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Moving or improving?

Are more and more homeowners opting for home extensions or improvements rather than a new house? That’s certainly the view of property website Zoopla, which reported in August that some 16,880 people had increased their loans when they remortgaged their homes in June – by an average of £56,100.

The data from UK Finance showed this figure had increased by eight per cent compared with June 2018, whereas in contrast, the number of remortgagers who didn’t take on extra debt dropped by 24 per cent to 15,320.

Adrian Anderson, director of mortgage broker Anderson Harris, told the website: “This is a clear sign that homeowners are staying put and improving or extending, rather than paying the hefty cost of moving home.”

An interesting conclusion, given that we don’t know what homeowners are using the money for, but one that journalist Nicky Burridge, writing for the website, was convinced was correct. “As house prices have risen, the associated costs of moving, many of which are charged as a percentage of a property’s value, have also increased,” she wrote.

“Lloyds Bank estimated that the average person now spends more than £12,000 on taxes, surveyors’ and estate agents’ fees and moving costs when they buy a home. And the shortage of homes for sale means a limited choice.”

However, UK Finance’s data and research analyst Callum Bilbe urged caution in interpreting the figures, pointing out that an increase in product transfers could also be a factor if people were choosing this option over remortgaging for the same amount of money. Product transfers – when people switch to a new mortgage deal with the same lender – tend to be quicker and simpler than a remortgage.

“Remortgaging activity can be volatile and there are often significant variations from month to month,” Bilbe added. “When we see a substantial change in figures, it’s important to examine the broader reasons why these changes might have occurred – and not to take a single month’s data at face value.”

If people are opting to renovate or extend rather than move, it is not a particularly new trend. NAEA Propertymark, the professional body for estate agents, reported last year that 15 per cent of homeowners had decided to renovate their property instead of moving, compared with three per cent in 2013, according to insurers Hiscox’s Renovations and Extensions Report.

Of those who had chosen to renovate, 25 per cent cited high property prices, 13 per cent stamp duty, and 15 per cent a lethargic property market. The NAEA also reported that the number of planning applications by homeowners had increased by 29 per cent over the past decade.

Architectural designer and television presenter Charlie Luxton told the association: “We need to renovate and improve our ageing housing stock and if we can nudge people to make sustainable as well as spatial improvements this can only be a good thing. It also means people stay longer in their homes, which is usually beneficial for community spirit and engagement in local issues.”

South east London architects Bluelime Home Design has been designing both new homes and home renovations and extensions for happy householders for 13 years. We have offices in  DartfordBromleyErithBexley and Croydon - call us on 01322 517632 to arrange a free architect consultation.

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