Research by London lettings and estate agent, Benham and Reeves, has revealed that while buying a fixer-upper may be a more cost-effective way of climbing the property ladder, the long term cost of bringing such a property up to standard is likely to see homebuyers pay more in the long run.
Benham and Reeves analysed the current cost of purchasing a property in need of modernisation and how these homes compared to the rest of the market.
The research shows that at an average sold price of £358,034, unmodernised properties do present a more affordable foot on the ladder for hard pressed homebuyers struggling with the ever increasing cost of homeownership. In fact, they are 4.5% more affordable when compared to similar, modernised homes in the same area.
Benham and Reeves then looked at the average cost of bringing an unmodernised property up to standard, a task that is estimated to require a budget equal to 15.8% of a properties original value.
On the average unmodernised home, that’s £56,569, meaning homebuyers will eventually fork out a total of £414,604 to get their fixer-upper up to scratch – £40,552 more than the cost of buying a modernised property outright.
London homebuyers are likely to overspend to the greatest extent when embarking on their quest to breathe new life into an old home. While an unmodernised home in the capital will cost almost £32,000 less on average, the average homebuyer will spend almost £115,000 on renovating it, an overall overspend of £82,600 versus buying a modernised home to begin with.
The average homebuyer in the East of England will eventually fork out £56,543 more renovating an unmodernised home versus the cost of buying a home already fit for family life, while in the South East this overspend averages £44,440.
Even in the North East where the cost of renovating a fixer-upper is at its lowest, an unmodernised home will eventually cost almost £7,000 more once accounting for the cost of bringing a property up to spec.
Director of Benham and Reeves, Marc von Grundherr, commented:
“A project property can be a great option for those struggling to climb the property ladder, as it often presents the chance to buy a larger home, or a home in an area we may not otherwise be able to afford.
For many homebuyers, the romantic notion of working long into the night to create their perfect family home also carries a high level of appeal, but be careful what you wish for.
While you may have the best intentions, you could soon find that the reality of juggling everyday life with such a monumental task can take its toll. Even the seemingly straightforward jobs drag on for longer than expected and cost more. At some point you will no doubt find you inevitably need professional help and this can also scupper even the most well planned budgets.
However, while the eventual cost may run higher than the price you would have paid for a modernised home, the benefit is that this work can be carried out over months, years even. This allows you to spread the cost and better manage your finances with the end result being a home finely personalised to your own taste and lifestyle needs, which in many cases is well worth the time, cost and effort.”
|Table shows the average cost of both an unmodernised and modernised property, the cost of renovating an unmodernised property, the total cost once complete and the difference versus a modernised property|
|Location||Average unmodernised property price||Est cost to renovate @ 15.8% of original market value||Cost of unmodernised property plus renovation costs||Average modernised property price||Difference vs Modernised|
|East of England||£405,000||£63,990||£468,990||£412,447||£56,543|
|West Midlands region||£230,000||£36,340||£266,340||£241,500||£24,840|
|Yorkshire and the Humber||£189,950||£30,012||£219,962||£203,250||£16,712|
|Table shows the difference in market value between a modernised and unmodernised property|
|Location||Average unmodernised property price||Average modernised property price||Difference (£)||Difference (%)|
|East of England||£405,000||£412,447||£7,447||1.8%|
|West Midlands region||£230,000||£241,500||£11,500||5.0%|
|Yorkshire and the Humber||£189,950||£203,250||£13,300||7.0%|
Unmodernised and modernised market values sourced from PropertyData.
Average cost to renovate a variety of property types and sizes sourced from CheckaTrade, White Gates, HOA, Fifi McGee and Clubmit and applied to the current market value of these property types to find the average % cost.
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