Is It Worth Extending An Ex Council House?

Is It Worth Extending An Ex Council House?

You may own an ex-council house and you might be wondering if it is worth extending it. Ex-council house or not, the same question applies to extending any property.

For any building work that’s done on a property, it’s about weighing up the cost of building an extension vs the additional value the extra space adds to the enlarged house. This is why it’s important to weigh up the cost-to-value increase when deciding if it’s worth extending an ex council house (also known as an ex-local authority property).

It is worth extending an ex-council house if the increased value of the enlarged home equals or exceeds the cost of the building works, taking account of what you’ll save in moving costs if you extend instead of moving to a large house. Also, take account of how long you intend to live in the house.

Questions to help you decide if it’s worth extending an ex council house

When deciding on if it’s worth extending an ex council house, ask yourself the following questions:

1. Do you need the extra space in the short term until you can afford to move?

For you to move to a bigger house with the extra space the extension will create will not only cost more for the property itself, unless it’s in a cheaper area, but moving to another property comes with the various costs of buying and selling a property.

When you move house you have to consider the various costs associated with selling your house, which includes estate agent fees, legal fees and removal costs. Then there’s the cost of buying your next house, which includes legal fees, stamp duty, search fees and mortgage costs.

Moving costs are “dead costs” that don’t add any value to a house, and need to be taken account of when you consider the cost of an extension vs the value this will add to your current home.

2. Will the extension to your ex-council house add more value than the cost of the building works?

It makes no sense to spend more on the build cost of the extension versus what the extra added space will increase the value of the property.

For example, if your ex-council house is a 3-bedroom property and is currently worth £200,000 and you plan to build an extension to make it into a 4 bedroom house with extra room downstairs.

Assuming the building works for the extension costs £50,000, you would hope the value of the home would increase to at least £250,000. In other words, you are at least aiming to get your money back on what you spend on the extension.

However, if a similar ex-council house is currently worth £100,000 and you spend the same £50,000 on an extension making it worth £120,000, this is not such a good proposition.

To confirm if you are going to get your money back, you need to check house prices of in your area.

  1. Firstly check how much your ex-council house is worth as it stands vs how much similar houses are worth with an extension. Take one value from the other which gives you your “Value Increase“.
  2. Then get quotes from at least two builders, and preferably three, to see how much the extension is going to cost, which is your “Build Cost“..
  3. If the price different between the value increase and your build costs, then you won’t be out of pocket.

To get a good idea of what your ex-council house is worth now, ask an estate agent to value your property for you. You should also ask them to help with finding out what your house will be worth with an extension. Most estate agents are normally happy to provide this service for free, as they hope their goodwill means you will choose them when you come to sell your property in the future.

I suggest you ask at least two different estate agents to value your ex-council house and advice on what it will be worth with the extension, as estate agent values differ from one to another.

When considering the value of other houses, make sure you factor in that your property is an ex-council house, as council houses tend to be valued at lower than non-council houses.

3. Will the cost of extending the house be more than the ceiling price of your street?

Most streets have a ceiling price, which is particularly true of some ex-council houses, and you don’t want to be the person who tests this ceiling without knowing what it is by spending too much on your property.

What a ceiling price means is that no matter what you do to a house, it can never be valued at more than the value of the highest value house on the street.

4. Is this ex-council house your forever home?

If the house you live in is considered your forever home, it makes sense to extend this property to accommodate your expanding family.

5. Do you love where you live?

If you love the area where you live and you don’t want to move, it makes sense to stay where you are and it will be worth extending your ex-council house.

6. Do you have enough space for the extension?

In order to build an extension on your ex-council house you need enough garden that can be sacrificed to accommodate the square footage of the extension. You want to have a large enough garden after the extension has been built that is proportional to the size of the enlarged house.

7. Other improvements to your ex-council house

Is it worth considering to make other improvements at the same time when you build the extension. These other improvements might include better cavity wall insulation, loft insulation, new energy efficient doors and windows, an upgraded boiler to reduce the cost of heating your larger home.

8. How long do you intend to remain in the house?

Depending on how long you intend to remain in this ex-council house will be a factor when considering an extension. If your intension is to stay in this house for 5-10 years or more, the cost of an extension will be worth it. Assuming house prices increase in the future, you should recoup the money you spend in the long term.

9. How much the council house cost to buy

If you managed to buy your ex-council house at a bargain price, when you spend money on building an extension you have a bigger gap between the total costs of buying plus improving the property versus what it is worth.

10. Can you afford to move?

You may not be able to move to another house, especially if moving means buying a non-council house. Non council houses tend to cost more than council houses, which might mean these are out of your budget. If this is the case, an extension to your house is worth it.

11. Is the area a good area?

There is no point in improving an ex-council house if the area where it’s built is run down and bad, as you’ll never get your money back. But if the area is desirable, then it may be worth extending your ex-council house, once you’ve done your homework on property prices or ex-council houses in the area.

12. Check any “no building without permission” covenants

Some ex-council houses have restrictive covenants that require additional permission over and above any planning permission needed to build or extend. If you breach a “No building without permission” covenant, you could be told to demolish the extension.

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Is It Worth Extending An Ex Council House?

Article written by Russell Bowyer who has been investing in property since purchasing his first commercial property in the 1990's for his own Chartered Accountancy business. But his first property investment project was to turn an old dilapidated restaurant into a large 5-bed home, which he purchased for £117,500 and sold for £450,000 (to see an "after" photo of the house before it was sold see here: About). Russell owns a number of investment properties, which includes houses, flats and HMO's. More recently he has turned his creative side to investing in property using lease options. His largest lease option deal to date was to acquire 12 properties worth over £2 million for just £12, which means he paid just £1 to acquire each property!

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