Last week, a landlord from Hampstead emailed me to ask, after reading the Hampstead Property Blog, if he should extend his terraced house making an extra bedroom in the loft. He had a builder friend who owed him a favour, and thought a good way would be get an ‘inexpensive’ extension.
Having more useable space is generally thought to be consistent with better quality accommodation and homeowners and tenants are prepared to pay for it. If you added a bedroom to a two bed terraced to make a three bed terraced, it will add 10% to the value of the property. Turn a three bed terraced into a four bed terraced and 9% will be added to the value. Looking at semi detached properties, and turn a two into a three bed and 12% will be added to the value, whilst making a three bed semi into four bed will add 9% in value.
However, before you rush off to the planning department there are some important considerations, whether you are a homeowner or landlord. What would be the cost of making that extra bedroom? The average value of a terraced house in Hampstead is currently £2,372,642 whilst the average value of a semi detached house is £3,424,029 meaning to make money the cost of the extension would need to be less than £50,000 on the terraced property and £80,000 on the semi detached house.
See the graph below to see the variance in values of terraced v semi detached houses ( Source ~ Office of National Statistics)
Talking to a number of trades people in the NW3 area, most are booked up into the New Year. Also, no matter how good a friend he was, I don’t think a £50,000/£800,00 extension was ever on the cards, maybe the builder was just thinking of a bit of re-pointing work on the chimney!
Well, that got me thinking about how bedrooms affected rental prices and rent-ability as well. Interestingly below, you will see that whilst bedrooms do have an effect on the rent that can be achieved and the rent-ability of the property – the difference does not warrant the expense, hassle and trouble of extending if you are time poor and looking to add value quickly.
- 17.6% of the one bed properties on the market to rent in Hampstead have a tenant with an average rent of £1,710 per month
- 10.8% of the two bed properties on the market to rent in Hampstead have a tenant with an average rent of £2,831 per month
- 13.9% of the three bed properties on the market to rent in Hampstead have a tenant with an average rent of £4,459 per month
- 10.8% of the four bed properties on the market to rent in Hampstead have a tenant with an average rent of £8,904 per month
Now, if you want to increase the value of your property, be you a Hampstead landlord or homeowner, there are things that cost a lot less than building extra bedrooms. This option is best explored if the property is vacant due to all the disruptions it will otherwise cause.
The cost/benefit analysis is something that can only be realised over the long term of 3 years or more, always look at the neighbouring properties in your street to see if it’s been done by other homeowners. There are two key factors that determine the value of any property, they are location and condition. Spruce up the exterior, emulsion all the rooms, install new carpets and curtains. For homeowners, a matter of two to three thousand pounds can add tens of thousands, whilst for landlords; these things can add an extra 10-15% to the rent that you can achieve.