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Friday, 18 April 2014

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Budgeting to improve your home

Extending your home or converting a loft can be a cost-effective way to considerably improve it, increase its value and avoid the disruption and costs from moving.

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Added value: Unless you’re involved in the building trade, working out the cost of converting your loft or extending your home can be difficult

So where do you start? Firstly, decide on your budget. Unless you’re involved in the building trade, working out the cost of the project is difficult.

A good source of costing is the Building Cost Information Service of the Royal Institution of Chartered Surveyors which publishes The Property Makeover Price Guide. Alternatively, you could get some idea from www.whatprice.co.uk or try the free estimator on www.growyourhome.com.

During this process always add a contingency allowance of at least 10 per cent in case costs over run.

You then need to consider the funding for the project. If you need to borrow money you’ll normally have the choice of either increasing your mortgage or taking out a personal loan.

You’ll pay a lower rate of interest for a further advance on your mortgage, but bear in mind that if you spread your repayments over the rest of your mortgage term you’ll probably end up paying more interest overall than with a short-term loan.

If you decide to proceed with the project, approach your neighbours about your plans as you may need their agreement. The Party Wall Act 1996 covers work involving party walls, boundary walls and excavations near neighbouring walls. You’ll also need to contact your local authority to find out whether you need planning permission for the works and whether they need building regulation approval.

If you need planning permission, decide whether you’re going to employ an architect or surveyor to draw up your plans, find a builder and oversee the project, or whether you just want a professional to provide the plans and do the rest yourself. Doing it yourself is normally the cheaper option but having someone competent to supervise the project should spare you considerable time and hassle.

If you have to apply for planning permission the process usually takes around eight weeks to get a reply. Check with your builders that they are dealing with building regulations compliance, otherwise you’ll have to submit an application and arrange for an inspector to carry out the required inspections. You’ll also have to pay a fee for these visits which will depend on the size of the project.

If you’re appointing the builders yourself then obtain three itemised quotes in writing which are not estimates.

A quote is a fixed price whereas an estimate is only an approximate price.

Ask friends for recommendations and ideally choose a firm belonging to a professional organisation such as the Federation of Master Builders which has dispute resolution procedures. Look out for those using the Government-backed TrustMark logo which means they are obliged to meet certain standards and avoid choosing firms simply because they can start immediately.

Good builders are frequently busy so be realistic about your expectations on time scale. Bear in mind that to help reduce costs you may want to complete some of the finishing works, such as decorating, yourself.

If your builder does not supply a contract, you could draw up one yourself setting out the work to be undertaken in as much detail as possible including timescales etc. to be signed by both you and your builder.

You can download a contract free of charge from the Federation of Master Builders website, however, if you ask for any extras after the work has started then check how much they are going to cost before proceeding with them.

Never pay the full price for the project upfront. Organise payments in stages as parts of the work are completed and hold back at least five per cent of the total cost until the project is completed to your satisfaction. If the works needs approval under building regulations remember to keep the final certificate to confirm that the work is approved so you have it available for a future purchaser of your property.

Finally, remember to inform your home insurer before you carry out any major improvements such as a loft conversions or an extension, otherwise you may that find claims for any damage to the property while the work is going on will be rejected, and consider adding legal expenses cover to your policy as this may pay for any disputes which could arise during the project.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

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