Invest in your home.

Hand putting coin in model house bank

According to the consumer magazine Which, the best way in which to add value to your house may be to add a garage, and although they noted that this was disputed by some estate agents, people who are contemplating converting their garage should take note. What was more interesting to me was that the next best improvement is to add a bedroom. The third most profitable improvement was the addition of a reception room. Of course, to add another bedroom for most people will mean they would have to extend the ground floor footprint too, or possibly convert the loft.

The exceptions are those people with an attached garage or a single story part of the house which can be built over, and we get our share of these projects as well. However, it’s clear that most homeowners intuitively know that an extra bedroom or extra living space adds value and that is why extending your house has once again become one of the UK’s favorite pastimes.

We do have a significant number of clients who just want a new house layout where it doesn’t involve extending but most of our projects (about 85%) want more space. Interestingly, a growing number of our clients are retired or at least nearing retirement, so you wouldn’t think another bedroom is necessary. However, if you’re looking at where to invest your savings with the knowledge that over a longer period of time you’ll get a good return, adding well designed and thoughtful space must be considered.

This type of investment doesn’t involve researching the shares market, and it doesn’t require paying brokers of fund managers, but you do get the benefit of a nicer surrounding until you cash in your investment and even best, all of it’s possibly free tax-free. Many people aged 55 and over can now withdraw their pension savings (subject to a one-off income tax), and according to the Treasury more than 85,000 people have dipped into their pension plans so far, cashing in 1.3 billion. It looks to me that the more canny aren’t spending this on holidays or new cars, but are investing in what is already their best investment ever; their house.

We must presume that when the time comes, they will downsize and mete out the proceeds as a pension. That may be the tricky part, but if interest rates have recovered by then, they may be able to live on the interest I suppose, since it could be a sizable sum, especially if we have some significant house inflation in the meantime – and we mustn’t discount this.

Written by Tony Keller – Building Tectonics.

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