Move home – or extend your existing home?

Needing more space is one of the most common reasons for moving home. A growing family is often the trigger that starts the search for a new house. Or maybe you would like to work from home – either working for yourself or someone else – and just need a space where you can work in peace and quiet.

Whatever the reason, if you’re thinking about moving home, maybe you should also think about the alternative – extending the home you have already. It may be cheaper and less hassle.

And if you are happy with the home you have, and like the location, why move if you don’t need to?

Well, there may be lots of reasons. Extending your home isn’t always as easy as it appears at first. But it is certainly worth looking at and we’ve set out some of the ‘pros and cons’ in this blog post to help you come to a decision.

We are assuming here that you own your house rather than rent it. But if you are a tenant rather than a homeowner, don’t immediately assume you cannot extend the property. See our ‘notes for tenants’ at the bottom of the blog.


Practical issues

One of the first things to consider, obviously, is whether you have the space to extend your home. Is your garden big enough to allow you to build an extension? Will you be happy with the size of garden you have left afterwards?

An extended home with little garden or no car parking may be difficult to sell when you eventually do move home.

Think ‘upwards’ as well as ‘outwards’. Can you create an additional room (or more than one) in your loft?

And what about going ‘downwards’? It might be possible to add a basement. But this is not a cheap option and is probably only financially feasible in high-price areas such as parts of London.


Financial issues

An extension will add value to your home as well as creating space. But you may find that the additional value is less than what you pay to get the extension built when all the costs are taken into consideration.

And anyway, if you are planning to stay in the house for the next few years (that’s why you are extending it, after all) any increase in value is not going to benefit you now – you only see the benefit when you come to sell.

Unless you have the cash to pay for the extension you are planning, you will have to take out a loan or – usually cheaper – get an additional mortgage or extend your existing mortgage. Usually the new borrowing will be via a separate account and you will be able to choose from several deals on offer. In this case, the new loan will not change the terms of your primary mortgage, but lenders will limit your total borrowing.

Some mortgage lenders are more flexible than others, but all have a limit to the ‘loan to value ratio’ (LTV) that they are prepared to consider. The total amount of your loans – what you currently owe plus the additional money you need to borrow for the extension – cannot exceed the LTV that the lender is willing to advance. This is typically 90 per cent of the total value of your home once the extension is completed.

Some lenders will be willing to let you have access to the cash before building works are complete. Others will want to see the extension finished before they part with any money – which isn’t a problem if your builder is willing to wait to the end of the project until it is paid. But you will usually get a better deal from the builder if you are willing and able to make payments as the project proceeds. And you will certainly have to pay some fees and charges 'up front'.

It may be possible to finance your extension quite cheaply if you can remortgage all your borrowings on to a better deal.

Personal and secured loans are likely to be more expensive than a mortgage, but they are worth considering if you cannot get a mortgage. But make sure you are confident you can meet the repayments. If you cannot get a mortgage for the additional expense, it may be that mortgage lenders are not convinced that you can afford the new loan. If that is the case, it should make you stop and think.

Whether you are extending your mortgage to pay for the extension or not, you will need to talk to your existing lender about what you are planning – and it is best to do this before you sign a building contract. The lender may want to see plans and a valid planning consent before giving permission for work to proceed. And there may be fees to pay for varying the mortgage.

It is a good idea to get some independent financial advice about the best way to raise money.


Insurance

Make sure you tell your insurer what you are planning before building work starts. Your existing policy may not be valid if you are making changes to the structure of your house.

There may be additional premiums to pay to cover additional risks during building works and for the larger house you will own when the works are finished.


What will it cost?

The cost of building works obviously varies according to what you are having done and also on where you live. Builders in some parts of the country are simply more expensive than in others, mostly because they have higher costs to cover.

As a rough guide, though, you can expect to pay something between £1,500 and £2,000 per square metre for a single storey extension. And then there is 20 per cent VAT to pay on top of that.

That’s not the end of it though. In addition, you will have to pay:

• Surveyors’ and architects’ fees.
• Fees to your local council for obtaining planning consent and inspections to ensure your new building work complies with Building Regulations.

These will typically push you costs up by another 20 per cent or more.


Planning consent

You will probably need planning consent for any extension to your property unless it is quite small.  There is a handy guide here to when you need planning permission and when you don’t.

Generally, planning consent is not difficult to obtain for any reasonable building works. If you live in a conservation area though, or in a listed building, things may not be so simple.

Your architect or builder should be able to advise you and handle all the necessary paperwork. Or talk to your local council – they are usually helpful, although frequently over-worked and under-staffed which means even simple enquiries can take a long while to be dealt with.

You will have to pay a fee when you apply for planning consent – and you don’t get it back if planning consent is refused! So, it is important to get the documentation right in the first place. You don’t want to have the application refused because of simple errors in the plans. There is a guide to the fees here.


Timing

Moving house can sometimes be a lengthy business - finding the right home, selling your existing property, dealing with the complexities of being caught in a ‘chain’, and all the rest of the problems that can occur.

So, building an extension may seem like a quicker solution to your need for more space.

In fact, that is probably not going to be true! From the point where you first start thinking about this through to the day when you start using your new extension, it will take far longer than you probably expect. Getting the plans drawn up, obtaining planning consent, finding a builder and then doing the actual building work will typically take a full year.


Hassle and stress

It has often been said that moving house is one of the most stressful things you can do in life. So, ‘staying put’ and having an extension built may seem a good idea to avoid that.

It is not exactly without problems, though. There’s the stress of seeing the project through its planning stages. Then, for several weeks (or even months), your home is going to be a building site, with all the associated noise and dust. You won’t be able to park your car on the drive because it will be full of building equipment. Your lawn will be a storage area for bricks, blocks and other materials. And the patience of even the most pleasant neighbours can wear thin after a few weeks of noise, mess and builders' vehicles parked all over the road.

If you are having a loft extension built it can be even more intrusive. The builders will generally gain access through the roof, rather than tramping through your home, but they will be working right above your head with scaffolding up against your windows.

It’s definitely not stress-free!


A separate solution

You can avoid many of the problems of building an extension if you are willing to have your new space separate from the rest of the house. And this can be ideal if you need that additional space for a home office or workshop rather than for ‘daily living’.

You can buy some really excellent ‘sectional buildings’ (the posh phrase for sheds) that can be well-insulated to make them usable all year round and fitted out to a high standard of convenience and comfort.

You will probably need to put in proper foundations (your supplier will advise you) and you may need planning consent (talk to your local council).

Conclusion

So, do you move – or do you stay and extend?

With so many things to consider, each decision is different. But while staying put and expanding your existing home may at first seem like less cost and stress, it may not prove to be the case.

And with developers such as Larkfleet Homes offering a wide range of new homes that are ready to move into, and with many also offering schemes that will relieve you of the hassle of selling your existing house, making a clean start in a new-build home could be the better option.

Notes for tenants

If you have been a good long-term tenant, and are planning to remain that way, you may find the landlord is willing to consider helping you if you want to extend your home. After all, it could leave them with a bigger and more valuable property on which they can collect more rent. 

It is a bit of a ‘long shot’, though. You are much more likely to be successful if you are renting privately than if you are renting from a housing association or council. But it is always worth asking. 

The financial arrangements can be ‘messy’, though – who is going to pay the builder, who is going to meet any additional insurance costs, what is the impact on the landlord’s mortgage on the property, etc? These complications can be enough to put off even the most willing landlord.

It can be much simpler if you are planning on creating more space by doing something like putting in a large shed, rather than building an extension to the house. But you will almost certainly need the landlord’s permission. Make sure you have that in writing before you make any financial commitments.

If you do get permission to erect a shed, your existing tenancy agreement will probably mean that you are obliged to keep it in good repair, etc.

And consider what happens when you do eventually move. Will you be able to take the shed with you (some will come apart almost as easily as they went together – in theory, at least!) or will you have to leave this expensive asset behind you?