Predicting Value in Unmodernised Property Renovations

Demand for modern homes in the UK is currently sky high. Almost half of homebuyers are on the hunt for new build homes. A hefty increase from just 27% in 2023, and renovated properties move quickly on the rental market. For investors, this opens the door for a potentially lucrative opportunity.

Read on to learn more about renovation costs and predicting the value of modernising a property.

Are Unmodernised Properties Cheaper?

Renovating an unmodernised property is only going to be worth your investment if there’s room to turn a profit. So, are unmodernised homes always cheaper than newly renovated properties?

On the surface, the answer is a resounding yes. The average house price in the UK is around £373,000, while unmodernised homes list in the region of £345,000. That’s an average cost difference of £28,000, with the potential for far higher returns on well-managed refurbishments.

Of course, there are several factors to consider here. Period properties, for instance, are often in demand for their heritage features, while listed cottages are well-loved for their authentic, unmodernised style. Look for homes built (or renovated) in the 20th century for safer investment opportunities.

How to Find Properties to Invest In 

When the property you invest in is crucial to your profit, it pays to do your research.

Begin by searching through unmodernised properties for sale in specific areas. This allows you to hone in on locations and find towns with a solid availability of properties to choose from. If you have a location in mind, use this data to avoid digging through hundreds of listings, simplifying your property search.

It’s smart to reach out to estate agents, too. Be specific about the type of property you’re looking for, giving them details like location, budget, and property condition. When a house that matches your specifications hits the market, they’ll be able to let you know before it reaches local listings.

To search for bargain properties, try your luck at auctions. These are goldmines for refurbishment projects, and the homes are often cheaper than market prices, making them popular amongst investors. Be sure to carry out any due diligence before bidding, including surveys and renovation cost estimates.

Exploring Average Property Prices

The predicted value of a property will vary depending on your local market. If you’re looking at refurbishing a studio flat, for instance, you’re likely to see higher demand in cities than in family-friendly villages.

Track local listings and online data to find out:

• Average prices: Look at both current asking prices and recently sold prices for comparable properties. This will help you understand true market value and identify whether there’s enough margin between purchase price and potential resale value after improvements.

• Rental yields: Research the rental prices of similar properties and calculate their potential rental yield. This uses annual rental income and the initial property price to create a clearer picture of potential returns.

• Time listed: Pay attention to how long different types of property remain on the market before selling. A shorter average time for modernised homes suggests strong demand, while longer listing periods may indicate less interest or prices that are far too high.

Again, speaking with a local estate agent is a smart move when considering property prices. They’ll have experience of recent valuations in specific areas, giving you useful insights into potential profit.

Factor in House Renovation Costs

Even when unmodernised properties are listed at low prices, that doesn’t necessarily make them a smart investment. Renovation costs can quickly add up, and homes in poor condition often have hidden issues, causing projected profits to diminish.

Average renovation costs per square foot vary a lot depending on works carried out. Your renovation budget for a typical 3-bed home in the UK could be anywhere between £43,000 and £110,000, on average, and there’s a lot of wiggle room on either side.

How to Estimate Renovation Costs

Although it’s tricky to nail down exactly how much you’ll need to modernise a property, there are ways you can generate a more precise view of your project’s costs.

Start by initiating a survey on the property. These are carried out by qualified professionals and will check the house from top to bottom, identifying issues that need work. Surveys cover roof condition, damp, plumbing, electrics, and the overall integrity of the building, giving you a clearer idea of what you’re buying.

For a renovation project, opt for a RICS Level 3 survey. This is the most comprehensive survey available, and is your best bet for ensuring you don’t bite off more than you can chew.

Once you receive the survey report, review it carefully and use it to negotiate. If there are substantial problems, you might be able to push the purchase price down to reflect the required repairs. This step alone can protect your margins and prevent unexpected financial strain later in the project.

You’ll then need to start obtaining quotes for renovation work. Speak to trusted tradespeople about the sort of costs you can expect, providing as much detail on the project as possible (including photos, where relevant). Don’t forget to add extra costs, too, like skip hire and scaffolding fees.

After obtaining all your quotes, add an extra 10-20% to your final budget. Set this fund aside to cover the cost of emergency issues, like leaking roofs or hidden faults.

Final Thoughts

Unmodernised properties often come with appealingly low prices, making them strong contenders for investment. If you’re thinking of renovating an older home for resale or rental, take your time to work out the predicted value before diving in. It might take a little extra work, but you’ll thank yourself for it later.