you want (hobbies, life experiences etc). There’s also the opportunity cost of not being able to retire, or take a break sooner. With the second one, maybe I won’t make my money back, but does that really matter when you’re borrowing against the cost of your house? All it means is less equity left over. When buying this place, the plan was to live here for pretty much the rest of our lives. I’m not overly worried about min/maxing the amount of equity in my magic coin shitting box as I am about being able to live life the way I want it.

Financially, developing the house will cost less than it would to move into a place that matches our space and location requirements by tens of thousands. So there’s that to consider too. Albeit, we’ll be left with a smaller garden post development, but we generally struggle to maintain the existing size of garden. So a larger garden would be just for show, while taking up more time we don’t have for maintenance anyway.

On the flip side, not developing it would mean we’d outgrow the place in a year or two. There maybe a few things we could do to gain more storage, but these feel like they’re just papering over the cracks. I’m not sure what we would do with the money we “save” this way either. It’s not a life changing amount.

Am I a fool for thinking this? Most of the money advice forums and people who own a property seem to religiously parrot the “buy the biggest house you can afford” line, when it doesn’t really make sense to me. What am I missing here?

Can’t answer for you but we put a dining room and utility room on the back of our house . The sensible money was on moving and taking a monster mortgage how ever we love the location of our house.

We wanted the dining room for facilitating family life.- all houses we could have got for house sale + build price would have been on tiny wee plots with tiny wee rooms.

For that reason we chose to extend…..leaving room for an extra bedroom that I will do if we have more children……that’ll probably make it’s money back.

Tdlr. If your building the house that suits your needs and there’s nothing on the market that doesn’t compromise in other areas….. Get on it

We are hoping to extend our house in the future. From the builders I have spoken to if you build additional sq m the cost should add almost double to your sale price. To back this up I was quoted approx 50k to do the work I wanted with similar houses selling for 100k more than ours is worth.

That was before building materials went through the roof though. A joiner mate of mine told me that jobs they estimated for 20k a year or so ago are now more like 30k.

Even so, providing you don’t get ripped off, adding to your home will make you more money than buying another, bigger house.

I’ve lived in my house for 21 years and have spent a lot of money on it, so am in a position where I like the house and also the situation. I think if you are happy where you are and you are spending money for the long term, it’s immaterial how much money you may or may not make.

I thought dinning rooms died in the 70’s?

Where do you eat your meals ?

You’re building a home not improving an investment. We did the same and couldn’t be happier, go with your gut instinct.

You’re missing nothing OP. If you’re happy, that’s all that matters.

I thought more along the lines of what can we buy that’ll still allow us to have a life worth living and bought accordingly.

Based on you now wanting to extend, and can afford it – your estimation was incorrect, or are you just fundamentally pessimistic?

As to only putting in what you think you’ll get back, I’ve never thought of a house in those terms – life is too short to live in a crap house if you can afford otherwise.

Personally I dont think you want to make a loss. If you do it well (& with a mind someone else may like it) adding square foot you’ll be fine. An exercise could be to work out sq/ft per £ of what you paid, and then use that £ value to calculate new value of increased house size. Should be quids in after building costs ? At least a bit? Or am I a spoilt Londoner???

Based on you now wanting to extend, and can afford it – your estimation was incorrect,

Alternatively. Life changes.

There are more of us living in this house 10 years later than when we bought.(which at the time was a stretch to avoid living in a flat like many of my.peers at the time) We are probably not alone in that scenario. So we looked at moving…..then extended.

Where do you eat your meals ?

My huge kitchen 😜

We’ve extended our house 3 times. Once to do the loft 13 years ago, then a small side extension and knocking through to make a open plan kitchen dinner about 11 years ago and then we quadrupled the size of the living room and added some extra storage space which we finished this year. I doubt we will get the money back on these as were at what anyone would pay for a semi our street and it would have probably made financial sense to move to a detached house. But we love where we live and would have struggled to get something detached like what we have in the area plus moving is a massive pain in the arse, but so is building.

We won’t lose money as house prices have risen but we won’t get it would have been worth if we’d left it plus what we’ve spent but it’s a home not an investment. People are happy to throw money at cars which lose money and you spend a lot more time in your house than you do a car.

The house now works for us as a family and is a nice place to be in which is the most important thing.

I started my mortgage on the current house about 15 years ago. Bought it with the intention of putting a dormer in to make it a 2 bedroom and have a bathroom in eventually (just got a tiny shower room and separate toilet just now) Hopefully going to eventually get the work done next year, think I’ll break even if I was to sell it with building costs going up recently. However that doesn’t bother me so much, I’d be happier with another bedroom in case anyone wants to stay overnight and a proper bathroom. Even if I were to lose money on it I’d still be happier with something that suits my needs more. Comfort/happiness means more to me than money

It depends whether potentially maximising the investment potential of your capital but having the stress of worrying about the affordability for many years is more important than keeping a place and enjoying living there even if you don’t realise all of the money some theoretical time in the future.
We had a project about four years ago that many people who were concentrating on the input costs compared to potential value of the completed property thought we were nuts. But we gained more space, we love living where we do and are very pleased with the outcome and we intend to stay for many years and we feel that it is worth it.

If your not selling it not very I’d have thought…..

Don’t go into negative equity in case life goes pear shaped.

“The mortgage is the noose around the working man’s (and woman’s) neck”

We don’t have a mortgage – I have never felt so fortunate during the last year or so.

So the consensus is roughly along the lines of:

– as long as you’re adding square footage, then you’ll be ok. Provided you’re not getting ripped off.
– just worry about making your home work for you
– forgot to add don’t have a mortgage to the list (although, it’s never been so cheap to borrow money, so rinsing your savings to pay for it wouldn’t be the best idea?0

I’ve taken a look at the costs for what we’re doing. The builder we’re planning on using isn’t the cheapest, but their quote is competitive with what other builders doing similar work is. We’ve also seen their work and have experience of what they’re like as they did some work for our neighbour. The builder has also worked on houses similar to ours, so I’m hoping the work holds no surprises for them. I’m willing to pay a bit extra to work with someone who seems professional and trustworthy. Though time will tell on that one.

Most of the work is to add square footage. There’s a not inconsiderable amount of it which has gone towards making things aesthetically pleasing and more functional for us. New kitchen, more windows, a new heating system, underfloor heating, mechanical extraction for heat, additional connectivity for the internet, a/v wiring etc. It feels like it’s not worth doing if you’re going to be cheap. There’s also money that needs to be spent to keep in line with building regs, but who wants to live in a death trap right? Some money is also going towards updating the house. This is another thing I see people not telling you about houses. Houses need updates periodically, and these things don’t come for free. People seem to conveniently forget about the money they needed to pay to replace doors/windows, or add a new boiler and so on, especially the time they spent doing those things when they calculate the return on their investment.

As for being a pessimist. It’s more like I expect the worst and hope for the best. Though I never thought I’d find all that Bitcoin I mined 10 years ago, or win the lottery, or have a giant inheritance left to my partner, or have some random life event work out so spectacularly in my favour, or have a family member pass away and become the guardian for their kids, or find out I’d need to be the carer for my aged parents… you get the picture. Like someone else wisely said, life changes and it made sense for me at the time with the information I had to make that particular decision I guess. It would be interesting how I’d have handled the decision with the benefit of hindsight, though I won’t know that one.

As a general rule (providing you don’t build something stupid) extensions make their money back but not a whole load more. If you like where you are and it’s long term, you won’t lose out (although you may compared to buying something significantly pricier if prices go up forever). There’s a lot of hassle in doing one and it’s not worth it just to make a quick buck.

Op.. figure out the total costs of moving. That money is completely burned if you buy again, and depending on how expensive your house is, could be a significant sum (in our case, south east, moving house would cost the best part of £50k, so for anything less than doubling size or relocating, it’s just not worth it)

When we moved into our place we had the windows replaced. Wooden sashes, there are a few. We were told we would never get our money back in re-sale. But it wasn’t just about that. It was having a nice place to live (warmer, quieter, more secure). We didn’t buy the place as an investment, but as a home. Houses are weird in that people buy them as both places to live and investments.

You’ll probably add some value. How much can be complicated. But is it going to make a difference to how you live and is that also worth spending the money.

If you love the house, and the changes make it more usable and life improving, then the impact on the value is less of a concern – but a gin palace in a modest cul-de-sac isn’t going to help selling it later on. If you think selling to take on a bigger property is in your not to distant future then it would be worthwhile understanding minimum investment for improvement to hit the sweet spot for sale cost of similar properties in your area.

Or get yourself on the Channel4 app and watch a load of Kirsty & Phils “Love it or List it”, as this often gets covered.

@paulneenan I am loving the idea of a gin palace!

We’ve got a very specific set of requirements which make what I’m looking for hard to find I think. We live on a an estate and know our neighbours very well. We’re all around similar ages and are sort of like each others’ urban family. Where we live is very close to the trails, sports facilities, schools, town and railway station meaning you can get by without a car and generally live most of your life outdoors while using the home as a base to sleep, eat and exercise.

The only thing that would make me consider moving would be if I could move to somewhere within a quarter of a mile of here and upsize while spending the same amount as what the extension plus the renovation would cost. What I’m finding is that doesn’t exist unless we were to rinse ourselves financially. Just the tax and the costs for the move would run into the tens of thousands, which I’d rather put into improving this place. There’s also the added cost of running a larger house and grounds. And anywhere we’d move into would need more work done, as it looks like most people in the vicinity who do sell have done little to absolutely no work to their houses, so they’d need redecoration and perhaps a new kitchen at a minimum. Again, just a new kitchen and an extension would be the bare minimum required to buy us a bit more time in the current place.

I think I know what my decision is. I do understand why some people with different values may just want to up and move for a bigger place, but they probably have a different perspective? Personally, any move which means I’d need to spend more time in a car, which means less time for my hobbies would be a straight no.

To be honest mate, I think you’ve made up your mind and just need to hear someone validate it.

Your friends’ concerns are perfectly valid at far as it goes. But.

If you spend a wedge on an extension and the value added to the house is say 10k less than your expenditure, but you then have a nicer place to live for a few decades… does it actually matter? This is what they’re missing, you may lose money (but probably won’t) but if you do then that’s the cost of being happier. Can they stick a dollar value on that? If you were planning on selling up in 12 months it’d be a different story.

It sounds like you have a nice gaff to start with so it’s probably worth investing in. I had almost the opposite problem, it needed a lot of work and there is a ceiling value on property where I lived. If I turned it into a show home – “refurbished to a very high standard” as pretentious **** say on TV – then at best I’d have added £20k max to the value. I started thinking “I’d like a new fireplace” and fixed it with a new house.

Oh, and forget “sentimental value,” it’s a box. Think with the head not the heart. For most practical purposes I’ve lived in the same place all my life and I couldn’t get out of there fast enough.

No option to report above post so reporting myself…

We’re just about to start extensive works on our house. It’s about 110m2 currently and we’ll be knocking down ~40m2 so we can add ~150m2. It’s going to cost a fortune and I’m hoping we might just about break even in terms of cost/valuation when all’s finished, but if it doesn’t then so what?. It’s the perfect location in a perfect village with the perfect social circle and so we coudn’t envisage moving anywhere else. We’re definitely about 3 years past having outgrown it as a family, but for the same reasons as above we’ve just been making do.

Who cares if it ends up being a net-loss exercise? As long as it doesn’t put you in the shit financially and the end result is what you want, not everything has to be done with “how much money will it make me” in mind.

One thing that would be of more concern than the value would be …. Can the plot/services sustain the new size of house.

Example. I viewed a house that had been extended and extended and was 5 bed with 2 ensuites and a conservatory out back……

1 off the road parking space at the head of a culdysack of 2 bed bungalows and next to no back garden remaining. There was a reason it was a very cheap 5 bed.

Don’t confuse house vs home. It’s your home, you live there. It’s not an investment.

trail_rat’s  dining room

That’s only the west wing dining hall for the staff.

We extended upwards – converted a 2 bed cottage into a 4 bed+ house for the growing family.
On reflection (12 years and house move later) we should have just moved. The converted house was fine, but the cost at the time would have allowed for a more significant upgrade to a nicer area.

I recently added two rooms to my house, no intention of relocating as I really like the area and the neighbours (we have our own mtb club!).

I’m confident the value of the house has risen enough to cover building costs (as a minimum which is all I care about).
I was lucky enough to have the money in the bank but effectively earning zero interest so putting it into the building is a better investment.
The house looks better – it had a tatty greenhouse there before.
It’s made a big difference to how we live our lives because it’s more useable and its warmer.

As long as you dont go over the top it will make its money back and be more saleable – but until that day comes sit back and enjoy it, I wish I hadn’t waited so long before starting ours.

Was looking around recently as fancied something with more space (live in a tiny cottage). But we had existing planning permission for an extension that is way bigger than would now be allowed (National Park planning!).
Adding 40sq m to a house that is only 70sq m will easily get my money back, especially as I won’t be wasting £30K on stamp duty to move.

Same as comments above though, we like where we live and are not doing it for immediate gain but it will make the house much more valuable plus a lot easier to sell in future.

OP, you almost answered your question in the thread title

How important is making your money back?

If you have enough money, and a nice place to live, less hassle, less risk etc is more important to you than having more money, your answer is obvious.

People under estimate the cost of moving. As long as you make sure your extension fits with the rest of the house, i.e. doesn’t end up top / bottom heavy, or loads or small rooms rather than less rooms but bigger etc then unless you go mad with the spec I expect you will be financially safe. IF you move there will probably be stuff you want to change anyway and least a new extension can be done to a good standard and get loads of other little bits sorted at same time

But we had existing planning permission for an extension that is way bigger than would now be allowed (National Park planning!).

have you made a material start as planning permission expires?

I’m wrestling with a similar decision at the moment. remodelled with a small extension 5 years ago and now thinking about extending off the back of the kitchen for a kitchen diner, 2nd bathroom and guest room/study. can’t find anything locally that I like AND can afford without buying a total wreck. I can build this with minimal disruption.

Cougar is on the money. We’re mostly set on the plan, it’s just that last push. Things like Rightmove are the equivalent of Tinder for property, and they sucker you into thinking the perfect place is around the corner if only x, y or z and the temptation is to kick the decision down the line.

Greybeard, making money is important, but I’d rather rely on my efforts to do so than relying on a single asset to do all the heavy lifting. Investments, career growth, lottery tickets, the odd government contract down the pub and so on.

Nice to see other peoples’ perspectives and that we’re generally on the right track. Roll on Gin Palace.

Am I a fool for thinking this? Most of the money advice forums and people who own a property seem to religiously parrot the “buy the biggest house you can afford” line, when it doesn’t really make sense to me. What am I missing here?

Money advice forums are full of people who value money. That’s not a bad thing, houses are big, serious, real money things and worth serious consideration, but I’m seeing so many echoes of the mid-2000s at the moment. Too many people talking about ‘property’ and not ‘homes’, it’s all starting to look like the myth of no-lose gamble market again.

Anyway OP sounds cautious and level-headed when it comes to money, if you want to extend because it will make you happy, then with a few simple common sense calculations to make sure you’re not tucking yourself up and do it. Yeah, I’m sure you could, in theory sell-up, move up and being theoretically better off, well as long as the no-lose gamble market continues, but would it make you any happier? Do you want to be that person? Do the best for your and the ones who live with you, that’s the best thing to do.

have you made a material start as planning permission expires?

Yes, it was started in 1997. The planning office didn’t believe it though even though the part of new building was there but it was so long ago any records are gone (they only keep them for 10 years). Had to pay an architect who had expertise in proving stuff and dealing with planning office to get it accepted.

Only you really know the answer to how much you want to stay where you are vs move OP. Houses will make money and investing in them may give you more than the capital investment, my bathroom probably didn’t add as much to the value of the house as it cost, but I bloody love my shower and use it daily 🙂

Currently doing a complete downstairs renovation on my house, removing walls, putting in a utility, new kitchen, underfloor heating, playroom for the kids, log burner the whole shebang.

Not making it any bigger but changing the layout and making it work for us, we looked at moving but we wouldn’t get what we wanted for the money we are spending on the renovation. I’m sure ill add some value but most likely not enough to cover what im spending, but by doing this work we are future proofing the place and hopefully we will never have to move, so its money well spent in my eyes.